1023-00003 · Ironside Capital Management LP · IDR Responses

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CALDERWOOD & HARKNESS LLP Attorneys at Law

1251 Avenue of the Americas, 40th Floor New York, New York 10020

Telephone: (212) 558-4000 Facsimile: (212) 558-3588

www.calderwoodharkness.com

July 28, 2023

VIA HAND DELIVERY AND ELECTRONIC MAIL

Timothy J. Albrecht Revenue Agent (Badge No. 74-28193) Internal Revenue Service Large Business & International Division 290 Broadway New York, New York 10007

Re: Ironside Capital Management LP (EIN: 83-2741956) — Response to Information Document Request #3; Tax Year Ended December 31, 2021; Carried Interest Holding Period Documentation Under IRC § 1061

Dear Agent Albrecht:

We write on behalf of our client, Ironside Capital Management LP ("ICM" or the "Fund"), a Delaware limited partnership, in response to Information Document Request #3 ("IDR #3") issued by the Internal Revenue Service ("IRS" or the "Service") in connection with the examination of ICM's federal income tax return for the tax year ended December 31, 2021. Our authority to represent ICM in this matter is confirmed by the Form 2848 (Power of Attorney and Declaration of Representative) filed with the Internal Revenue Service on April 14, 2023, which designates the undersigned, Sylvia Hartwell, and Leila Nazari, both of Calderwood & Harkness LLP, as ICM's authorized representatives for all matters arising in connection with this examination.

We acknowledge receipt of IDR #3 on July 11, 2023. IDR #3 consists of twelve (12) separately numbered items, each directed at the documentation and substantiation of the holding periods of certain assets disposed of during the 2021 tax year, the gains from which were allocated to Ironside Capital GP LLC (the Fund's general partner) as carried interest (performance allocations), and the characterization of such gains as long-term capital gains under Section 1061 of the Internal Revenue Code of 1986, as amended (the "Code" or "IRC"). This letter and the enclosed materials constitute ICM's complete response to IDR #3.

For context, we note that this response follows and builds upon ICM's two prior IDR responses submitted during the course of this examination: ICM's response to IDR #1, submitted on May 19, 2023, which addressed the Service's initial requests for organizational documents, financial statements, and the Fund's 2021 Form 1065 and related schedules; and ICM's response to IDR #2, submitted on June 23, 2023, which addressed the Service's requests for detailed information regarding the Fund's investment activities, allocation methodology, and the identification of specific partners and their respective distributive shares. We also reference the in-person meeting held on July 14, 2023, at the IRS Manhattan Campus at 290 Broadway, New York, during which the parties discussed the holding period documentation at issue and this response was identified as a follow-up deliverable.

This response was prepared with the significant assistance of Robert Jansen, an associate in the Tax Department of Calderwood & Harkness LLP, who conducted the detailed trade-level holding period analysis set forth in the enclosed Exhibit C. The supporting trade-level data was sourced directly from the records of Ridgeline Securities LLC, ICM's prime broker and custodian, and was cross-referenced against the workpapers and tax return files of Borwick Craine & Associates LLP, ICM's independent auditor and tax return preparer. The engagement partner for tax at Borwick Craine & Associates LLP is Elliot Navarro, CPA, who oversaw the preparation of ICM's 2021 Form 1065 and the related Schedules K-1.

I. BACKGROUND — FUND STRUCTURE AND PERFORMANCE ALLOCATIONS

To provide the Service with the appropriate context for the analysis that follows, we briefly summarize the structure, governance, and relevant terms of ICM and its general partner.

Fund Formation and Organization. Ironside Capital Management LP is a Delaware limited partnership formed on June 14, 2016, pursuant to a Certificate of Limited Partnership filed with the Delaware Secretary of State. ICM is governed by the Amended and Restated Agreement of Limited Partnership of Ironside Capital Management LP, dated as of June 14, 2016, as amended (the "LPA"), a copy of which was provided to the Service in connection with ICM's response to IDR #1. ICM's Delaware registered agent is Capitol Statutory Services LLC, located at 1209 Orange Street, Wilmington, Delaware 19801. The Fund maintains its principal office and headquarters at 590 Madison Avenue, 28th Floor, New York, New York 10022.

General Partner. The general partner of ICM is Ironside Capital GP LLC (EIN: 83-2741890), a Delaware limited liability company (the "GP" or "Ironside Capital GP"). The managing members of the GP are:

• Desmond R. Calloway, Founder and Chief Investment Officer, holding a sixty-two percent (62%) membership interest in the GP; and

• Priya Venkatesh, Chief Operating Officer and Chief Financial Officer, holding a twenty-eight percent (28%) membership interest in the GP.

The remaining ten percent (10%) membership interest in the GP is held by certain other GP members whose identities were provided to the Service in connection with ICM's response to IDR #1. All GP members participate in the management of the Fund in their respective capacities and perform substantial services in connection with ICM's asset management activities.

Fund Operations and Service Providers. ICM employs a multi-strategy investment approach encompassing global macro, event-driven equity, and credit strategies. The Fund's key service providers include:

• Prime Broker and Custodian: Ridgeline Securities LLC

• Fund Administrator: Greystone Fund Administration LLC

• Independent Auditor and Tax Return Preparer: Borwick Craine & Associates LLP (Elliot Navarro, CPA, engagement partner for tax)

Assets Under Management. As of December 31, 2021, ICM reported total assets under management ("AUM") of approximately $3.82 billion. As of that date, the Fund had forty-seven (47) limited partners in addition to the GP.

Performance Allocations — Carried Interest. Pursuant to Section 5.2 of the LPA (the "Performance Allocation" provision), the GP is entitled to a performance allocation (commonly referred to as "carried interest") equal to twenty percent (20%) of the Fund's net investment profits above an eight percent (8%) annualized preferred return hurdle (the "Hurdle Rate"). The LPA further provides for a full catch-up provision, under which, once the limited partners have received their preferred return, one hundred percent (100%) of additional profits are allocated to the GP until the GP has received an aggregate allocation equal to twenty percent (20%) of total net investment profits. Excerpts from the relevant LPA provisions — specifically Sections 5.2 (Performance Allocation), 5.3 (Allocation of Gains and Losses), and the related definitional sections — are enclosed herewith as Exhibit D.

2021 Fund Performance and Performance Allocation. For the tax year ended December 31, 2021, ICM achieved a gross fund return of approximately 18.7%. In connection with this performance, total performance allocations to the GP for the 2021 tax year were $94.3 million. This amount was reflected on the Fund's 2021 Form 1065 (U.S. Return of Partnership Income) and on the Schedule K-1 (Form 1065) issued to Ironside Capital GP LLC for the 2021 tax year.

Filing of 2021 Form 1065. ICM's 2021 Form 1065 was filed on extension on September 15, 2022. The return was prepared by Borwick Craine & Associates LLP under the direction of Elliot Navarro, CPA, as engagement partner for tax.

II. SUMMARY OF ISSUE UNDER EXAMINATION

IDR #3 addresses the Service's inquiry into whether $38.7 million of the $94.3 million in total performance allocations made to Ironside Capital GP LLC for the 2021 tax year qualifies for long-term capital gain treatment under IRC § 1061. This $38.7 million represents the aggregate gains from fourteen (14) specific investment positions that were liquidated during the 2021 tax year and that the Service has identified for detailed holding period scrutiny.

Section 1061 of the Code, enacted as part of the Tax Cuts and Jobs Act of 2017 (Public Law No. 115-97), imposes a three-year holding period requirement — in lieu of the standard one-year holding period generally applicable under IRC § 1222 — for certain capital gains that are allocable to an "applicable partnership interest" ("API") to qualify for treatment as long-term capital gains. If the underlying assets generating such gains were held for three years or less at the time of disposition, the gains must be recharacterized as short-term capital gains, irrespective of whether the general one-year holding period for long-term capital gain treatment under IRC § 1222 has been satisfied.

The Service has identified fourteen (14) specific positions disposed of during the 2021 tax year and has questioned whether these positions met the three-year holding period threshold required by IRC § 1061 for the associated gains to be treated as long-term capital gains when allocated to the GP as carried interest. If the positions were held for three years or less, the $38.7 million in gains allocable to the GP's carried interest would be recharacterized from long-term capital gain (currently taxed at the maximum federal rate of 20%, plus the 3.8% net investment income tax) to short-term capital gain (taxed at the maximum federal ordinary income rate of 37%, plus the 3.8% net investment income tax). The potential incremental federal income tax impact to the GP and its members arising from such recharacterization would be approximately $6.579 million, calculated as the $38.7 million in gains multiplied by the 17% differential between the 37% ordinary income rate and the 20% long-term capital gains rate.

ICM's Position. It is ICM's position that all fourteen (14) challenged positions exceeded the IRC § 1061 three-year holding period requirement at the time of their respective dispositions during 2021. The long-term capital gain treatment reported on ICM's 2021 Form 1065 and the related Schedules K-1 issued to Ironside Capital GP LLC and the Fund's limited partners is correct as filed. The enclosed documentation, including trade confirmations from ICM's prime broker (Ridgeline Securities LLC), the detailed holding period schedule prepared by Robert Jansen of Calderwood & Harkness LLP, and supporting workpapers from Borwick Craine & Associates LLP, substantiate this position in full.

III. APPLICABLE LEGAL FRAMEWORK

A. IRC § 1061 — Partnership Interests Held in Connection with the Performance of Services

Section 1061(a) of the Code provides the operative rule governing the tax treatment of net long-term capital gain with respect to an applicable partnership interest. Specifically, IRC § 1061(a) states:

"If one or more applicable partnership interests are held by a taxpayer at any time during the taxable year, the excess (if any) of — (A) the taxpayer's net long-term capital gain with respect to such interests for such taxable year, over (B) the taxpayer's net long-term capital gain with respect to such interests for such taxable year computed by applying paragraphs (3) and (4) of section 1222 by substituting '3 years' for '1 year,' shall be treated as short-term capital gain, notwithstanding section 83 or any election in effect under section 83(b)."

In practical terms, this provision requires that, for gains allocable to an API to retain their character as long-term capital gains, the underlying assets generating such gains must have been held for more than three years — rather than the one-year period generally applicable under IRC § 1222.

An "applicable partnership interest" is defined under IRC § 1061(c)(1) as any interest in a partnership which is transferred to (or is held by) the taxpayer, directly or indirectly, in connection with the performance of substantial services by the taxpayer, or any other related person, in any applicable trade or business. An "applicable trade or business" is defined under IRC § 1061(c)(2) as any activity conducted on a regular, continuous, and substantial basis which, regardless of whether the activity is conducted in one or more entities, consists in whole or in part of (A) raising or returning capital, and (B) either (i) investing in (or disposing of) specified assets (or identifying specified assets for such investing or disposition), or (ii) developing specified assets.

ICM does not dispute that the GP's interest in the Fund constitutes an "applicable partnership interest" within the meaning of IRC § 1061(c)(1). The GP's partnership interest was received in connection with the performance of substantial investment management services by Desmond R. Calloway, Priya Venkatesh, and other GP members, and the Fund's activities constitute an "applicable trade or business" within the meaning of IRC § 1061(c)(2). The sole question at issue is whether the underlying assets — the fourteen (14) challenged positions — satisfied the three-year holding period requirement.

It is critical to note that the three-year holding period mandated by IRC § 1061 is measured at the asset level. That is, the relevant inquiry is the holding period of the underlying partnership assets that generated the gains, not the holding period of the partnership interest itself. This distinction is significant because it requires a trade-by-trade analysis of the acquisition and disposition dates for each asset generating gains that are allocated to the GP as carried interest. The analysis enclosed herewith as Exhibit C undertakes precisely this asset-level inquiry.

B. Treasury Regulation § 1.1061 — Final Regulations

The Treasury Department and the IRS published final regulations under IRC § 1061 in Treasury Decision 9945, 86 Fed. Reg. 5,450 (January 19, 2021) (the "Final Regulations"). The Final Regulations, codified at Treas. Reg. § 1.1061-1 through § 1.1061-6, provide detailed rules for determining the holding period of assets held by a partnership for purposes of the three-year holding period requirement.

Of particular relevance to this response are the following provisions of the Final Regulations:

(i) One Year Disposition Amount and Three Year Disposition Amount. Treasury Regulation § 1.1061-4 establishes the framework for calculating the "One Year Disposition Amount" and the "Three Year Disposition Amount." The One Year Disposition Amount is the aggregate amount of net long-term capital gain (determined under the standard one-year holding period of IRC § 1222) recognized with respect to assets held by the partnership for more than one year but not more than three years. The Three Year Disposition Amount is the aggregate amount of net long-term capital gain recognized with respect to assets held for more than three years. The excess of the One Year Disposition Amount over the Three Year Disposition Amount is the amount subject to recharacterization as short-term capital gain under IRC § 1061(a). In ICM's case, because all fourteen (14) challenged positions were held for more than three years, the Three Year Disposition Amount equals the One Year Disposition Amount for these positions, and no recharacterization is required.

(ii) API Gain and API Loss. Treasury Regulation § 1.1061-3 provides rules for determining "API Gain" and "API Loss" — the amounts of long-term capital gain and long-term capital loss, respectively, that are allocable to an applicable partnership interest. These amounts are computed by reference to the distributive share of gain or loss allocable to the API holder. The $38.7 million at issue in this examination represents API Gain allocable to Ironside Capital GP LLC, as the holder of the applicable partnership interest in ICM.

(iii) Look-Through Rules for Tiered Partnerships. Treasury Regulation § 1.1061-4(b)(9) provides look-through rules for tiered partnership structures. While ICM holds certain investments through subsidiary entities, the fourteen (14) challenged positions at issue in this IDR response were held directly by ICM (and not through tiered partnership structures), and accordingly the look-through rules are not directly applicable to the positions addressed herein. To the extent the Service has questions regarding investments held through tiered structures, ICM reserves the right to address those matters in future correspondence.

C. Holding Period Determination Rules

The determination of holding period for purposes of IRC § 1061 follows the general rules set forth in IRC § 1223, subject to the substitution of the three-year period for the standard one-year period.

IRC § 1223(1) provides for the "tacking" of holding periods in certain circumstances — for example, where property is received in a tax-free exchange, the holding period of the property received includes the holding period of the property exchanged. However, the fourteen (14) challenged positions were each acquired by ICM through ordinary open-market purchases, and no tacking issues arise with respect to these positions. The holding period for each position commences on the day after the trade date on which the security was acquired and ends on (and includes) the trade date on which the security was disposed of, consistent with standard securities holding period conventions. See Rev. Rul. 66-7, 1966-1 C.B. 188; cf. IRC § 1223; Treas. Reg. § 1.1223-1.

The establishment of the holding period for each position depends upon the availability and reliability of contemporaneous records documenting the acquisition and disposition of each asset. In this case, the trade confirmations issued by Ridgeline Securities LLC — ICM's prime broker and custodian — constitute the primary contemporaneous documentary evidence of the trade dates for each acquisition and disposition. These confirmations, Bates-stamped for ease of reference, are enclosed as Exhibit B and provide definitive evidence of the acquisition dates, disposition dates, quantities, prices, and settlement terms for each of the fourteen (14) challenged positions.

IV. METHODOLOGY FOR HOLDING PERIOD ANALYSIS

Robert Jansen, an associate in the Tax Department of Calderwood & Harkness LLP, prepared the enclosed trade-level holding period analysis (Exhibit C) in connection with this response. The analysis was conducted using the following methodology, which is described here in detail to provide the Service with full transparency regarding the basis for ICM's position.

Scope of Analysis. The analysis covers all fourteen (14) positions specifically identified by the Service in IDR #3 as positions for which the Service has questioned the holding period. For each position, the analysis identifies and documents the following data points:

(a) The specific security or instrument (identified by name, CUSIP/ISIN, and position identifier);

(b) The original acquisition date (trade date);

(d) The calculated holding period, expressed in both calendar days and fractional years;

(e) The acquisition cost basis (including transaction costs);

(f) The sale or disposition proceeds (net of transaction costs);

(g) The realized gain or loss on the disposition; and

(h) The classification of the gain or loss as long-term or short-term under the three-year standard of IRC § 1061.

Source Data and Verification. The data underlying the holding period analysis was obtained from the following sources, each of which provides an independent record of ICM's trading activity:

First, the primary source data consists of trade confirmations and monthly account statements obtained directly from Ridgeline Securities LLC, ICM's prime broker and custodian. Ridgeline Securities LLC is a registered broker-dealer subject to regulation by the Financial Industry Regulatory Authority ("FINRA") and the Securities and Exchange Commission ("SEC"), and is required by applicable regulations to maintain accurate records of all transactions executed on behalf of its customers. The trade confirmations from Ridgeline constitute contemporaneous, third-party documentary evidence of the acquisition and disposition dates, quantities, and prices for each of the fourteen (14) challenged positions. These confirmations have been Bates-stamped (Bates Nos. ICM-IDR3-000001 through ICM-IDR3-000487) and are enclosed as Exhibit B.

Second, the Ridgeline trade confirmation data was cross-referenced against the internal fund accounting records maintained by Greystone Fund Administration LLC, ICM's independent fund administrator. Greystone's records include daily net asset value ("NAV") calculations, position-level profit and loss reports, and transaction-level detail for all investment activity. The cross-referencing confirmed that the acquisition and disposition dates reflected in Greystone's records are consistent with the trade confirmations from Ridgeline in all material respects.

Third, the data was independently verified against the tax workpapers prepared by Borwick Craine & Associates LLP in connection with the preparation of ICM's 2021 Form 1065. Fenwick Craine's workpapers include a complete schedule of all dispositions during the 2021 tax year, with holding period calculations for each position, and these workpapers were relied upon by Fenwick Craine in classifying gains as long-term or short-term for purposes of the Form 1065 and the related Schedules K-1. The holding period calculations in Exhibit C are consistent with those in Fenwick Craine's workpapers.

Holding Period Convention. Consistent with standard securities holding period conventions and applicable Treasury guidance, the holding period for each position was calculated from the trade date of acquisition to the trade date of disposition. The day after the acquisition trade date is treated as the first day of the holding period, and the disposition trade date is included in the holding period. This methodology follows the approach set forth in Revenue Ruling 66-7, 1966-1 C.B. 188, and is consistent with the treatment applied by Borwick Craine & Associates LLP in preparing ICM's 2021 Form 1065.

Results of Analysis. The analysis confirms that all fourteen (14) challenged positions had holding periods in excess of three years — that is, in excess of 1,095 days — at the time of their respective dispositions during the 2021 tax year. Accordingly, the gains from these positions satisfy the three-year holding period requirement of IRC § 1061, and their classification as long-term capital gains on ICM's 2021 Form 1065 and the related Schedules K-1 is correct.

V. ITEM-BY-ITEM RESPONSES TO IDR #3

Set forth below are ICM's responses to each of the twelve (12) items contained in IDR #3.

Item 1.

Request: Identification of all assets disposed of during the 2021 tax year for which gain was allocated to Ironside Capital GP LLC as a performance allocation (carried interest).

Response: Enclosed as Exhibit A is a comprehensive schedule listing all assets disposed of by ICM during the 2021 tax year that generated realized gains allocated, in whole or in part, to Ironside Capital GP LLC as performance allocations under LPA § 5.2. The schedule includes the security or instrument name, CUSIP/ISIN (where applicable), acquisition date, disposition date, cost basis, sale proceeds, and realized gain for each position. The fourteen (14) positions specifically identified by the Service in IDR #3 for holding period scrutiny are highlighted on Exhibit A and correspond to the positions addressed in the detailed holding period analysis set forth in Exhibit C.

Item 2.

Request: For each asset identified in response to Item 1, the original acquisition date.

Response: The original acquisition dates for all fourteen (14) challenged positions are set forth in the Holding Period Schedule enclosed as Exhibit C. The acquisition dates for these positions range from as early as September 7, 2016, to as late as November 14, 2018. All acquisition dates fall more than three years prior to the respective 2021 disposition dates, thereby satisfying the three-year holding period requirement of IRC § 1061. The acquisition dates reflected in Exhibit C are supported by the trade confirmations from Ridgeline Securities LLC enclosed as Exhibit B.

Item 3.

Request: For each asset identified in response to Item 1, the disposition date.

Response: The disposition dates for all fourteen (14) challenged positions are set forth in the Holding Period Schedule enclosed as Exhibit C. Dispositions of the fourteen positions occurred at various points throughout calendar year 2021, with disposition dates ranging from February 2, 2021, through November 18, 2021. Each disposition date is cross-referenced to the corresponding trade confirmation from Ridgeline Securities LLC in Exhibit B.

Item 4.

Request: Trade confirmations or settlement statements evidencing the acquisition of each identified asset.

Response: Enclosed as part of Exhibit B are the Bates-stamped trade confirmations from Ridgeline Securities LLC documenting the original acquisition of each of the fourteen (14) challenged positions. Each acquisition trade confirmation reflects the trade date, settlement date, security description, quantity, price per unit, and total acquisition cost (including commissions and other transaction costs). The trade confirmations are organized by position and are cross-referenced to the corresponding entries in the Holding Period Schedule (Exhibit C) by Bates number.

Item 5.

Request: Trade confirmations or settlement statements evidencing the disposition of each identified asset.

Response: Also enclosed as part of Exhibit B are the Bates-stamped trade confirmations from Ridgeline Securities LLC documenting the disposition of each of the fourteen (14) challenged positions. Each disposition trade confirmation reflects the trade date, settlement date, security description, quantity, price per unit, and total sale proceeds (net of commissions and other transaction costs). The disposition confirmations are paired with and immediately follow the corresponding acquisition confirmations for each position within Exhibit B to facilitate the Service's review.

Item 6.

Request: Calculation of the holding period for each asset identified, including the methodology used to determine the holding period.

Response: The holding period calculations for all fourteen (14) challenged positions are set forth in the Holding Period Schedule enclosed as Exhibit C. The methodology used to calculate the holding period is described in detail in Section IV of this letter (above). In summary, the holding period for each position was calculated from the trade date of acquisition to the trade date of disposition, with the day after the acquisition trade date counted as the first day of the holding period and the disposition trade date included in the holding period. This methodology is consistent with Revenue Ruling 66-7, 1966-1 C.B. 188, and with the approach applied by Borwick Craine & Associates LLP in preparing ICM's 2021 Form 1065. The Holding Period Schedule includes the holding period expressed in both calendar days and fractional years for each of the fourteen positions. All fourteen positions reflect holding periods in excess of 1,095 days (three years).

Item 7.

Request: Documentation of the cost basis for each asset identified.

Response: The cost basis for each of the fourteen (14) challenged positions is set forth in the Holding Period Schedule enclosed as Exhibit C. Cost basis figures reflect the actual acquisition cost of each position, inclusive of commissions, execution fees, and other transaction costs incurred at the time of acquisition. The cost basis figures in Exhibit C are supported by and consistent with the acquisition trade confirmations from Ridgeline Securities LLC enclosed as Exhibit B, which reflect the per-unit acquisition price, quantity, and total cost (including transaction costs) for each position.

Item 8.

Request: Documentation of sale or disposition proceeds for each asset identified.

Response: The sale or disposition proceeds for each of the fourteen (14) challenged positions are set forth in the Holding Period Schedule enclosed as Exhibit C. Proceeds figures reflect the actual gross sale price, net of commissions, execution fees, and other transaction costs incurred at the time of disposition. The proceeds figures in Exhibit C are supported by and consistent with the disposition trade confirmations from Ridgeline Securities LLC enclosed as Exhibit B, which reflect the per-unit sale price, quantity, and total proceeds (net of transaction costs) for each position.

Item 9.

Request: Calculation of gain or loss for each asset identified.

Response: The realized gain or loss for each of the fourteen (14) challenged positions is set forth in the Holding Period Schedule enclosed as Exhibit C. Gain or loss for each position was calculated as the difference between the disposition proceeds (net of transaction costs) and the acquisition cost basis (inclusive of transaction costs). The total aggregate realized gains from the fourteen challenged positions amount to $38.7 million. Each of these gains is classified as a long-term capital gain under the three-year holding period standard of IRC § 1061, as each of the fourteen positions was held for more than three years (1,095+ days) at the time of disposition. No position among the fourteen generated a realized loss.

Item 10.

Request: Copies of the partnership agreement provisions governing the allocation of performance-based compensation, including carried interest.

Response: Enclosed as Exhibit D are excerpts from the Amended and Restated Agreement of Limited Partnership of Ironside Capital Management LP, specifically the following sections:

• Section 5.2 — Performance Allocation: This section sets forth the terms of the GP's carried interest, providing for a performance allocation equal to twenty percent (20%) of the Fund's net investment profits above an eight percent (8%) annualized preferred return hurdle (the Hurdle Rate), with a full catch-up provision.

• Section 5.3 — Allocation of Gains and Losses: This section provides the mechanics for allocating realized and unrealized gains and losses among the partners, including the allocation of capital gains and losses to the GP's capital account in respect of the performance allocation.

• Related Definitions: Excerpted definitional provisions relevant to the Performance Allocation and Allocation of Gains and Losses sections, including the definitions of "Net Investment Profits," "Hurdle Rate," "Catch-Up Allocation," "Performance Allocation," and "High Water Mark."

The full LPA was previously provided to the Service in connection with ICM's response to IDR #1 on May 19, 2023. The excerpts enclosed as Exhibit D are provided for the Service's convenience and are consistent with the complete LPA previously produced.

Item 11.

Request: Schedule K-1 (Form 1065) issued to Ironside Capital GP LLC for the 2021 tax year, showing the allocation of long-term and short-term capital gains.

Response: Enclosed as Exhibit E is a copy of the 2021 Schedule K-1 (Form 1065) issued by ICM to Ironside Capital GP LLC (EIN: 83-2741890) for the tax year ended December 31, 2021. The Schedule K-1 reflects the $94.3 million total performance allocation to the GP, inclusive of both long-term and short-term capital gains, ordinary income, and other items of partnership income, gain, loss, deduction, and credit allocable to the GP. The $38.7 million at issue in this examination is a subset of the total performance allocation and is properly reported as long-term capital gain on the Schedule K-1, consistent with the holding period analysis set forth in Exhibit C and the three-year holding period requirement of IRC § 1061.

Item 12.

Request: Any legal memoranda, opinion letters, or tax analyses prepared in connection with the Fund's IRC § 1061 compliance for the tax year 2021.

Response: ICM's position on IRC § 1061 compliance for the 2021 tax year was determined in connection with the preparation of the Fund's 2021 Form 1065 by Borwick Craine & Associates LLP, under the direction of Elliot Navarro, CPA, engagement partner for tax. The holding period determinations were based on contemporaneous trade records maintained by Ridgeline Securities LLC and the straightforward application of the three-year holding period to each position disposed of during the 2021 tax year. No separate formal legal memorandum or opinion letter was prepared prior to the commencement of this examination, as the holding period analysis was a factual determination made in the ordinary course of tax return preparation and did not present interpretive uncertainty warranting a formal legal opinion.

However, in light of the Service's inquiries in connection with this examination, Calderwood & Harkness LLP intends to submit a comprehensive legal memorandum addressing all examination issues, including the IRC § 1061 holding period issue, under separate cover. We anticipate that this memorandum will be submitted on or about September 6, 2023, and will provide a detailed legal analysis supporting ICM's position on each issue raised during the examination.

VI. NARRATIVE DISCUSSION — TRADE-LEVEL HOLDING PERIOD ANALYSIS

A. Overview of the Fourteen Challenged Positions

The fourteen (14) positions identified by the Service in IDR #3 span the breadth of ICM's multi-strategy investment approach. The challenged positions include investments across ICM's three principal strategy verticals: global macro positions (including sovereign debt instruments and currency-linked structured products), event-driven equity positions (including common stock and convertible securities acquired in connection with anticipated corporate events such as mergers, acquisitions, and restructurings), and credit instruments (including corporate bonds and distressed debt).

All fourteen positions were originally acquired between September 2016 and November 2018. This timeframe corresponds to the early years of ICM's operations following the Fund's formation on June 14, 2016. The acquisitions were made in the ordinary course of ICM's investment activities and were documented contemporaneously through trade confirmations issued by Ridgeline Securities LLC, as enclosed in Exhibit B.

Dispositions of the fourteen positions occurred at various times throughout calendar year 2021, with disposition dates ranging from early February 2021 to mid-November 2021. In each case, the investment thesis underlying the original acquisition had been fully realized, and the disposition was made in the ordinary course of portfolio management.

The holding periods for the fourteen positions range from the shortest holding period of approximately 1,107 days (approximately 3.03 years) to the longest holding period of approximately 1,898 days (approximately 5.20 years). In every case, the holding period exceeds the three-year (1,095-day) threshold required by IRC § 1061 for the gain to retain its character as long-term capital gain when allocated to the GP as carried interest.

B. Summary of Aggregate Results

The following table summarizes the aggregate results of the holding period analysis for the fourteen challenged positions:

As reflected in the table above, not a single one of the fourteen challenged positions falls below the three-year holding period threshold. The classification of all $38.7 million in gains as long-term capital gains on ICM's 2021 Form 1065 and the related Schedules K-1 is correct, and no recharacterization under IRC § 1061(a) is warranted.

C. Verification and Audit Trail

The reliability and integrity of the holding period analysis are supported by a multi-layered verification process:

1. Primary Source — Ridgeline Securities LLC. The trade-level data forming the foundation of the analysis was sourced directly from the prime brokerage records of Ridgeline Securities LLC. As ICM's prime broker and custodian, Ridgeline maintains a complete and independent record of all securities transactions executed on behalf of ICM, including trade dates, settlement dates, quantities, prices, and counterparty information. Ridgeline's records constitute the most authoritative contemporaneous evidence of the acquisition and disposition dates for each position. The relevant trade confirmations have been Bates-stamped and enclosed as Exhibit B for the Service's review.

2. Cross-Reference — Greystone Fund Administration LLC. The trade data from Ridgeline was cross-referenced against the internal fund accounting records maintained by Greystone Fund Administration LLC, ICM's independent fund administrator. Greystone independently records all investment transactions for purposes of daily NAV calculations, investor reporting, and regulatory compliance. The cross-referencing process confirmed that the acquisition and disposition dates in Greystone's records are consistent with those reflected in Ridgeline's trade confirmations for all fourteen challenged positions.

3. Independent Verification — Borwick Craine & Associates LLP. As a final layer of verification, the holding period data was compared against the tax workpapers prepared by Borwick Craine & Associates LLP in connection with the preparation of ICM's 2021 Form 1065. Fenwick Craine independently obtained trade data from Ridgeline Securities LLC and Greystone Fund Administration LLC and performed its own holding period calculations for purposes of classifying gains as long-term or short-term on the Form 1065 and the related Schedules K-1. The holding period calculations in Exhibit C are consistent with those in Fenwick Craine's workpapers, providing an additional independent confirmation of the accuracy of the analysis.

The multi-source verification process described above provides a robust and complete audit trail supporting the holding period determinations for each of the fourteen challenged positions. We are confident that the documentation enclosed herewith fully substantiates ICM's position that all fourteen positions satisfied the three-year holding period requirement of IRC § 1061.

VII. EXHIBIT LIST

The following exhibits are enclosed with this letter and form part of ICM's response to IDR #3:

VIII. RESERVATION OF RIGHTS

ICM expressly reserves all rights in connection with this examination, including but not limited to the following:

(a) ICM reserves the right to supplement this response at any time with additional documentation, data, analysis, or argument, whether in response to further requests from the Service or on its own initiative.

(b) ICM reserves the right to raise additional legal and factual arguments in support of the positions reported on its 2021 Form 1065, including arguments not addressed in this response or in the enclosed exhibits.

(c) ICM reserves the right to assert any and all applicable privileges, including the attorney-client privilege and the work product doctrine, with respect to any communications, documents, or materials that may be responsive to past, current, or future requests from the Service. Nothing in this response or the enclosed materials should be construed as a waiver, express or implied, of any such privilege or protection. The provision of factual trade data and holding period calculations does not constitute a waiver of any privilege that may attach to legal analysis, strategy discussions, or other communications between ICM and its counsel.

(d) ICM reserves the right to challenge any proposed adjustment, including through the administrative appeals process and, if necessary, through judicial proceedings.

As noted above, Calderwood & Harkness LLP intends to submit a comprehensive legal memorandum addressing all examination issues, including the IRC § 1061 holding period issue addressed herein, under separate cover. We anticipate that this memorandum will be submitted to the Service on or about September 6, 2023. ICM reserves all rights with respect to the legal arguments and analysis that will be set forth in that memorandum.

IX. REQUEST FOR COMMUNICATION AND NEXT STEPS

We respectfully request that Agent Albrecht, and any other members of the examination team, direct any questions or follow-up requests regarding this response and the enclosed materials to the undersigned or to Leila Nazari at Calderwood & Harkness LLP. Our contact information is as follows:

Sylvia Hartwell Partner, Tax Department Calderwood & Harkness LLP 1251 Avenue of the Americas, 40th Floor New York, New York 10020 Telephone: (212) 558-4127

Email: shartwell@calderwoodharkness.com

Leila Nazari Counsel, Tax Department Calderwood & Harkness LLP 1251 Avenue of the Americas, 40th Floor New York, New York 10020 Telephone: (212) 558-4293

Email: lnazari@calderwoodharkness.com

In addition, we note that Robert Jansen, the associate at Calderwood & Harkness LLP who prepared the trade-level holding period analysis enclosed as Exhibit C, is available to address any follow-up questions the Service may have regarding the schedules, the underlying data, or the methodology used in the analysis. Mr. Jansen can be reached at (212) 558-4511 or rjansen@calderwoodharkness.com.

We also reference the productive in-person meeting held at the IRS Manhattan Campus at 290 Broadway on July 14, 2023, which was attended by the undersigned, Leila Nazari, Agent Albrecht, Revenue Agent Dawn M. Petrovic, and Attorney Eric S. Lundgren of the IRS Office of Chief Counsel. At that meeting, the parties discussed the holding period documentation at issue, and this response was identified as a follow-up deliverable to be submitted by ICM. We believe this response fully addresses the items discussed at that meeting and satisfies the commitments made by ICM's representatives at that time.

We remain available to meet with the examination team, whether in person or by telephone, at the Service's convenience to discuss any aspect of this response or the broader examination. We are committed to cooperating fully with the Service throughout this process and to providing any additional information or documentation that may be reasonably required.

We trust that the foregoing response and the enclosed exhibits fully address each of the twelve items in IDR #3 and provide the Service with the documentation necessary to confirm the propriety of ICM's holding period determinations and the long-term capital gain treatment reported on the Fund's 2021 Form 1065 and the related Schedules K-1. We look forward to working with the examination team toward a prompt and satisfactory resolution of this matter.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Sylvia Hartwell Partner, Tax Department

1251 Avenue of the Americas, 40th Floor New York, New York 10020 Telephone: (212) 558-4127

Email: shartwell@calderwoodharkness.com

Enclosures:

Exhibit A — Schedule of All Assets Disposed of in 2021 Generating Gain Allocated to Ironside Capital GP LLC

Exhibit B — Ridgeline Securities LLC Trade Confirmations (Bates Nos. ICM-IDR3-000001 through ICM-IDR3-000487)

Exhibit C — Holding Period Schedule — Trade-Level Analysis of 14 Challenged Positions

Exhibit D — Excerpts from the Amended and Restated Agreement of Limited Partnership of Ironside Capital Management LP (§§ 5.2, 5.3, and Related Definitions)

Exhibit E — 2021 Schedule K-1 (Form 1065) Issued to Ironside Capital GP LLC (EIN: 83-2741890)

cc:

Dawn M. Petrovic, Revenue Agent, Internal Revenue Service, Large Business & International Division

Eric S. Lundgren, Attorney, Internal Revenue Service, Office of Chief Counsel, Large Business & International Branch 5

Marcus Trent, General Counsel, Ironside Capital Management LP

Leila Nazari, Counsel, Calderwood & Harkness LLP

Robert Jansen, Associate, Calderwood & Harkness LLP

Metric	Amount / Result
Number of challenged positions	14
Total aggregate realized gains	$38,700,000
Positions with holding period > 3 years (1,095 days)	14 of 14
Positions with holding period ≤ 3 years (1,095 days)	0 of 14
Shortest holding period among 14 positions	Approximately 1,107 days (3.03 years)
Longest holding period among 14 positions	Approximately 1,898 days (5.20 years)
Classification under IRC § 1061	Long-term capital gain (all 14 positions)
Reported on 2021 Form 1065 and Schedule K-1	Long-term capital gain
Recharacterization to short-term capital gain required	None
Exhibit	Description
Exhibit A	Schedule of All Assets Disposed of in 2021 Generating Gain Allocated to Ironside Capital GP LLC — comprehensive listing of all disposed positions generating realized gains allocated to the GP as performance allocations; the fourteen (14) challenged positions are highlighted
Exhibit B	Ridgeline Securities LLC Trade Confirmations — Bates-stamped trade confirmations (Bates Nos. ICM-IDR3-000001 through ICM-IDR3-000487) documenting both the original acquisition and the disposition of each of the fourteen (14) challenged positions; acquisition and disposition confirmations are paired by position for ease of reference
Exhibit C	Holding Period Schedule — Trade-Level Analysis of 14 Challenged Positions, prepared by Robert Jansen, Calderwood & Harkness LLP; includes the following columns for each position: position identifier, security/instrument name, CUSIP/ISIN, acquisition date (trade date), disposition date (trade date), holding period (calendar days), holding period (fractional years), acquisition cost basis, sale/disposition proceeds, realized gain or loss, LTCG vs. STCG classification under IRC § 1061, and cross-reference to Ridgeline trade confirmation Bates numbers
Exhibit D	Excerpts from the Amended and Restated Agreement of Limited Partnership of Ironside Capital Management LP — specifically LPA § 5.2 (Performance Allocation), § 5.3 (Allocation of Gains and Losses), and related definitional provisions
Exhibit E	2021 Schedule K-1 (Form 1065) issued by ICM to Ironside Capital GP LLC (EIN: 83-2741890) for the tax year ended December 31, 2021

CALDERWOOD & HARKNESS LLP Attorneys at Law
1251 Avenue of the Americas, 40th Floor New York, New York 10020
Telephone: (212) 558-4000 Facsimile: (212) 558-3588
www.calderwoodharkness.com
July 28, 2023
VIA HAND DELIVERY AND ELECTRONIC MAIL
Timothy J. Albrecht Revenue Agent (Badge No. 74-28193) Internal Revenue Service Large Business & International Division 290 Broadway New York, New York 10007
Re: Ironside Capital Management LP (EIN: 83-2741956) — Response to Information Document Request #3; Tax Year Ended December 31, 2021; Carried Interest Holding Period Documentation Under IRC § 1061
Dear Agent Albrecht:
We write on behalf of our client, Ironside Capital Management LP ("ICM" or the "Fund"), a Delaware limited partnership, in response to Information Document Request #3 ("IDR #3") issued by the Internal Revenue Service ("IRS" or the "Service") in connection with the examination of ICM's federal income tax return for the tax year ended December 31, 2021. Our authority to represent ICM in this matter is confirmed by the Form 2848 (Power of Attorney and Declaration of Representative) filed with the Internal Revenue Service on April 14, 2023, which designates the undersigned, Sylvia Hartwell, and Leila Nazari, both of Calderwood & Harkness LLP, as ICM's authorized representatives for all matters arising in connection with this examination.
We acknowledge receipt of IDR #3 on July 11, 2023. IDR #3 consists of twelve (12) separately numbered items, each directed at the documentation and substantiation of the holding periods of certain assets disposed of during the 2021 tax year, the gains from which were allocated to Ironside Capital GP LLC (the Fund's general partner) as carried interest (performance allocations), and the characterization of such gains as long-term capital gains under Section 1061 of the Internal Revenue Code of 1986, as amended (the "Code" or "IRC"). This letter and the enclosed materials constitute ICM's complete response to IDR #3.
For context, we note that this response follows and builds upon ICM's two prior IDR responses submitted during the course of this examination: ICM's response to IDR #1, submitted on May 19, 2023, which addressed the Service's initial requests for organizational documents, financial statements, and the Fund's 2021 Form 1065 and related schedules; and ICM's response to IDR #2, submitted on June 23, 2023, which addressed the Service's requests for detailed information regarding the Fund's investment activities, allocation methodology, and the identification of specific partners and their respective distributive shares. We also reference the in-person meeting held on July 14, 2023, at the IRS Manhattan Campus at 290 Broadway, New York, during which the parties discussed the holding period documentation at issue and this response was identified as a follow-up deliverable.
This response was prepared with the significant assistance of Robert Jansen, an associate in the Tax Department of Calderwood & Harkness LLP, who conducted the detailed trade-level holding period analysis set forth in the enclosed Exhibit C. The supporting trade-level data was sourced directly from the records of Ridgeline Securities LLC, ICM's prime broker and custodian, and was cross-referenced against the workpapers and tax return files of Borwick Craine & Associates LLP, ICM's independent auditor and tax return preparer. The engagement partner for tax at Borwick Craine & Associates LLP is Elliot Navarro, CPA, who oversaw the preparation of ICM's 2021 Form 1065 and the related Schedules K-1.
I. BACKGROUND — FUND STRUCTURE AND PERFORMANCE ALLOCATIONS
To provide the Service with the appropriate context for the analysis that follows, we briefly summarize the structure, governance, and relevant terms of ICM and its general partner.
Fund Formation and Organization. Ironside Capital Management LP is a Delaware limited partnership formed on June 14, 2016, pursuant to a Certificate of Limited Partnership filed with the Delaware Secretary of State. ICM is governed by the Amended and Restated Agreement of Limited Partnership of Ironside Capital Management LP, dated as of June 14, 2016, as amended (the "LPA"), a copy of which was provided to the Service in connection with ICM's response to IDR #1. ICM's Delaware registered agent is Capitol Statutory Services LLC, located at 1209 Orange Street, Wilmington, Delaware 19801. The Fund maintains its principal office and headquarters at 590 Madison Avenue, 28th Floor, New York, New York 10022.
General Partner. The general partner of ICM is Ironside Capital GP LLC (EIN: 83-2741890), a Delaware limited liability company (the "GP" or "Ironside Capital GP"). The managing members of the GP are:
• Desmond R. Calloway, Founder and Chief Investment Officer, holding a sixty-two percent (62%) membership interest in the GP; and
• Priya Venkatesh, Chief Operating Officer and Chief Financial Officer, holding a twenty-eight percent (28%) membership interest in the GP.
The remaining ten percent (10%) membership interest in the GP is held by certain other GP members whose identities were provided to the Service in connection with ICM's response to IDR #1. All GP members participate in the management of the Fund in their respective capacities and perform substantial services in connection with ICM's asset management activities.
Fund Operations and Service Providers. ICM employs a multi-strategy investment approach encompassing global macro, event-driven equity, and credit strategies. The Fund's key service providers include:
• Prime Broker and Custodian: Ridgeline Securities LLC
• Fund Administrator: Greystone Fund Administration LLC
• Independent Auditor and Tax Return Preparer: Borwick Craine & Associates LLP (Elliot Navarro, CPA, engagement partner for tax)
Assets Under Management. As of December 31, 2021, ICM reported total assets under management ("AUM") of approximately $3.82 billion. As of that date, the Fund had forty-seven (47) limited partners in addition to the GP.
Performance Allocations — Carried Interest. Pursuant to Section 5.2 of the LPA (the "Performance Allocation" provision), the GP is entitled to a performance allocation (commonly referred to as "carried interest") equal to twenty percent (20%) of the Fund's net investment profits above an eight percent (8%) annualized preferred return hurdle (the "Hurdle Rate"). The LPA further provides for a full catch-up provision, under which, once the limited partners have received their preferred return, one hundred percent (100%) of additional profits are allocated to the GP until the GP has received an aggregate allocation equal to twenty percent (20%) of total net investment profits. Excerpts from the relevant LPA provisions — specifically Sections 5.2 (Performance Allocation), 5.3 (Allocation of Gains and Losses), and the related definitional sections — are enclosed herewith as Exhibit D.
2021 Fund Performance and Performance Allocation. For the tax year ended December 31, 2021, ICM achieved a gross fund return of approximately 18.7%. In connection with this performance, total performance allocations to the GP for the 2021 tax year were $94.3 million. This amount was reflected on the Fund's 2021 Form 1065 (U.S. Return of Partnership Income) and on the Schedule K-1 (Form 1065) issued to Ironside Capital GP LLC for the 2021 tax year.
Filing of 2021 Form 1065. ICM's 2021 Form 1065 was filed on extension on September 15, 2022. The return was prepared by Borwick Craine & Associates LLP under the direction of Elliot Navarro, CPA, as engagement partner for tax.
II. SUMMARY OF ISSUE UNDER EXAMINATION
IDR #3 addresses the Service's inquiry into whether $38.7 million of the $94.3 million in total performance allocations made to Ironside Capital GP LLC for the 2021 tax year qualifies for long-term capital gain treatment under IRC § 1061. This $38.7 million represents the aggregate gains from fourteen (14) specific investment positions that were liquidated during the 2021 tax year and that the Service has identified for detailed holding period scrutiny.
Section 1061 of the Code, enacted as part of the Tax Cuts and Jobs Act of 2017 (Public Law No. 115-97), imposes a three-year holding period requirement — in lieu of the standard one-year holding period generally applicable under IRC § 1222 — for certain capital gains that are allocable to an "applicable partnership interest" ("API") to qualify for treatment as long-term capital gains. If the underlying assets generating such gains were held for three years or less at the time of disposition, the gains must be recharacterized as short-term capital gains, irrespective of whether the general one-year holding period for long-term capital gain treatment under IRC § 1222 has been satisfied.
The Service has identified fourteen (14) specific positions disposed of during the 2021 tax year and has questioned whether these positions met the three-year holding period threshold required by IRC § 1061 for the associated gains to be treated as long-term capital gains when allocated to the GP as carried interest. If the positions were held for three years or less, the $38.7 million in gains allocable to the GP's carried interest would be recharacterized from long-term capital gain (currently taxed at the maximum federal rate of 20%, plus the 3.8% net investment income tax) to short-term capital gain (taxed at the maximum federal ordinary income rate of 37%, plus the 3.8% net investment income tax). The potential incremental federal income tax impact to the GP and its members arising from such recharacterization would be approximately $6.579 million, calculated as the $38.7 million in gains multiplied by the 17% differential between the 37% ordinary income rate and the 20% long-term capital gains rate.
ICM's Position. It is ICM's position that all fourteen (14) challenged positions exceeded the IRC § 1061 three-year holding period requirement at the time of their respective dispositions during 2021. The long-term capital gain treatment reported on ICM's 2021 Form 1065 and the related Schedules K-1 issued to Ironside Capital GP LLC and the Fund's limited partners is correct as filed. The enclosed documentation, including trade confirmations from ICM's prime broker (Ridgeline Securities LLC), the detailed holding period schedule prepared by Robert Jansen of Calderwood & Harkness LLP, and supporting workpapers from Borwick Craine & Associates LLP, substantiate this position in full.
III. APPLICABLE LEGAL FRAMEWORK
A. IRC § 1061 — Partnership Interests Held in Connection with the Performance of Services
Section 1061(a) of the Code provides the operative rule governing the tax treatment of net long-term capital gain with respect to an applicable partnership interest. Specifically, IRC § 1061(a) states:
"If one or more applicable partnership interests are held by a taxpayer at any time during the taxable year, the excess (if any) of — (A) the taxpayer's net long-term capital gain with respect to such interests for such taxable year, over (B) the taxpayer's net long-term capital gain with respect to such interests for such taxable year computed by applying paragraphs (3) and (4) of section 1222 by substituting '3 years' for '1 year,' shall be treated as short-term capital gain, notwithstanding section 83 or any election in effect under section 83(b)."
In practical terms, this provision requires that, for gains allocable to an API to retain their character as long-term capital gains, the underlying assets generating such gains must have been held for more than three years — rather than the one-year period generally applicable under IRC § 1222.
An "applicable partnership interest" is defined under IRC § 1061(c)(1) as any interest in a partnership which is transferred to (or is held by) the taxpayer, directly or indirectly, in connection with the performance of substantial services by the taxpayer, or any other related person, in any applicable trade or business. An "applicable trade or business" is defined under IRC § 1061(c)(2) as any activity conducted on a regular, continuous, and substantial basis which, regardless of whether the activity is conducted in one or more entities, consists in whole or in part of (A) raising or returning capital, and (B) either (i) investing in (or disposing of) specified assets (or identifying specified assets for such investing or disposition), or (ii) developing specified assets.
ICM does not dispute that the GP's interest in the Fund constitutes an "applicable partnership interest" within the meaning of IRC § 1061(c)(1). The GP's partnership interest was received in connection with the performance of substantial investment management services by Desmond R. Calloway, Priya Venkatesh, and other GP members, and the Fund's activities constitute an "applicable trade or business" within the meaning of IRC § 1061(c)(2). The sole question at issue is whether the underlying assets — the fourteen (14) challenged positions — satisfied the three-year holding period requirement.
It is critical to note that the three-year holding period mandated by IRC § 1061 is measured at the asset level. That is, the relevant inquiry is the holding period of the underlying partnership assets that generated the gains, not the holding period of the partnership interest itself. This distinction is significant because it requires a trade-by-trade analysis of the acquisition and disposition dates for each asset generating gains that are allocated to the GP as carried interest. The analysis enclosed herewith as Exhibit C undertakes precisely this asset-level inquiry.
B. Treasury Regulation § 1.1061 — Final Regulations
The Treasury Department and the IRS published final regulations under IRC § 1061 in Treasury Decision 9945, 86 Fed. Reg. 5,450 (January 19, 2021) (the "Final Regulations"). The Final Regulations, codified at Treas. Reg. § 1.1061-1 through § 1.1061-6, provide detailed rules for determining the holding period of assets held by a partnership for purposes of the three-year holding period requirement.
Of particular relevance to this response are the following provisions of the Final Regulations:
(i) One Year Disposition Amount and Three Year Disposition Amount. Treasury Regulation § 1.1061-4 establishes the framework for calculating the "One Year Disposition Amount" and the "Three Year Disposition Amount." The One Year Disposition Amount is the aggregate amount of net long-term capital gain (determined under the standard one-year holding period of IRC § 1222) recognized with respect to assets held by the partnership for more than one year but not more than three years. The Three Year Disposition Amount is the aggregate amount of net long-term capital gain recognized with respect to assets held for more than three years. The excess of the One Year Disposition Amount over the Three Year Disposition Amount is the amount subject to recharacterization as short-term capital gain under IRC § 1061(a). In ICM's case, because all fourteen (14) challenged positions were held for more than three years, the Three Year Disposition Amount equals the One Year Disposition Amount for these positions, and no recharacterization is required.
(ii) API Gain and API Loss. Treasury Regulation § 1.1061-3 provides rules for determining "API Gain" and "API Loss" — the amounts of long-term capital gain and long-term capital loss, respectively, that are allocable to an applicable partnership interest. These amounts are computed by reference to the distributive share of gain or loss allocable to the API holder. The $38.7 million at issue in this examination represents API Gain allocable to Ironside Capital GP LLC, as the holder of the applicable partnership interest in ICM.
(iii) Look-Through Rules for Tiered Partnerships. Treasury Regulation § 1.1061-4(b)(9) provides look-through rules for tiered partnership structures. While ICM holds certain investments through subsidiary entities, the fourteen (14) challenged positions at issue in this IDR response were held directly by ICM (and not through tiered partnership structures), and accordingly the look-through rules are not directly applicable to the positions addressed herein. To the extent the Service has questions regarding investments held through tiered structures, ICM reserves the right to address those matters in future correspondence.
C. Holding Period Determination Rules
The determination of holding period for purposes of IRC § 1061 follows the general rules set forth in IRC § 1223, subject to the substitution of the three-year period for the standard one-year period.
IRC § 1223(1) provides for the "tacking" of holding periods in certain circumstances — for example, where property is received in a tax-free exchange, the holding period of the property received includes the holding period of the property exchanged. However, the fourteen (14) challenged positions were each acquired by ICM through ordinary open-market purchases, and no tacking issues arise with respect to these positions. The holding period for each position commences on the day after the trade date on which the security was acquired and ends on (and includes) the trade date on which the security was disposed of, consistent with standard securities holding period conventions. See Rev. Rul. 66-7, 1966-1 C.B. 188; cf. IRC § 1223; Treas. Reg. § 1.1223-1.
The establishment of the holding period for each position depends upon the availability and reliability of contemporaneous records documenting the acquisition and disposition of each asset. In this case, the trade confirmations issued by Ridgeline Securities LLC — ICM's prime broker and custodian — constitute the primary contemporaneous documentary evidence of the trade dates for each acquisition and disposition. These confirmations, Bates-stamped for ease of reference, are enclosed as Exhibit B and provide definitive evidence of the acquisition dates, disposition dates, quantities, prices, and settlement terms for each of the fourteen (14) challenged positions.
IV. METHODOLOGY FOR HOLDING PERIOD ANALYSIS
Robert Jansen, an associate in the Tax Department of Calderwood & Harkness LLP, prepared the enclosed trade-level holding period analysis (Exhibit C) in connection with this response. The analysis was conducted using the following methodology, which is described here in detail to provide the Service with full transparency regarding the basis for ICM's position.
Scope of Analysis. The analysis covers all fourteen (14) positions specifically identified by the Service in IDR #3 as positions for which the Service has questioned the holding period. For each position, the analysis identifies and documents the following data points:
(a) The specific security or instrument (identified by name, CUSIP/ISIN, and position identifier);
(b) The original acquisition date (trade date);
(c) The disposition date (trade date);
(d) The calculated holding period, expressed in both calendar days and fractional years;
(e) The acquisition cost basis (including transaction costs);
(f) The sale or disposition proceeds (net of transaction costs);
(g) The realized gain or loss on the disposition; and
(h) The classification of the gain or loss as long-term or short-term under the three-year standard of IRC § 1061.
Source Data and Verification. The data underlying the holding period analysis was obtained from the following sources, each of which provides an independent record of ICM's trading activity:
First, the primary source data consists of trade confirmations and monthly account statements obtained directly from Ridgeline Securities LLC, ICM's prime broker and custodian. Ridgeline Securities LLC is a registered broker-dealer subject to regulation by the Financial Industry Regulatory Authority ("FINRA") and the Securities and Exchange Commission ("SEC"), and is required by applicable regulations to maintain accurate records of all transactions executed on behalf of its customers. The trade confirmations from Ridgeline constitute contemporaneous, third-party documentary evidence of the acquisition and disposition dates, quantities, and prices for each of the fourteen (14) challenged positions. These confirmations have been Bates-stamped (Bates Nos. ICM-IDR3-000001 through ICM-IDR3-000487) and are enclosed as Exhibit B.
Second, the Ridgeline trade confirmation data was cross-referenced against the internal fund accounting records maintained by Greystone Fund Administration LLC, ICM's independent fund administrator. Greystone's records include daily net asset value ("NAV") calculations, position-level profit and loss reports, and transaction-level detail for all investment activity. The cross-referencing confirmed that the acquisition and disposition dates reflected in Greystone's records are consistent with the trade confirmations from Ridgeline in all material respects.
Third, the data was independently verified against the tax workpapers prepared by Borwick Craine & Associates LLP in connection with the preparation of ICM's 2021 Form 1065. Fenwick Craine's workpapers include a complete schedule of all dispositions during the 2021 tax year, with holding period calculations for each position, and these workpapers were relied upon by Fenwick Craine in classifying gains as long-term or short-term for purposes of the Form 1065 and the related Schedules K-1. The holding period calculations in Exhibit C are consistent with those in Fenwick Craine's workpapers.
Holding Period Convention. Consistent with standard securities holding period conventions and applicable Treasury guidance, the holding period for each position was calculated from the trade date of acquisition to the trade date of disposition. The day after the acquisition trade date is treated as the first day of the holding period, and the disposition trade date is included in the holding period. This methodology follows the approach set forth in Revenue Ruling 66-7, 1966-1 C.B. 188, and is consistent with the treatment applied by Borwick Craine & Associates LLP in preparing ICM's 2021 Form 1065.
Results of Analysis. The analysis confirms that all fourteen (14) challenged positions had holding periods in excess of three years — that is, in excess of 1,095 days — at the time of their respective dispositions during the 2021 tax year. Accordingly, the gains from these positions satisfy the three-year holding period requirement of IRC § 1061, and their classification as long-term capital gains on ICM's 2021 Form 1065 and the related Schedules K-1 is correct.
V. ITEM-BY-ITEM RESPONSES TO IDR #3
Set forth below are ICM's responses to each of the twelve (12) items contained in IDR #3.
Item 1.
Request: Identification of all assets disposed of during the 2021 tax year for which gain was allocated to Ironside Capital GP LLC as a performance allocation (carried interest).
Response: Enclosed as Exhibit A is a comprehensive schedule listing all assets disposed of by ICM during the 2021 tax year that generated realized gains allocated, in whole or in part, to Ironside Capital GP LLC as performance allocations under LPA § 5.2. The schedule includes the security or instrument name, CUSIP/ISIN (where applicable), acquisition date, disposition date, cost basis, sale proceeds, and realized gain for each position. The fourteen (14) positions specifically identified by the Service in IDR #3 for holding period scrutiny are highlighted on Exhibit A and correspond to the positions addressed in the detailed holding period analysis set forth in Exhibit C.
Item 2.
Request: For each asset identified in response to Item 1, the original acquisition date.
Response: The original acquisition dates for all fourteen (14) challenged positions are set forth in the Holding Period Schedule enclosed as Exhibit C. The acquisition dates for these positions range from as early as September 7, 2016, to as late as November 14, 2018. All acquisition dates fall more than three years prior to the respective 2021 disposition dates, thereby satisfying the three-year holding period requirement of IRC § 1061. The acquisition dates reflected in Exhibit C are supported by the trade confirmations from Ridgeline Securities LLC enclosed as Exhibit B.
Item 3.
Request: For each asset identified in response to Item 1, the disposition date.
Response: The disposition dates for all fourteen (14) challenged positions are set forth in the Holding Period Schedule enclosed as Exhibit C. Dispositions of the fourteen positions occurred at various points throughout calendar year 2021, with disposition dates ranging from February 2, 2021, through November 18, 2021. Each disposition date is cross-referenced to the corresponding trade confirmation from Ridgeline Securities LLC in Exhibit B.
Item 4.
Request: Trade confirmations or settlement statements evidencing the acquisition of each identified asset.
Response: Enclosed as part of Exhibit B are the Bates-stamped trade confirmations from Ridgeline Securities LLC documenting the original acquisition of each of the fourteen (14) challenged positions. Each acquisition trade confirmation reflects the trade date, settlement date, security description, quantity, price per unit, and total acquisition cost (including commissions and other transaction costs). The trade confirmations are organized by position and are cross-referenced to the corresponding entries in the Holding Period Schedule (Exhibit C) by Bates number.
Item 5.
Request: Trade confirmations or settlement statements evidencing the disposition of each identified asset.
Response: Also enclosed as part of Exhibit B are the Bates-stamped trade confirmations from Ridgeline Securities LLC documenting the disposition of each of the fourteen (14) challenged positions. Each disposition trade confirmation reflects the trade date, settlement date, security description, quantity, price per unit, and total sale proceeds (net of commissions and other transaction costs). The disposition confirmations are paired with and immediately follow the corresponding acquisition confirmations for each position within Exhibit B to facilitate the Service's review.
Item 6.
Request: Calculation of the holding period for each asset identified, including the methodology used to determine the holding period.
Response: The holding period calculations for all fourteen (14) challenged positions are set forth in the Holding Period Schedule enclosed as Exhibit C. The methodology used to calculate the holding period is described in detail in Section IV of this letter (above). In summary, the holding period for each position was calculated from the trade date of acquisition to the trade date of disposition, with the day after the acquisition trade date counted as the first day of the holding period and the disposition trade date included in the holding period. This methodology is consistent with Revenue Ruling 66-7, 1966-1 C.B. 188, and with the approach applied by Borwick Craine & Associates LLP in preparing ICM's 2021 Form 1065. The Holding Period Schedule includes the holding period expressed in both calendar days and fractional years for each of the fourteen positions. All fourteen positions reflect holding periods in excess of 1,095 days (three years).
Item 7.
Request: Documentation of the cost basis for each asset identified.
Response: The cost basis for each of the fourteen (14) challenged positions is set forth in the Holding Period Schedule enclosed as Exhibit C. Cost basis figures reflect the actual acquisition cost of each position, inclusive of commissions, execution fees, and other transaction costs incurred at the time of acquisition. The cost basis figures in Exhibit C are supported by and consistent with the acquisition trade confirmations from Ridgeline Securities LLC enclosed as Exhibit B, which reflect the per-unit acquisition price, quantity, and total cost (including transaction costs) for each position.
Item 8.
Request: Documentation of sale or disposition proceeds for each asset identified.
Response: The sale or disposition proceeds for each of the fourteen (14) challenged positions are set forth in the Holding Period Schedule enclosed as Exhibit C. Proceeds figures reflect the actual gross sale price, net of commissions, execution fees, and other transaction costs incurred at the time of disposition. The proceeds figures in Exhibit C are supported by and consistent with the disposition trade confirmations from Ridgeline Securities LLC enclosed as Exhibit B, which reflect the per-unit sale price, quantity, and total proceeds (net of transaction costs) for each position.
Item 9.
Request: Calculation of gain or loss for each asset identified.
Response: The realized gain or loss for each of the fourteen (14) challenged positions is set forth in the Holding Period Schedule enclosed as Exhibit C. Gain or loss for each position was calculated as the difference between the disposition proceeds (net of transaction costs) and the acquisition cost basis (inclusive of transaction costs). The total aggregate realized gains from the fourteen challenged positions amount to $38.7 million. Each of these gains is classified as a long-term capital gain under the three-year holding period standard of IRC § 1061, as each of the fourteen positions was held for more than three years (1,095+ days) at the time of disposition. No position among the fourteen generated a realized loss.
Item 10.
Request: Copies of the partnership agreement provisions governing the allocation of performance-based compensation, including carried interest.
Response: Enclosed as Exhibit D are excerpts from the Amended and Restated Agreement of Limited Partnership of Ironside Capital Management LP, specifically the following sections:
• Section 5.2 — Performance Allocation: This section sets forth the terms of the GP's carried interest, providing for a performance allocation equal to twenty percent (20%) of the Fund's net investment profits above an eight percent (8%) annualized preferred return hurdle (the Hurdle Rate), with a full catch-up provision.
• Section 5.3 — Allocation of Gains and Losses: This section provides the mechanics for allocating realized and unrealized gains and losses among the partners, including the allocation of capital gains and losses to the GP's capital account in respect of the performance allocation.
• Related Definitions: Excerpted definitional provisions relevant to the Performance Allocation and Allocation of Gains and Losses sections, including the definitions of "Net Investment Profits," "Hurdle Rate," "Catch-Up Allocation," "Performance Allocation," and "High Water Mark."
The full LPA was previously provided to the Service in connection with ICM's response to IDR #1 on May 19, 2023. The excerpts enclosed as Exhibit D are provided for the Service's convenience and are consistent with the complete LPA previously produced.
Item 11.
Request: Schedule K-1 (Form 1065) issued to Ironside Capital GP LLC for the 2021 tax year, showing the allocation of long-term and short-term capital gains.
Response: Enclosed as Exhibit E is a copy of the 2021 Schedule K-1 (Form 1065) issued by ICM to Ironside Capital GP LLC (EIN: 83-2741890) for the tax year ended December 31, 2021. The Schedule K-1 reflects the $94.3 million total performance allocation to the GP, inclusive of both long-term and short-term capital gains, ordinary income, and other items of partnership income, gain, loss, deduction, and credit allocable to the GP. The $38.7 million at issue in this examination is a subset of the total performance allocation and is properly reported as long-term capital gain on the Schedule K-1, consistent with the holding period analysis set forth in Exhibit C and the three-year holding period requirement of IRC § 1061.
Item 12.
Request: Any legal memoranda, opinion letters, or tax analyses prepared in connection with the Fund's IRC § 1061 compliance for the tax year 2021.
Response: ICM's position on IRC § 1061 compliance for the 2021 tax year was determined in connection with the preparation of the Fund's 2021 Form 1065 by Borwick Craine & Associates LLP, under the direction of Elliot Navarro, CPA, engagement partner for tax. The holding period determinations were based on contemporaneous trade records maintained by Ridgeline Securities LLC and the straightforward application of the three-year holding period to each position disposed of during the 2021 tax year. No separate formal legal memorandum or opinion letter was prepared prior to the commencement of this examination, as the holding period analysis was a factual determination made in the ordinary course of tax return preparation and did not present interpretive uncertainty warranting a formal legal opinion.
However, in light of the Service's inquiries in connection with this examination, Calderwood & Harkness LLP intends to submit a comprehensive legal memorandum addressing all examination issues, including the IRC § 1061 holding period issue, under separate cover. We anticipate that this memorandum will be submitted on or about September 6, 2023, and will provide a detailed legal analysis supporting ICM's position on each issue raised during the examination.
VI. NARRATIVE DISCUSSION — TRADE-LEVEL HOLDING PERIOD ANALYSIS
A. Overview of the Fourteen Challenged Positions
The fourteen (14) positions identified by the Service in IDR #3 span the breadth of ICM's multi-strategy investment approach. The challenged positions include investments across ICM's three principal strategy verticals: global macro positions (including sovereign debt instruments and currency-linked structured products), event-driven equity positions (including common stock and convertible securities acquired in connection with anticipated corporate events such as mergers, acquisitions, and restructurings), and credit instruments (including corporate bonds and distressed debt).
All fourteen positions were originally acquired between September 2016 and November 2018. This timeframe corresponds to the early years of ICM's operations following the Fund's formation on June 14, 2016. The acquisitions were made in the ordinary course of ICM's investment activities and were documented contemporaneously through trade confirmations issued by Ridgeline Securities LLC, as enclosed in Exhibit B.
Dispositions of the fourteen positions occurred at various times throughout calendar year 2021, with disposition dates ranging from early February 2021 to mid-November 2021. In each case, the investment thesis underlying the original acquisition had been fully realized, and the disposition was made in the ordinary course of portfolio management.
The holding periods for the fourteen positions range from the shortest holding period of approximately 1,107 days (approximately 3.03 years) to the longest holding period of approximately 1,898 days (approximately 5.20 years). In every case, the holding period exceeds the three-year (1,095-day) threshold required by IRC § 1061 for the gain to retain its character as long-term capital gain when allocated to the GP as carried interest.
B. Summary of Aggregate Results
The following table summarizes the aggregate results of the holding period analysis for the fourteen challenged positions:
As reflected in the table above, not a single one of the fourteen challenged positions falls below the three-year holding period threshold. The classification of all $38.7 million in gains as long-term capital gains on ICM's 2021 Form 1065 and the related Schedules K-1 is correct, and no recharacterization under IRC § 1061(a) is warranted.
C. Verification and Audit Trail
The reliability and integrity of the holding period analysis are supported by a multi-layered verification process:
1. Primary Source — Ridgeline Securities LLC. The trade-level data forming the foundation of the analysis was sourced directly from the prime brokerage records of Ridgeline Securities LLC. As ICM's prime broker and custodian, Ridgeline maintains a complete and independent record of all securities transactions executed on behalf of ICM, including trade dates, settlement dates, quantities, prices, and counterparty information. Ridgeline's records constitute the most authoritative contemporaneous evidence of the acquisition and disposition dates for each position. The relevant trade confirmations have been Bates-stamped and enclosed as Exhibit B for the Service's review.
2. Cross-Reference — Greystone Fund Administration LLC. The trade data from Ridgeline was cross-referenced against the internal fund accounting records maintained by Greystone Fund Administration LLC, ICM's independent fund administrator. Greystone independently records all investment transactions for purposes of daily NAV calculations, investor reporting, and regulatory compliance. The cross-referencing process confirmed that the acquisition and disposition dates in Greystone's records are consistent with those reflected in Ridgeline's trade confirmations for all fourteen challenged positions.
3. Independent Verification — Borwick Craine & Associates LLP. As a final layer of verification, the holding period data was compared against the tax workpapers prepared by Borwick Craine & Associates LLP in connection with the preparation of ICM's 2021 Form 1065. Fenwick Craine independently obtained trade data from Ridgeline Securities LLC and Greystone Fund Administration LLC and performed its own holding period calculations for purposes of classifying gains as long-term or short-term on the Form 1065 and the related Schedules K-1. The holding period calculations in Exhibit C are consistent with those in Fenwick Craine's workpapers, providing an additional independent confirmation of the accuracy of the analysis.
The multi-source verification process described above provides a robust and complete audit trail supporting the holding period determinations for each of the fourteen challenged positions. We are confident that the documentation enclosed herewith fully substantiates ICM's position that all fourteen positions satisfied the three-year holding period requirement of IRC § 1061.
VII. EXHIBIT LIST
The following exhibits are enclosed with this letter and form part of ICM's response to IDR #3:
VIII. RESERVATION OF RIGHTS
ICM expressly reserves all rights in connection with this examination, including but not limited to the following:
(a) ICM reserves the right to supplement this response at any time with additional documentation, data, analysis, or argument, whether in response to further requests from the Service or on its own initiative.
(b) ICM reserves the right to raise additional legal and factual arguments in support of the positions reported on its 2021 Form 1065, including arguments not addressed in this response or in the enclosed exhibits.
(c) ICM reserves the right to assert any and all applicable privileges, including the attorney-client privilege and the work product doctrine, with respect to any communications, documents, or materials that may be responsive to past, current, or future requests from the Service. Nothing in this response or the enclosed materials should be construed as a waiver, express or implied, of any such privilege or protection. The provision of factual trade data and holding period calculations does not constitute a waiver of any privilege that may attach to legal analysis, strategy discussions, or other communications between ICM and its counsel.
(d) ICM reserves the right to challenge any proposed adjustment, including through the administrative appeals process and, if necessary, through judicial proceedings.
As noted above, Calderwood & Harkness LLP intends to submit a comprehensive legal memorandum addressing all examination issues, including the IRC § 1061 holding period issue addressed herein, under separate cover. We anticipate that this memorandum will be submitted to the Service on or about September 6, 2023. ICM reserves all rights with respect to the legal arguments and analysis that will be set forth in that memorandum.
IX. REQUEST FOR COMMUNICATION AND NEXT STEPS
We respectfully request that Agent Albrecht, and any other members of the examination team, direct any questions or follow-up requests regarding this response and the enclosed materials to the undersigned or to Leila Nazari at Calderwood & Harkness LLP. Our contact information is as follows:
Sylvia Hartwell Partner, Tax Department Calderwood & Harkness LLP 1251 Avenue of the Americas, 40th Floor New York, New York 10020 Telephone: (212) 558-4127
Email: shartwell@calderwoodharkness.com
Leila Nazari Counsel, Tax Department Calderwood & Harkness LLP 1251 Avenue of the Americas, 40th Floor New York, New York 10020 Telephone: (212) 558-4293
Email: lnazari@calderwoodharkness.com
In addition, we note that Robert Jansen, the associate at Calderwood & Harkness LLP who prepared the trade-level holding period analysis enclosed as Exhibit C, is available to address any follow-up questions the Service may have regarding the schedules, the underlying data, or the methodology used in the analysis. Mr. Jansen can be reached at (212) 558-4511 or rjansen@calderwoodharkness.com.
We also reference the productive in-person meeting held at the IRS Manhattan Campus at 290 Broadway on July 14, 2023, which was attended by the undersigned, Leila Nazari, Agent Albrecht, Revenue Agent Dawn M. Petrovic, and Attorney Eric S. Lundgren of the IRS Office of Chief Counsel. At that meeting, the parties discussed the holding period documentation at issue, and this response was identified as a follow-up deliverable to be submitted by ICM. We believe this response fully addresses the items discussed at that meeting and satisfies the commitments made by ICM's representatives at that time.
We remain available to meet with the examination team, whether in person or by telephone, at the Service's convenience to discuss any aspect of this response or the broader examination. We are committed to cooperating fully with the Service throughout this process and to providing any additional information or documentation that may be reasonably required.
We trust that the foregoing response and the enclosed exhibits fully address each of the twelve items in IDR #3 and provide the Service with the documentation necessary to confirm the propriety of ICM's holding period determinations and the long-term capital gain treatment reported on the Fund's 2021 Form 1065 and the related Schedules K-1. We look forward to working with the examination team toward a prompt and satisfactory resolution of this matter.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Sylvia Hartwell Partner, Tax Department
1251 Avenue of the Americas, 40th Floor New York, New York 10020 Telephone: (212) 558-4127
Email: shartwell@calderwoodharkness.com
Enclosures:
Exhibit A — Schedule of All Assets Disposed of in 2021 Generating Gain Allocated to Ironside Capital GP LLC
Exhibit B — Ridgeline Securities LLC Trade Confirmations (Bates Nos. ICM-IDR3-000001 through ICM-IDR3-000487)
Exhibit C — Holding Period Schedule — Trade-Level Analysis of 14 Challenged Positions
Exhibit D — Excerpts from the Amended and Restated Agreement of Limited Partnership of Ironside Capital Management LP (§§ 5.2, 5.3, and Related Definitions)
Exhibit E — 2021 Schedule K-1 (Form 1065) Issued to Ironside Capital GP LLC (EIN: 83-2741890)
cc:
Dawn M. Petrovic, Revenue Agent, Internal Revenue Service, Large Business & International Division
Eric S. Lundgren, Attorney, Internal Revenue Service, Office of Chief Counsel, Large Business & International Branch 5
Marcus Trent, General Counsel, Ironside Capital Management LP
Leila Nazari, Counsel, Calderwood & Harkness LLP
Robert Jansen, Associate, Calderwood & Harkness LLP
Metric | Amount / Result
Number of challenged positions | 14
Total aggregate realized gains | $38,700,000
Positions with holding period > 3 years (1,095 days) | 14 of 14
Positions with holding period ≤ 3 years (1,095 days) | 0 of 14
Shortest holding period among 14 positions | Approximately 1,107 days (3.03 years)
Longest holding period among 14 positions | Approximately 1,898 days (5.20 years)
Classification under IRC § 1061 | Long-term capital gain (all 14 positions)
Reported on 2021 Form 1065 and Schedule K-1 | Long-term capital gain
Recharacterization to short-term capital gain required | None
Exhibit | Description
Exhibit A | Schedule of All Assets Disposed of in 2021 Generating Gain Allocated to Ironside Capital GP LLC — comprehensive listing of all disposed positions generating realized gains allocated to the GP as performance allocations; the fourteen (14) challenged positions are highlighted
Exhibit B | Ridgeline Securities LLC Trade Confirmations — Bates-stamped trade confirmations (Bates Nos. ICM-IDR3-000001 through ICM-IDR3-000487) documenting both the original acquisition and the disposition of each of the fourteen (14) challenged positions; acquisition and disposition confirmations are paired by position for ease of reference
Exhibit C | Holding Period Schedule — Trade-Level Analysis of 14 Challenged Positions, prepared by Robert Jansen, Calderwood & Harkness LLP; includes the following columns for each position: position identifier, security/instrument name, CUSIP/ISIN, acquisition date (trade date), disposition date (trade date), holding period (calendar days), holding period (fractional years), acquisition cost basis, sale/disposition proceeds, realized gain or loss, LTCG vs. STCG classification under IRC § 1061, and cross-reference to Ridgeline trade confirmation Bates numbers
Exhibit D | Excerpts from the Amended and Restated Agreement of Limited Partnership of Ironside Capital Management LP — specifically LPA § 5.2 (Performance Allocation), § 5.3 (Allocation of Gains and Losses), and related definitional provisions
Exhibit E | 2021 Schedule K-1 (Form 1065) issued by ICM to Ironside Capital GP LLC (EIN: 83-2741890) for the tax year ended December 31, 2021

CALDERWOOD & HARKNESS LLP Attorneys at Law

VIA HAND DELIVERY AND ELECTRONIC MAIL

II. SUMMARY OF ISSUE UNDER EXAMINATION

III. APPLICABLE LEGAL FRAMEWORK

IV. METHODOLOGY FOR HOLDING PERIOD ANALYSIS

VII. EXHIBIT LIST

VIII. RESERVATION OF RIGHTS

IX. REQUEST FOR COMMUNICATION AND NEXT STEPS

CALDERWOOD & HARKNESS LLP

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