CALDERWOOD & HARKNESS LLP Attorneys at Law

CALDERWOOD & HARKNESS LLP Attorneys at Law
1900 K Street NW, Suite 1100 Washington, DC 20006
Telephone: (202) 944-7800 Facsimile: (202) 944-7801 www.calderwoodharkness.com
July 30, 2025
VIA HAND DELIVERY AND ELECTRONIC SUBMISSION
Internal Revenue Service Office of the Associate Chief Counsel (International) CC:INTL, Branch 1 1111 Constitution Avenue NW Washington, DC 20224
Re: Supplemental Submission in Connection with Private Letter Ruling Request on Behalf of Solara Digital Infrastructure LP (EIN: 82-4917366) and Related Entities — Cross-Border Fund-Platform Reorganization
Pre-Submission Conference: July 22, 2025 Engagement No.: 20250527-SDILP-PLR
Dear Associate Chief Counsel (International) and Counsel:
I. Introduction and Purpose
This letter is submitted by Calderwood & Harkness LLP ("Calderwood & Harkness" or "Firm") on behalf of our client, Solara Digital Infrastructure LP ("Solara," "SDILP," or the "Taxpayer"), a Delaware limited partnership bearing Employer Identification Number 82-4917366, and its affiliated fund entities identified herein (collectively with Solara, the "Solara Entities"). Calderwood & Harkness serves as U.S. tax counsel to Solara and the Solara Entities in connection with all matters relating to the private letter ruling request (the "PLR Request") described herein. Leonard Cross, Partner, and Sylvia Hartwell, Partner, have been designated as Solara's authorized representatives before the Internal Revenue Service (the "Service") pursuant to Forms 2848 (Power of Attorney and Declaration of Representative) previously executed by the Taxpayer and filed with the Service.
This supplemental submission (the "Supplemental Submission") is made in response to, and follows directly upon, the pre-submission conference held on July 22, 2025 (the "Pre-Submission Conference"), between representatives of Calderwood & Harkness and attorneys of the Office of the Associate Chief Counsel (International), CC:INTL, Branch 1 (with secondary jurisdiction in the Office of the Associate Chief Counsel (Passthroughs & Special Industries) ("CC:PSI")). The purpose of this Supplemental Submission is to provide additional information, factual detail, supplemental representations, and legal authority responsive to the questions, comments, and requests raised by the Service during the Pre-Submission Conference.
As discussed during the Pre-Submission Conference, the PLR Request seeks eight specific rulings from the Service in connection with a multi-step cross-border reorganization of Solara's fund platform (the "Reorganization"). The Reorganization contemplates the consolidation of four Legacy Offshore Vehicles (as defined below) — two Cayman Islands exempted limited partnerships and two Luxembourg special limited partnerships (sociétés en commandite spéciales) — into a newly formed Delaware-domiciled master fund structure, the Solara Consolidated Master Fund LP (the "Consolidated Master Fund LP" or the "Master Fund"), through a series of contribution and distribution transactions intended to qualify for nonrecognition treatment under Subchapter K of the Internal Revenue Code of 1986, as amended (the "Code"). The aggregate fair market value of all assets to be transferred in connection with the Reorganization is approximately $7.75 billion, with an aggregate adjusted tax basis of approximately $6.03 billion and aggregate built-in gain of approximately $1.72 billion.
This Supplemental Submission is intended to be read in conjunction with the forthcoming formal PLR Request, which Solara anticipates will be submitted to the Service on or about August 15, 2025. References herein to the "PLR Request" refer to that forthcoming submission. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the PLR Request when filed.
II. Summary of Pre-Submission Conference and IRS Requests
A. Pre-Submission Conference
A Pre-Submission Conference was held on July 22, 2025, at the offices of the Internal Revenue Service, 1111 Constitution Avenue NW, Washington, DC 20224. Representatives of Calderwood & Harkness in attendance included the following:
•  Leonard Cross, Responsible Partner, Tax Department, Calderwood & Harkness LLP
•  Sylvia Hartwell, Billing Partner, Tax Department, Calderwood & Harkness LLP
•  Robert Jansen, Lead Associate, Tax Department, Calderwood & Harkness LLP
In addition, Garrett Simmons, Working Associate, Tax Department, Calderwood & Harkness LLP, assisted in the preparation of the materials presented at the Pre-Submission Conference and in the preparation of this Supplemental Submission, although Mr. Simmons did not attend the Pre-Submission Conference in person.
B. Summary of the Service's Principal Areas of Inquiry
During the Pre-Submission Conference, the Service's attorneys raised a number of questions and requests for additional information, supplemental analysis, and further factual representations. Calderwood & Harkness has organized its responses to the Service's requests by topic, corresponding to the eight specific rulings sought in the PLR Request. The principal areas of inquiry raised by the Service, and addressed in this Supplemental Submission, are as follows:
1.  IRC § 721(b) Investment Company Exception (Ruling 2): The Service requested additional detail on the operating nature of the portfolio company assets being contributed to the Consolidated Master Fund LP, in order to evaluate whether the contributions might result in the creation of an "investment company" within the meaning of IRC § 721(b) and Treasury Regulations § 1.351-1(c)(1)(ii). This inquiry is addressed in Section III below.
2.  IRC § 367 Inapplicability (Ruling 3): The Service requested further clarification and supplemental analysis of Solara's position that IRC §§ 367(a) and 367(b) do not apply to the contributions described in Steps 2 through 4 of the Reorganization, which involve transfers of assets by foreign partnerships to a domestic partnership. This inquiry is addressed in Section IV below.
3.  IRC § 731(c) Marketable Securities (Ruling 4): The Service requested supplemental analysis regarding why the limited partnership interests in the Consolidated Master Fund LP distributed by the Legacy Offshore Vehicles to their respective limited partners in Step 5 of the Reorganization do not constitute "marketable securities" within the meaning of IRC § 731(c)(2). This inquiry is addressed in Section V below.
4.  IRC § 752 Liability Shifting Mechanics (Ruling 5): The Service requested further detail on the liability netting mechanics and the aggregate impact of $1.34 billion in liability shifts resulting from the Reorganization. This inquiry is addressed in Section VI below.
5.  Business Purpose and Economic Substance: The Service requested additional representations and factual detail supporting the independent business purposes of the five-step Reorganization and its economic substance, particularly in light of potential scrutiny under the step transaction doctrine, substance-over-form principles, and the anti-abuse rule of Treasury Regulations § 1.701-2. This inquiry is addressed in Section VII below.
6.  IRC § 1446 Withholding (Ruling 7): The Service requested supplemental authority supporting Solara's position that no withholding under IRC § 1446(a) is required on the contributions (Steps 2–4) or distributions (Step 5) effected as part of the Reorganization. This inquiry is addressed in Section VIII below.
7.  FIRPTA / IRC § 897 (Additional Clarification): The Service requested clarification on whether the interests in certain data center and fiber-optic network portfolio companies constitute "United States real property interests" ("USRPIs") under IRC § 897, and if so, the implications for the nonrecognition treatment of the Reorganization. This inquiry is addressed in Section IX below.
The following Sections III through IX address each of these areas of inquiry in turn.
III. Supplemental Information — IRC § 721(b) Investment Company Exception (Ruling 2)
A. Detailed Description of Portfolio Company Operations
During the Pre-Submission Conference, the Service requested additional detail demonstrating that the twenty-three (23) portfolio company interests being contributed by the Legacy Offshore Vehicles to the Consolidated Master Fund LP in Steps 2 through 4 of the Reorganization are interests in active operating companies, rather than "stocks, securities, or other investment assets" within the meaning of IRC § 721(b) and Treasury Regulations § 1.351-1(c)(1)(ii). As discussed with the Service, the determination of whether a transfer results in the creation of an "investment company" under § 721(b) (by cross-reference to the principles of § 351) turns on whether the transfer results in the diversification of the transferors' interests and whether the transferee holds primarily "stocks, securities, or other investment assets." Solara's position is that the § 721(b) investment company exception does not apply because the portfolio company interests being contributed are interests in active operating businesses — not stocks, securities, or investment instruments — and the Consolidated Master Fund LP will not function as an investment company.
Set forth below are detailed business descriptions of representative portfolio companies across the Solara fund platform. A complete description of all twenty-three portfolio companies is provided in Supplemental Exhibit 1, attached hereto.
1. NovaBright Data Systems Inc.
NovaBright Data Systems Inc. ("NovaBright") is a corporation organized under the laws of the State of Delaware. NovaBright operates and manages hyperscale and enterprise colocation data centers at seventeen locations across the United States, including facilities in Northern Virginia (Ashburn and Sterling), Dallas-Fort Worth, Phoenix, Chicago (Elk Grove Village), and Portland. NovaBright's operations encompass the design, construction, commissioning, and ongoing management of mission-critical data center infrastructure, including power distribution systems, cooling infrastructure, physical security systems, and network interconnection platforms. NovaBright currently employs approximately 1,840 operational staff, including facility engineers, mechanical and electrical technicians, network operations center personnel, construction project managers, and customer success teams.
NovaBright's aggregate fair market value is $890 million, with an adjusted tax basis of $520 million, resulting in built-in gain of $370 million. NovaBright is held 60% by Solara Digital Partners Fund IV-A (Cayman) LP ("Fund IV-A Cayman") and 40% by Solara Digital Partners Fund IV LP ("Fund IV LP"). NovaBright generates revenue primarily through long-term colocation and managed hosting agreements with enterprise customers, cloud service providers, and content delivery networks. NovaBright is an actively managed operating company and does not hold any material portfolio of stocks, securities, or passive investment assets.
2. Crestline Cloud Solutions LLC
Crestline Cloud Solutions LLC ("Crestline") is a limited liability company organized under the laws of the State of Delaware that has elected to be classified as a disregarded entity for U.S. federal income tax purposes. Crestline is an enterprise software-as-a-service ("SaaS") platform provider, offering cloud-based infrastructure management, automation, and analytics solutions to enterprise customers across the telecommunications, financial services, and healthcare industries. Crestline's platform processes approximately 4.2 billion API transactions per month and serves over 600 enterprise customers in eighteen countries.
Crestline's aggregate fair market value is €340 million (approximately $367 million at the 1.08 EUR/USD exchange rate applied uniformly throughout this submission), with an adjusted tax basis of €195 million (approximately $211 million) and built-in gain of €145 million (approximately $156 million). Crestline is held 100% by Solara Digital Partners Fund IV-B (Luxembourg) SCSp ("Fund IV-B Lux"). Crestline generates recurring subscription revenue from annual and multi-year enterprise license agreements and employs approximately 520 personnel across software engineering, product management, sales, and customer support functions. Crestline is an actively managed operating company engaged in the active conduct of a software development and services business.
3. Veridian Edge Computing Corp.
Veridian Edge Computing Corp. ("Veridian") is a corporation organized under the laws of the State of Delaware. Veridian is an edge computing infrastructure company that designs, deploys, owns, and operates distributed computing nodes, micro data centers, and network infrastructure at the edge of enterprise and telecommunications networks. Veridian currently operates approximately 3,200 edge computing nodes across forty-two metropolitan areas in the United States and maintains an active construction pipeline for an additional 1,100 nodes expected to be deployed through 2027.
Veridian's aggregate fair market value is $1.12 billion, with an adjusted tax basis of $780 million and built-in gain of $340 million. Veridian is held 55% by Solara Digital Partners Fund V-A (Cayman) LP ("Fund V-A Cayman") and 45% by Solara Digital Partners Fund V LP ("Fund V LP"). Veridian employs approximately 2,100 personnel across network engineering, field operations, product development, and corporate functions. Veridian generates revenue from capacity-as-a-service agreements, infrastructure leasing arrangements, and managed edge computing services. Veridian is an active operating business that owns and manages substantial physical computing and network infrastructure assets.
4. Thorngate Fiber Networks LP
Thorngate Fiber Networks LP ("Thorngate") is a limited partnership organized under the laws of the State of Delaware. Thorngate is a fiber-optic network operator that owns, constructs, and operates long-haul and metro fiber-optic cable routes across the eastern and central United States. Thorngate's network encompasses approximately 28,000 route miles of lit and dark fiber-optic cable serving enterprise, carrier, and government customers. Thorngate's operations include network construction, fiber splicing, route engineering, network monitoring, maintenance, and customer provisioning.
Thorngate's aggregate fair market value is $670 million, with an adjusted tax basis of $490 million and built-in gain of $180 million. Thorngate is held 100% by Fund IV-A Cayman. Thorngate employs approximately 780 personnel, including field technicians, network engineers, construction crews, and sales and operations staff. Thorngate is an active infrastructure operating business that derives revenue from long-term indefeasible rights of use ("IRU") agreements, dark fiber leasing, and lit fiber wavelength services. Thorngate does not hold any material portfolio of stocks, securities, or passive investment assets.
5. Helix SaaS Holdings Ltd.
Helix SaaS Holdings Ltd. ("Helix") is a Cayman Islands exempted company. Helix is a holding company with three wholly owned operating subsidiaries, each of which is engaged in the active conduct of an enterprise SaaS business: (i) Helix Analytics Inc. (Delaware corporation; predictive analytics platform for financial services); (ii) Helix SecureNet Ltd. (United Kingdom; cybersecurity-as-a-service platform for critical infrastructure operators); and (iii) Helix DataOps Pte. Ltd. (Singapore; data operations automation platform for telecommunications providers). Collectively, the Helix operating subsidiaries employ approximately 910 personnel and generate recurring SaaS subscription revenue from over 400 enterprise customers.
Helix's aggregate fair market value is $445 million, with an adjusted tax basis of $310 million and built-in gain of $135 million. Helix is held 100% by Fund V-A Cayman. While Helix is structured as a holding company, its assets consist entirely of ownership interests in the three actively managed operating subsidiaries described above, and Helix does not hold any stocks, securities, or passive investment instruments other than de minimis working capital held at the holding company level.
6. Summary of All 23 Portfolio Companies
All twenty-three (23) portfolio companies across the Legacy Offshore Vehicles — eleven (11) held by the Fund IV vehicles and twelve (12) held by the Fund V vehicles — are active operating businesses in the digital infrastructure and enterprise SaaS sectors. Each portfolio company is engaged in the active conduct of a trade or business, employs substantial operational personnel, generates revenue from the provision of services or the operation of physical infrastructure, and manages tangible and intangible operating assets. None of the portfolio companies is an investment vehicle, a holding company for passive assets, or an entity whose assets consist primarily of stocks, securities, or similar investment instruments. A comprehensive description of each of the twenty-three portfolio companies, including business descriptions, valuation data, employment figures, and asset characterizations, is set forth in Supplemental Exhibit 1, attached hereto.
The aggregate fair market value of all assets being transferred in connection with the Reorganization is $7.75 billion. The aggregate adjusted tax basis of all such assets is $6.03 billion. The aggregate built-in gain is $1.72 billion. These figures are consistent with those presented at the Pre-Submission Conference and will be updated, if necessary, in the formal PLR Request based on valuations current as of the anticipated closing dates.
B. Additional Representation
Solara represents that at no time have any of the contributing partnerships (Fund IV-A Cayman, Fund IV-B Lux, Fund V-A Cayman, or Fund V-B Lux) or the Consolidated Master Fund LP held, or been formed with the intent to hold, "stocks, securities, or other investment assets" as those terms are used in Treasury Regulations § 1.351-1(c)(1)(ii), other than de minimis working capital investments (consisting of cash and short-term United States Treasury obligations) held in the ordinary course of business and not exceeding, in the aggregate, 2% of the total fair market value of the assets of any such entity at any time.
IV. Supplemental Analysis — IRC § 367 Inapplicability (Ruling 3)
A. Statutory Text Analysis
During the Pre-Submission Conference, the Service requested further elaboration on Solara's position that IRC §§ 367(a) and 367(b) do not apply to the contributions described in Steps 2 through 4 of the Reorganization. In those Steps, four foreign partnerships — Fund IV-A Cayman, Fund IV-B Lux, Fund V-A Cayman, and Fund V-B Lux (collectively, the "Legacy Offshore Vehicles") — will contribute portfolio company interests and related assets to the Consolidated Master Fund LP, a newly formed domestic partnership. Solara's position is that § 367 does not apply to these transfers because the statute, by its express terms, applies only to transfers involving foreign corporations, and neither the transferors nor the transferee in Steps 2 through 4 are corporations.
IRC § 367(a)(1). Section 367(a)(1) provides, in relevant part, that "[i]f, in connection with any exchange described in section 332, 351, 354, 355, 356, or 361, a United States person transfers property to a foreign corporation, such foreign corporation shall not, for purposes of determining the extent to which gain shall be recognized on such transfer, be considered to be a corporation." By its express terms, § 367(a)(1) applies only where (i) a "United States person" (ii) "transfers property" (iii) "to a foreign corporation." The Consolidated Master Fund LP is a domestic limited partnership, not a foreign corporation. The contributing entities are foreign partnerships, not United States persons. Accordingly, the threshold requirements of § 367(a)(1) are not satisfied, and the provision does not apply to any of the transfers contemplated in Steps 2 through 4.
IRC § 367(b). Section 367(b) provides rules for exchanges described in §§ 332, 351, 354, 355, 356, or 361 in connection with which the transferor or the transferee is a foreign corporation. Each of these cross-referenced provisions — §§ 332, 351, 354, 355, 356, and 361 — is a corporate provision governing corporate formations, reorganizations, liquidations, and distributions. The transfers in Steps 2 through 4 of the Reorganization are not described in any of these corporate provisions; rather, they are contributions to a partnership governed by IRC § 721. Section 367(b) therefore has no application.
The Consolidated Master Fund LP will be classified as a partnership for U.S. federal income tax purposes under Treasury Regulations § 301.7701-3. Form 8832 (Entity Classification Election) will be filed for the Consolidated Master Fund LP with an effective date of September 15, 2025, confirming partnership classification. No election to classify the Consolidated Master Fund LP as an association taxable as a corporation has been or will be made.
B. Contributing Entities
The following entities will serve as contributing (transferor) entities in Steps 2 through 4 of the Reorganization. Each is classified as a foreign partnership for U.S. federal income tax purposes:
•  Solara Digital Partners Fund IV-A (Cayman) LP ("Fund IV-A Cayman"): A Cayman Islands exempted limited partnership registered with the Cayman Islands Monetary Authority ("CIMA") under registration number MF-72491. Fund IV-A Cayman is classified as a foreign partnership for U.S. federal income tax purposes.
•  Solara Digital Partners Fund IV-B (Luxembourg) SCSp ("Fund IV-B Lux"): A Luxembourg special limited partnership (société en commandite spéciale) registered with the Luxembourg Registre de Commerce et des Sociétés ("RCS") under number B 248193. Fund IV-B Lux is classified as a foreign partnership for U.S. federal income tax purposes.
•  Solara Digital Partners Fund V-A (Cayman) LP ("Fund V-A Cayman"): A Cayman Islands exempted limited partnership registered with CIMA under registration number MF-89103. Fund V-A Cayman is classified as a foreign partnership for U.S. federal income tax purposes.
•  Solara Digital Partners Fund V-B (Luxembourg) SCSp ("Fund V-B Lux"): A Luxembourg special limited partnership (société en commandite spéciale) registered with the Luxembourg RCS under number B 271056. Fund V-B Lux is classified as a foreign partnership for U.S. federal income tax purposes.
The receiving entity is Solara Consolidated Master Fund LP — a Delaware limited partnership to be formed on September 15, 2025, and to be classified as a domestic partnership for U.S. federal income tax purposes.
C. Legislative History and Administrative Guidance
The legislative history of IRC § 367 confirms that the provision was enacted as a corporate-level toll charge mechanism designed to prevent the tax-free repatriation of earnings from foreign corporations and the tax-free transfer of appreciated assets to foreign corporate structures where they might escape U.S. taxation. The Senate Report accompanying the Tax Reform Act of 1976 (S. Rep. No. 94-938, at 264–65 (1976)) described § 367 as a safeguard against the use of corporate provisions to move appreciated property beyond the reach of the U.S. taxing jurisdiction. This corporate focus is reflected in every iteration of § 367 and in the regulations promulgated thereunder.
No regulations under § 367 extend the provision's reach to partnership-to-partnership transfers or to contributions by partnerships to partnerships. Treasury Regulations §§ 1.367(a)-1 through 1.367(a)-8 and §§ 1.367(b)-1 through 1.367(b)-13 address various types of transfers to and from foreign corporations; none addresses transfers to or from partnerships. The preamble to the final regulations under § 367(a) (T.D. 9803, 81 Fed. Reg. 91,012 (Dec. 16, 2016)) does not mention partnership contributions or suggest that the regulations apply to partnership transactions.
Moreover, the Service has not issued any published ruling, revenue procedure, notice, or announcement applying § 367 to transfers between or among partnerships. Leading treatises and commentators confirm that § 367 applies exclusively in the corporate context. See, e.g., Kuntz & Peroni, U.S. International Taxation ¶ B3.04[1] (noting that § 367 "applies only to transfers to foreign corporations and does not apply to transfers to partnerships"); Nancy Pryor, Federal Taxation of Income, Estates and Gifts ¶ 72.1 (same).
Solara is not aware of any authority — statutory, regulatory, judicial, or administrative — applying § 367 to partnership-to-partnership transfers of the type contemplated in Steps 2 through 4. To the extent any academic commentary has suggested that the principles underlying § 367 could theoretically be extended to partnership transfers, such commentary is speculative, has not been adopted by the Service or the courts, and is inconsistent with the unambiguous text of the statute.
D. Additional Representation
Solara represents that neither the Consolidated Master Fund LP nor any of the contributing partnerships (Fund IV-A Cayman, Fund IV-B Lux, Fund V-A Cayman, or Fund V-B Lux) has elected or will elect to be classified as a corporation (i.e., as an association taxable as a corporation) under Treasury Regulations § 301.7701-3. Each of these entities is and will be classified as a partnership for U.S. federal income tax purposes at all relevant times before, during, and after the Reorganization.
V. Supplemental Analysis — IRC § 731(c) Marketable Securities (Ruling 4)
A. Service's Inquiry
During the Pre-Submission Conference, the Service requested additional detail and analysis regarding why the limited partnership interests in the Consolidated Master Fund LP distributed by the Legacy Offshore Vehicles to their respective limited partners in Step 5 of the Reorganization do not constitute "marketable securities" as defined in IRC § 731(c)(2). Section 731(c)(1)(A) provides that, for purposes of § 731(a)(1) and § 737, the term "money" includes marketable securities, with the result that a distribution of marketable securities by a partnership may be treated as a distribution of money triggering gain recognition to the distributee partner. Solara's position is that the interests distributed in Step 5 are not marketable securities within the meaning of § 731(c)(2), and that the distribution therefore qualifies for nonrecognition treatment under § 731(a)(1).
B. Analysis
IRC § 731(c)(2)(A) defines "marketable securities" as "financial instruments and foreign currencies which are, as of the date of the distribution, actively traded (within the meaning of section 1092(d)(1))." Section 1092(d)(1), in turn, defines "actively traded" by reference to whether the relevant property is of a type that is "actively traded" and for which there is an "established financial market." Under § 731(c)(2)(B), "financial instruments" include stocks, other equity interests, evidences of indebtedness, options, forward and futures contracts, notional principal contracts, and derivatives. Under § 731(c)(2)(C), an interest in an entity is treated as a financial instrument if the interest is "actively traded" and the entity is described in certain specified categories.
The limited partnership interests in the Consolidated Master Fund LP distributed to the limited partners of the Legacy Offshore Vehicles in Step 5 will not meet the definition of marketable securities under § 731(c)(2) for the following reasons:
(i) Not Listed or Traded. The limited partnership interests in the Consolidated Master Fund LP will not be listed, quoted, or traded on any national securities exchange (including the New York Stock Exchange, Nasdaq, or any other exchange), nor on any foreign securities exchange or interdealer quotation system.
(ii) Not Registered Under Securities Laws. The limited partnership interests will not be registered under the Securities Act of 1933, as amended, or under the securities laws of any state or foreign jurisdiction. The interests will be offered and sold exclusively in reliance on exemptions from registration under Sections 4(a)(2) and 4(a)(7) of the Securities Act and Regulation D promulgated thereunder.
(iii) Subject to Transfer Restrictions. The interests will be subject to significant contractual transfer restrictions set forth in the limited partnership agreement of the Consolidated Master Fund LP, including requirements for general partner consent, compliance with applicable securities laws, tax compliance (including provisions designed to prevent the partnership from being treated as a "publicly traded partnership" within the meaning of IRC § 7704), and other customary private fund transfer restrictions.
(iv) Not Readily Tradable on a Secondary Market. There is no secondary market, and no substantial equivalent thereof, for interests in the Consolidated Master Fund LP. The interests are private fund interests held by a limited number of sophisticated institutional investors, and no market maker, broker-dealer, or trading platform has been engaged or is expected to be engaged to facilitate secondary trading in such interests.
Because the limited partnership interests in the Consolidated Master Fund LP are not "actively traded" on an "established financial market" as of the date of distribution, they do not constitute "marketable securities" within the meaning of § 731(c)(2), and their distribution in Step 5 is not treated as a distribution of money under § 731(c)(1).
C. Section 731(c)(3) Exceptions
Even assuming arguendo that the limited partnership interests in the Consolidated Master Fund LP could be characterized as "marketable securities" within the meaning of § 731(c)(2) — a characterization that Solara does not concede — § 731(c)(3)(A) provides an exception from the application of § 731(c)(1) for marketable securities that were not marketable securities when they were contributed to the distributing partnership.
In the Reorganization, the contributing partnerships (the Legacy Offshore Vehicles) are contributing interests in operating portfolio companies — not marketable securities — to the Consolidated Master Fund LP in Steps 2 through 4. The limited partnership interests in the Consolidated Master Fund LP that are distributed to the limited partners of the Legacy Offshore Vehicles in Step 5 are newly issued interests received by the Legacy Offshore Vehicles in exchange for the contributed portfolio company interests. Those newly issued partnership interests were not "contributed to" the distributing partnership as marketable securities; rather, they were received by the Legacy Offshore Vehicles as consideration for their contributions. Accordingly, even under the arguendo assumption, the § 731(c)(3)(A) exception would apply to exclude the distributed interests from the definition of "money" under § 731(c)(1).
Additionally, § 731(c)(3)(B) provides an exception for any marketable security distributed to a partner who contributed such security to the partnership. To the extent the limited partners of the Legacy Offshore Vehicles ultimately contributed capital that was used to acquire the portfolio company interests, a plausible argument exists that the § 731(c)(3)(B) exception would also apply, although Solara does not rely primarily on this exception.
D. Additional Representation
Solara represents that the limited partnership interests in the Consolidated Master Fund LP distributed in Step 5 of the Reorganization will not be listed, traded, quoted, or registered on any established securities market, interdealer quotation system, or foreign securities exchange. Solara further represents that there is no plan, intention, understanding, or agreement — whether written or oral, formal or informal — to list, register, or cause to be publicly tradable the limited partnership interests in the Consolidated Master Fund LP at any time following the Reorganization. Solara will include customary provisions in the limited partnership agreement of the Consolidated Master Fund LP to ensure that the interests are not treated as "readily tradable on a secondary market (or the substantial equivalent thereof)" within the meaning of Treasury Regulations § 1.7704-1.
VI. Supplemental Detail — IRC § 752 Liability Shifting Analysis (Ruling 5)
A. Service's Request
During the Pre-Submission Conference, the Service requested further detail regarding the netting mechanics applicable to the liability shifts resulting from the Reorganization and the aggregate impact of $1.34 billion in portfolio-level liabilities that will be assumed by or allocated through the Consolidated Master Fund LP. The Service inquired specifically about (i) the current allocation of liabilities among the partners of each Legacy Offshore Vehicle under IRC § 752 and the applicable Treasury Regulations, (ii) the post-Reorganization allocation of liabilities among the partners of the Consolidated Master Fund LP (including through the feeder structure), and (iii) the application of the netting rule under Treasury Regulations § 1.752-1(f) to demonstrate that no partner will recognize gain under § 731(a) as a result of the liability shifts.
B. Pre-Reorganization Liability Allocation
The aggregate liabilities across all four Legacy Offshore Vehicles total $1.34 billion. These liabilities consist of portfolio-level indebtedness incurred by the Legacy Offshore Vehicles or their portfolio company subsidiaries, including subscription credit facilities, net asset value credit facilities, and portfolio company-level acquisition financing that is allocated to the Legacy Offshore Vehicles under the applicable partnership agreements. The liabilities are allocated as follows on a pre-Reorganization basis:
•  Fund IV-A Cayman: $485 million in aggregate liabilities, consisting of (i) $210 million in a subscription credit facility secured by uncalled capital commitments (nonrecourse to any individual partner, allocated under Treasury Regulations § 1.752-3 among all partners in accordance with their interests in partnership profits), and (ii) $275 million in portfolio-level acquisition financing at the NovaBright and Thorngate portfolio company levels (allocated as nonrecourse liabilities under Treasury Regulations § 1.752-3).
•  Fund IV-B Lux: €175 million (approximately $189 million) in aggregate liabilities, consisting of a subscription credit facility (€100 million) and portfolio-level indebtedness at Crestline (€75 million), both allocated as nonrecourse liabilities under Treasury Regulations § 1.752-3.
•  Fund V-A Cayman: $470 million in aggregate liabilities, consisting of (i) $195 million in a subscription credit facility, and (ii) $275 million in portfolio-level acquisition financing at the Veridian and Helix portfolio company levels, both allocated as nonrecourse liabilities under Treasury Regulations § 1.752-3.
•  Fund V-B Lux: €180 million (approximately $194 million) in aggregate liabilities, consisting of a subscription credit facility (€110 million) and portfolio-level indebtedness (€70 million), both allocated as nonrecourse liabilities under Treasury Regulations § 1.752-3.
The liabilities across all four Legacy Offshore Vehicles are nonrecourse liabilities within the meaning of Treasury Regulations § 1.752-1(a)(2), as no partner bears the economic risk of loss with respect to any such liability. Under Treasury Regulations § 1.752-3, nonrecourse liabilities are allocated among the partners of each Legacy Offshore Vehicle in accordance with the three-tier allocation methodology prescribed therein: first, to the extent of partnership minimum gain; second, in proportion to the amount of § 704(c) minimum gain allocable to each partner; and third, in accordance with each partner's share of partnership profits.
C. Post-Reorganization Liability Allocation
Following the completion of Steps 2 through 4, all $1.34 billion in aggregate liabilities will be assumed by or allocated through the Consolidated Master Fund LP. As a result of the contribution transactions, the Legacy Offshore Vehicles will become partners in the Consolidated Master Fund LP, and each partner's share of partnership liabilities will be redetermined under IRC § 752 and Treasury Regulations §§ 1.752-1, -2, and -3.
Following Step 5, the dissolution of the Legacy Offshore Vehicles and the migration of limited partners to the feeder/master structure, the liabilities will be allocated among the partners of the Consolidated Master Fund LP, including (i) Solara International Feeder (Cayman) LP (the "International Feeder"), through which non-U.S. investors will hold their interests, (ii) Solara Tax-Exempt Feeder (Cayman) LP (the "Tax-Exempt Feeder"), through which U.S. tax-exempt investors will hold their interests, and (iii) U.S. taxable investors who will continue to hold interests directly through Fund IV LP and Fund V LP alongside the Consolidated Master Fund LP.
Because the International Feeder and the Tax-Exempt Feeder are themselves partnerships for U.S. federal income tax purposes, a tiered partnership analysis is required to determine the ultimate allocation of liabilities to the individual partners of those feeder entities. Under Treasury Regulations § 1.752-4(a), a partner's share of the liabilities of a lower-tier partnership (the Consolidated Master Fund LP) is determined at the upper-tier partnership level (the feeders) by taking into account the upper-tier partnership's share of lower-tier partnership liabilities, which flows through to the partners of the upper-tier partnership in accordance with the three-tier allocation methodology.
Solara has prepared a detailed § 752 liability allocation model demonstrating the pre- and post-Reorganization allocation of all $1.34 billion in liabilities among the ultimate partners of the Consolidated Master Fund LP. This modeling spreadsheet is attached hereto as Supplemental Exhibit 2 and will be updated in the formal PLR Request to reflect final liability balances as of the anticipated closing dates.
D. Conclusion on Gain Recognition
Under Treasury Regulations § 1.752-1(f), where a partner's share of partnership liabilities increases (resulting in a deemed contribution of money to the partnership under § 752(a)) and decreases (resulting in a deemed distribution of money by the partnership under § 752(b)) as part of the same transaction or series of transactions, the increase and decrease are netted, and only the net increase or net decrease is taken into account.
Application of the § 1.752-1(f) netting rule to the Reorganization demonstrates that, after netting all increases and decreases in each partner's share of liabilities resulting from the multi-step contribution and distribution transactions, no partner experiences a net deemed distribution under § 752(b) that exceeds such partner's adjusted basis in its partnership interest. This conclusion holds for each of the approximately sixty-seven (67) individual partners across the Solara fund platform, including the largest investors such as Nordhaven Sovereign Wealth Fund (with aggregate commitments of $880 million), Kestrel Pacific Insurance Group (with aggregate commitments of approximately €475 million / $513 million), Pinnacle State Employees' Retirement System, Grandview University Endowment, and Argyle Family Office Holdings LLC.
Accordingly, no gain is recognized under IRC § 731(a)(1) by any partner as a result of the liability shifts occurring in connection with the Reorganization.
The detailed netting calculations supporting this conclusion for each partner are set forth in Supplemental Exhibit 2.
E. Additional Representation
Solara represents that no partner of any Legacy Offshore Vehicle, feeder entity, or the Consolidated Master Fund LP will receive, and no partner is expected to receive, a net deemed distribution under IRC § 752(b) in excess of such partner's adjusted outside basis in its partnership interest as a result of the Reorganization. This representation is based on the § 752 liability allocation modeling prepared by Solara's tax team and reviewed by Calderwood & Harkness, copies of which are attached as Supplemental Exhibit 2.
VII. Supplemental Detail — Business Purpose and Economic Substance
A. Service's Request
During the Pre-Submission Conference, the Service requested additional representations and factual detail supporting the independent business purposes of the five-step Reorganization and its economic substance. The Service noted that multi-step transactions involving the consolidation of offshore fund vehicles into domestic structures may attract scrutiny under the step transaction doctrine (Commissioner v. Clark, 489 U.S. 726 (1989); McDonald's Restaurants of Illinois, Inc. v. Commissioner, 688 F.2d 520 (7th Cir. 1982)), substance-over-form principles (Gregory v. Helvering, 293 U.S. 465 (1935)), and the anti-abuse rule of Treasury Regulations § 1.701-2. Solara appreciates the Service's diligence and provides the following additional detail regarding the substantial non-tax business purposes motivating the Reorganization and the meaningful economic changes that will result from its consummation.
B. Business Purposes
The Reorganization is motivated by four substantial and independent non-tax business purposes, each of which independently justifies the consolidation of the Legacy Offshore Vehicles into the Consolidated Master Fund LP:
1. Operational Cost Reduction
Solara currently incurs approximately $3.8 million annually in duplicative administrative, audit, regulatory, and compliance costs arising from the maintenance of four parallel offshore fund vehicles across two jurisdictions (Cayman Islands and Luxembourg). These costs include: (i) separate annual audits for each offshore vehicle (approximately $680,000 per year across all four vehicles), conducted by Buchanan Fenwick CPAs LLP and Rowan Whitfield CPAs LLP Cayman; (ii) annual CIMA regulatory filing fees and Luxembourg CSSF supervisory fees (approximately $340,000 per year); (iii) local registered office and corporate services fees payable to Harborstone Corporate Services Ltd. (Cayman) and independent administrators in Luxembourg (approximately $290,000 per year); (iv) duplicative legal fees for ongoing maintenance, annual filings, amendments, and partnership agreement updates across four vehicles and two jurisdictions (approximately $1.1 million per year); and (v) duplicative fund administration, transfer agency, and investor reporting costs (approximately $1.39 million per year). The Reorganization will eliminate substantially all of this duplication by consolidating the four offshore vehicles into a single domestic master fund structure.
2. Pillar Two GloBE Compliance
The Organisation for Economic Co-operation and Development ("OECD") Pillar Two Global Anti-Base Erosion ("GloBE") rules, as implemented through the European Union Directive 2022/2523 (the "Minimum Tax Directive"), are effective for Solara's Luxembourg entities beginning with fiscal year 2025. The GloBE rules impose a 15% global minimum tax on large multinational enterprise groups and, as applied to the Luxembourg SCSp structures, significantly diminish the tax benefits historically associated with those vehicles. Specifically, the qualified domestic minimum top-up tax ("QDMTT") mechanisms adopted by Luxembourg create compliance complexity and potential incremental tax cost for Fund IV-B Lux and Fund V-B Lux and their investors. The Reorganization removes the Luxembourg entities from the GloBE scope by dissolving the Luxembourg SCSps and consolidating their assets into the domestic Consolidated Master Fund LP, thereby simplifying compliance and eliminating the incremental costs and uncertainties associated with Pillar Two.
3. FATCA and CRS Simplification
Consolidation of the four Legacy Offshore Vehicles into the Consolidated Master Fund LP reduces the number of entities required to file reports under the Foreign Account Tax Compliance Act ("FATCA") and the Common Reporting Standard ("CRS"). Currently, each of the four Legacy Offshore Vehicles is a "reporting financial institution" under FATCA and/or CRS, requiring separate registration, classification, and annual reporting to the relevant local tax authorities (the Cayman Islands Tax Information Authority and the Administration des contributions directes of Luxembourg). Consolidation reduces the number of reporting entities from four to, at most, three (the Consolidated Master Fund LP, the International Feeder, and the Tax-Exempt Feeder), with attendant reductions in compliance burden and risk of reporting errors.
4. LP-Requested Governance Simplification
The LP Advisory Committee (the "LPAC") of the Solara fund platform, at its meeting on April 22, 2025, achieved 78% in interest preliminary consent for the Reorganization. The LPAC, which includes representatives of the largest institutional investors in the Solara platform, has formally requested a simplified governance framework with fewer parallel vehicles, standardized reporting, and a unified limited partnership agreement governing investor rights, transfer restrictions, key person provisions, and distribution waterfall mechanics. The existence of four parallel offshore vehicles — each with its own limited partnership agreement, advisory committee, reporting requirements, and distribution mechanics — has created governance complexity that is disfavored by institutional investors and their consultants. The Reorganization responds directly to these investor demands.
5. Independent Purpose of Each Step
Each step of the five-step Reorganization has an independent purpose apart from the overall consolidation. Step 1 (formation of new entities) is necessary to create the receiving vehicles. Steps 2 through 4 (contributions of portfolio assets) are structured as sequential contributions from each Legacy Offshore Vehicle to the Consolidated Master Fund LP, with the sequencing driven by the differing regulatory and contractual requirements applicable to each offshore vehicle (including CIMA notice requirements for the Cayman vehicles and RCS filing requirements for the Luxembourg vehicles). Step 5 (dissolution and distribution) is the final step necessary to complete the consolidation and migrate investors to the feeder/master structure. The independent purpose of each step is documented in the transaction memorandum prepared by Calderwood & Harkness and will be set forth in detail in the formal PLR Request.
C. Economic Substance
The Reorganization will result in meaningful structural and operational changes to the Solara fund platform. The Consolidated Master Fund LP will be a newly formed Delaware limited partnership, to be formed on September 15, 2025, with its own limited partnership agreement, its own governance provisions (including a reconstituted LPAC), its own investor reporting framework, and its own compliance and regulatory posture. The Consolidated Master Fund LP will be managed by Solara Consolidated Master Fund GP LLC, a newly formed Delaware limited liability company that will serve as the sole general partner.
The feeder/master structure to be implemented in connection with Step 5 — consisting of the International Feeder (for non-U.S. investors) and the Tax-Exempt Feeder (for U.S. tax-exempt investors) — serves continuing investor accommodation purposes that are distinct from the pre-Reorganization structure. Specifically:
•  Solara International Feeder (Cayman) LP will serve as the investment vehicle for non-U.S. investors who require a non-U.S. domiciled vehicle for regulatory, fiduciary, or operational reasons. Non-U.S. investors expected to invest through the International Feeder include Nordhaven Sovereign Wealth Fund (a sovereign wealth fund of the Kingdom of Nordhaven, with $380 million committed to Fund IV-A Cayman and $500 million committed to Fund V-A Cayman, for aggregate commitments of $880 million) and Kestrel Pacific Insurance Group (a Singapore-domiciled insurance group, with €200 million committed to Fund IV-B Lux and €275 million committed to Fund V-B Lux, for aggregate commitments of approximately €475 million / $513 million).
•  Solara Tax-Exempt Feeder (Cayman) LP will serve as the investment vehicle for U.S. tax-exempt investors, including Pinnacle State Employees' Retirement System and Grandview University Endowment, who invest through an offshore vehicle in order to mitigate exposure to unrelated business taxable income ("UBTI") under IRC §§ 511–514 that might otherwise arise from debt-financed investments.
U.S. taxable investors, including Argyle Family Office Holdings LLC (with $95 million committed to Fund IV and $130 million committed to Fund V, for aggregate commitments of $225 million), will continue to invest directly through Fund IV LP and Fund V LP alongside the Consolidated Master Fund LP, avoiding the administrative burden of migrating to a new vehicle.
D. Additional Representations
Solara represents that the Reorganization is motivated by the substantial non-tax business purposes described above and is not undertaken primarily for purposes of tax avoidance within the meaning of the anti-abuse rule set forth in Treasury Regulations § 1.701-2(b). Solara further represents that the Reorganization has meaningful economic substance apart from the creation of tax benefits and that each step of the Reorganization produces non-tax consequences that are material to the overall transaction.
Solara represents that each step of the Reorganization will be fully consummated and will not be reversed, unwound, or otherwise negated. No commitment, agreement, or understanding — whether written or oral, formal or informal — exists that contemplates the reversal, unwinding, or negation of any step of the Reorganization.
VIII. Supplemental Authority — IRC § 1446 Withholding (Ruling 7)
A. Service's Request
During the Pre-Submission Conference, the Service requested supplemental authority supporting Solara's position that no withholding under IRC § 1446(a) is required in connection with the contributions of portfolio company interests by the Legacy Offshore Vehicles to the Consolidated Master Fund LP in Steps 2 through 4, or in connection with the distributions of Consolidated Master Fund LP interests by the Legacy Offshore Vehicles to their limited partners in Step 5. This issue is of particular significance to the non-U.S. investors in the Solara fund platform, including Nordhaven Sovereign Wealth Fund (Kingdom of Nordhaven) and Kestrel Pacific Insurance Group (Singapore), whose investments will be subject to the withholding regime of § 1446 to the extent effectively connected taxable income is allocable to them.
B. Analysis
IRC § 1446(a) imposes on every partnership having effectively connected taxable income ("ECTI") for any taxable year an obligation to pay a withholding tax on behalf of each foreign partner. The withholding obligation arises only where the partnership has ECTI "allocable under section 704 to foreign partners." Treasury Regulations §§ 1.1446-1 through 1.1446-6 implement this statutory requirement and provide detailed rules for computing the withholding obligation.
Steps 2–4 (Contributions). The contributions of portfolio company interests by the Legacy Offshore Vehicles to the Consolidated Master Fund LP in Steps 2 through 4 are nonrecognition transactions under IRC § 721(a). Because § 721(a) provides that no gain or loss is recognized by either the contributing partnership or the Consolidated Master Fund LP on the contribution, no ECTI arises from the contribution transactions. Where no ECTI arises, there is no amount "allocable under section 704 to foreign partners," and accordingly no withholding obligation arises under § 1446(a).
This conclusion is consistent with the structure and purpose of § 1446, which imposes withholding as a proxy for the foreign partner's obligation to pay U.S. income tax on its share of the partnership's ECTI. Where the underlying transaction generates no taxable income — as is the case with a nonrecognition contribution under § 721(a) — there is no tax liability for which withholding would serve as a proxy, and no withholding is required.
Step 5 (Distributions). The distributions of Consolidated Master Fund LP interests by the Legacy Offshore Vehicles to their limited partners in Step 5 are nonrecognition distributions under IRC § 731(a)(1). As demonstrated in Sections V and VI above, no gain is recognized on these distributions because (i) the distributed interests are not "money" or "marketable securities" under § 731(c), and (ii) no partner receives a net deemed distribution under § 752(b) in excess of its adjusted outside basis. Where no gain or income is recognized, no ECTI arises, and no withholding obligation arises under § 1446(a).
Published Authority. The position that nonrecognition transactions do not give rise to withholding obligations under § 1446 is supported by the following authorities:
•  The preamble to the final regulations under § 1446 (T.D. 9200, 70 Fed. Reg. 28,696 (May 18, 2005)) confirms that § 1446 withholding applies only to a partnership's ECTI allocable to foreign partners, and does not extend to transactions that do not generate taxable income.
•  Treasury Regulations § 1.1446-2(b)(1) provides that a partnership's ECTI for purposes of § 1446 is determined in accordance with § 704 and the regulations thereunder, and includes only items of income, gain, loss, and deduction that are effectively connected with the conduct of a trade or business within the United States. Nonrecognition transactions under § 721(a) and § 731(a) do not generate items of income or gain.
•  The principles of Rev. Rul. 84-111, 1984-2 C.B. 88, confirm that contributions of property to a partnership under § 721 are nonrecognition events, and the Service has not issued any guidance suggesting that § 1446 withholding applies to such events.
•  The provisions of IRC § 1446(f), enacted by the Tax Cuts and Jobs Act of 2017 (Pub. L. 115-97), impose withholding on transfers of partnership interests under § 1446(f)(1) and on distributions under § 1446(f)(4), but these provisions apply to dispositions of partnership interests that give rise to gain under § 741 or § 751, not to nonrecognition contributions or distributions.
A comprehensive survey of authorities supporting the § 1446 nonwithholding position is set forth in Supplemental Exhibit 4, attached hereto.
C. Additional Representation
Solara represents that it will comply with all applicable information reporting obligations under IRC §§ 6031 (annual returns of partnership income), 6038 (information with respect to certain foreign corporations and partnerships), and 6046A (information with respect to transfers to and transactions of foreign partnerships) in connection with the Reorganization. Solara will furnish Schedules K-1 (Partner's Share of Income, Deductions, Credits, etc.) to all partners of the Consolidated Master Fund LP, the International Feeder, the Tax-Exempt Feeder, and any continuing domestic vehicles, reflecting the nonrecognition treatment of the contribution and distribution transactions.
IX. Supplemental Analysis — FIRPTA / IRC § 897 (Additional Clarification)
A. Service's Inquiry
During the Pre-Submission Conference, the Service requested clarification on whether interests in certain data center and fiber-optic network portfolio companies — particularly NovaBright Data Systems Inc. and Thorngate Fiber Networks LP — constitute "United States real property interests" ("USRPIs") under IRC § 897, and if so, the implications of such characterization for the nonrecognition treatment of the Reorganization.
B. Analysis
1. Definition of USRPI
IRC § 897(c)(1) defines a "United States real property interest" as (A) an interest in real property located in the United States, or (B) any interest (other than an interest solely as a creditor) in any domestic corporation unless the taxpayer establishes that such corporation was at no time a "United States real property holding corporation" ("USRPHC") during the applicable testing period. Under § 897(c)(2), a USRPHC is a corporation in which the fair market value of its USRPIs equals or exceeds 50% of the aggregate fair market value of its USRPIs, interests in real property located outside the United States, and other assets used or held for use in a trade or business (the "50% asset test").
2. Data Centers
NovaBright Data Systems Inc. operates hyperscale and enterprise colocation data centers at physical locations within the United States. While NovaBright's data centers are housed in physical real estate — including owned and leased buildings, land, and improvements — Solara's position is that the predominant value of NovaBright is attributable to its technology infrastructure (including servers, cooling systems, power distribution units, and network interconnection equipment), its customer contracts and relationships (including long-term colocation agreements), its assembled workforce, its operational platform, and its brand and market position, rather than to the underlying real property.
Solara has conducted a preliminary analysis of whether NovaBright qualifies as a USRPHC under the 50% asset test. Based on independent appraisals obtained from Ostrander Consulting Group (retained as the independent valuation advisor to Solara), the fair market value of NovaBright's U.S. real property interests (consisting of owned real estate and leasehold improvements at its seventeen data center locations) is approximately $178 million, representing approximately 20% of NovaBright's total fair market value of $890 million. The remaining 80% of NovaBright's value is attributable to personal property (technology infrastructure and equipment), intangible assets (customer contracts, software, and intellectual property), and goodwill. Accordingly, NovaBright does not satisfy the 50% asset test and is not a USRPHC.
3. Fiber-Optic Networks
Thorngate Fiber Networks LP owns and operates approximately 28,000 route miles of fiber-optic cable across the eastern and central United States. The Service's inquiry raises the question of whether fiber-optic cables constitute "real property" for purposes of IRC § 897. Solara's position is that fiber-optic cables are properly characterized as tangible personal property rather than fixtures or real property, consistent with the following analysis:
•  Under general federal tax principles, the characterization of property as real or personal depends on the applicable state law and the relevant factors set forth in Whiteco Industries, Inc. v. Commissioner, 65 T.C. 664 (1975), including the manner of attachment, the intent of the parties, and the adaptability of the property to the use of the realty.
•  Fiber-optic cables are typically installed in underground conduits, aerial routes, or undersea routes and are designed to be removed, replaced, or upgraded without material damage to the underlying real property. The cables are functional telecommunications equipment rather than structural components of real property.
•  The IRS has issued guidance addressing the characterization of telecommunications infrastructure. See, e.g., Rev. Rul. 2003-54, 2003-1 C.B. 982 (addressing depreciation classification of fiber-optic cable); see also Treasury Regulations § 1.1250-1(e)(3) (distinguishing "section 1250 property" from "section 1245 property" in the context of buildings and structural components). Fiber-optic cable is generally treated as § 1245 property (tangible personal property) rather than § 1250 property (real property) for depreciation purposes, which supports its characterization as personal property for FIRPTA purposes.
Even to the extent Thorngate holds interests i