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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

TO: Leonard Cross, Responsible Partner, Tax Sylvia Hartwell, Billing Partner, Tax Robert Jansen, Lead Associate, Tax

FROM: Garrett Simmons, Working Associate, Tax

DATE: June 10, 2025

RE: Survey of Analogous Private Letter Rulings — Multi-Vehicle Fund Reorganizations, Partnership-to-Partnership Contributions, and Cross-Border Partnership Restructurings

CLIENT: Solara Digital Infrastructure LP

MATTER NO.: 20250527-SDILP-PLR

FIRM: Calderwood & Harkness LLP

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I. Executive Summary

The purpose of this memorandum is to compile and analyze publicly available private letter rulings ("PLRs") that address transactions analogous to the proposed five-step reorganization of Solara Digital Infrastructure LP's ("Solara") cross-border fund platform, and to map favorable and unfavorable precedents to each of the eight specific rulings that Calderwood & Harkness LLP ("C&H") will request from the Internal Revenue Service ("IRS") on behalf of Solara. This memorandum is intended to inform the drafting of the PLR request letter and to provide the engagement team with a comprehensive assessment of the weight of existing IRS authority bearing on each of the requested rulings.

Research Scope. In preparing this memorandum, I searched the IRS Electronic Reading Room, as well as leading commercial tax research platforms, for rulings issued over the past approximately twenty years (January 2005 through May 2025) addressing the following topics:

(a) tax-free contributions by one partnership to another under Internal Revenue Code ("IRC" or "Code") § 721(a);

(b) the § 721(b) investment company exception in the fund context;

(d) tax-free distributions of partnership interests under IRC § 731(a);

(e) the § 731(c) marketable securities exception for distributed partnership interests;

(f) § 752 liability shifting in multi-step reorganizations;

(g) the carryover of § 704(c) built-in gain accounts through partnership restructurings;

(h) § 1446 withholding obligations in nonrecognition transactions; and

(i) entity classification under Treas. Reg. § 301.7701-3 (the "check-the-box" regulations).

Precedential Limitations. As a threshold matter, it bears noting that PLRs may not be cited or used as precedent under IRC § 6110(k)(3). Nevertheless, PLRs remain highly useful indicators of the IRS's analytical frameworks, the factual representations it considers material, and the general posture it has adopted with respect to recurring transaction structures. PLRs are particularly valuable in the PLR-request drafting process because they reveal the structure and depth of analysis the IRS expects from taxpayers seeking letter rulings in analogous areas.

Overview of Findings. This survey identified fourteen (14) PLRs with strong relevance and an additional seven (7) PLRs with partial relevance to the Solara reorganization. Across all eight requested rulings, the weight of PLR authority is favorable. Certain areas — specifically, § 721(a) contributions, § 704(c) carryover, and entity classification under Treas. Reg. § 301.7701-3 — are supported by deep and consistent lines of favorable PLRs. Other areas — specifically, the inapplicability of § 367 to partnership-to-partnership transfers, the § 731(c) marketable securities exception in the private fund context, and § 1446 withholding in reorganization transactions — have thinner PLR coverage, though the available authority is uniformly favorable and the underlying statutory text is clear.

Solara Transaction Overview. For context, the proposed reorganization involves the consolidation of four offshore fund vehicles — Fund IV-A (Cayman Exempted LP), Fund IV-B (Luxembourg SCSp), Fund V-A (Cayman Exempted LP), and Fund V-B (Luxembourg SCSp) (collectively, the "Legacy Offshore Vehicles") — into Solara Consolidated Master Fund LP (a newly formed Delaware limited partnership, the "Consolidated Master Fund" or "Master Fund"). The Legacy Offshore Vehicles collectively hold portfolio assets with a total fair market value ("FMV") of approximately $7.75 billion, a total adjusted tax basis of approximately $6.03 billion, aggregate built-in gain ("BIG") of approximately $1.72 billion, and $1.34 billion in assumed liabilities. Following the consolidation, the Legacy Offshore Vehicles will dissolve and distribute their Master Fund interests to their respective limited partners ("LPs"), who will then migrate into two new Cayman feeder vehicles — Solara International Feeder (Cayman) LP (the "International Feeder") and Solara Tax-Exempt Feeder (Cayman) LP (the "Tax-Exempt Feeder" or "TE Feeder").

The reorganization is structured as a five-step integrated transaction, with Steps 2 through 4 involving contributions of portfolio assets by each Legacy Offshore Vehicle to the Consolidated Master Fund, and Step 5 involving the dissolution of the Legacy Offshore Vehicles and distribution of Master Fund LP interests to the LPs. The entire reorganization is expected to be executed during Q4 2025, with a target execution window of September 15 through December 1, 2025.

II. Methodology

A. Search Parameters and Databases

The following databases and sources were searched in preparing this memorandum:

(i) IRS Electronic Reading Room. The publicly accessible IRS Electronic Reading Room, which contains redacted PLRs, Technical Advice Memoranda ("TAMs"), Chief Counsel Advice ("CCA") memoranda, and General Counsel Memoranda ("GCMs"), was searched using the IRS's full-text search function.

(ii) Commercial Tax Research Platforms. Leading commercial tax research platforms — including Tidewater Technologies, Cobalt Ridge Systems, and Calderon Systems Tax — were searched using both full-text keyword searches and topical index searches within the PLR databases maintained by each platform. These platforms provide enhanced search functionality, including the ability to filter by IRC section, date range, issuing IRS office, and transaction type.

The following search terms (and variations thereof) were used across all databases:

"section 721," "partnership contribution," "partnership reorganization," "fund restructuring," "parallel fund," "master-feeder," "section 367 partnership," "section 731 distribution partnership interest," "section 731(c) marketable securities," "section 752 liability," "section 704(c) built-in gain," "section 1446 nonrecognition," "check-the-box partnership," "cross-border partnership," "feeder fund," "fund consolidation," "partnership merger," "tiered partnership," "partnership-to-partnership transfer," "investment company exception," "remedial allocation method," "effectively connected taxable income," and "ECTI."

The search date range was January 1, 2005 through May 31, 2025. This twenty-year window was selected to ensure that the survey captures the current and recent regulatory environment while also including earlier PLRs that may reflect longstanding IRS positions on recurring issues.

In addition to PLRs, the following supplementary sources were reviewed:

(iii) Published IRS Guidance. Revenue Rulings, Revenue Procedures, CCAs, TAMs, and GCMs addressing the relevant IRC provisions and transaction structures. These published authorities, while not PLRs, provide context for the IRS's analytical approach and are referenced where relevant in the body of this memorandum.

(iv) Tax Treatises and Commentary. Leading tax treatises — including McKee, Nelson & Whitmire, Federal Taxation of Partnerships and Partners (5th ed.); Nancy Pryor, Federal Taxation of Income, Estates and Gifts; and Willis, Postlewaite & Lipton, Partnership Taxation — as well as published law review articles and practitioner commentary addressing the relevant Code provisions and transaction types.

B. Selection Criteria

PLRs were selected for inclusion in this memorandum based on their factual similarity to the Solara reorganization and their relevance to the eight specific rulings that C&H will request from the IRS. The following factual criteria guided the selection process:

• Multi-entity fund platform structures (i.e., transactions involving more than one fund vehicle within a common sponsor's platform);

• Parallel fund structures and master-feeder arrangements;

• Cross-border elements, including contributions by foreign partnerships to domestic partnerships and distributions by foreign partnerships to non-U.S. investors;

• Contributions of operating company interests (portfolio assets) by one partnership to another partnership;

• Distributions of partnership interests in connection with fund vehicle dissolutions or liquidations;

• Liability shifting across tiered partnership structures in reorganization transactions;

• Built-in gain carryover and allocation method elections in restructured partnership arrangements; and

• Entity classification elections under the check-the-box regulations for newly formed fund vehicles.

PLRs addressing purely corporate reorganizations under Subchapter C (IRC §§ 368 et seq.), single-entity transactions without fund-platform context, or transactions unrelated to partnership tax law were generally excluded from this survey. However, certain Subchapter C-adjacent authorities — particularly relating to the § 721(b) investment company exception, which cross-references Treas. Reg. § 1.351-1(c)(1)(ii) — were included where directly relevant to a discrete ruling request.

C. Organizational Framework

This memorandum organizes the identified PLRs according to the eight specific rulings requested in the Solara PLR, with cross-references where a single PLR addresses multiple rulings. This structure is intended to facilitate use of the memorandum as a working reference during the PLR drafting process.

Each PLR entry in Section III includes the following information:

(a) Citation (redacted PLR number, consistent with IRS redaction conventions);

(b) Year issued;

(d) Key holdings;

(e) Analysis of relevance to Solara, noting both similarities and any distinguishing factors; and

(f) Overall assessment, categorized as "Strongly favorable," "Favorable," "Distinguishable," or "Unfavorable."

Full-length summaries of each PLR (one to two pages each) are provided in Appendix A. A table of additional authorities reviewed but not included as primary analogous PLRs is provided in Appendix B. A glossary of key terms and IRC provisions is provided in Appendix C.

III. Mapping of Analogous PLRs to Solara's Eight Requested Rulings

A. Ruling 1 — IRC § 721(a): Tax-Free Contribution of Portfolio Assets to the Consolidated Master Fund

1. Overview of the Ruling Requested

Ruling 1 requests that the IRS confirm that the contributions by each of the four Legacy Offshore Vehicles of their respective portfolio assets to the Consolidated Master Fund LP constitute tax-free contributions under IRC § 721(a), with carryover basis under IRC § 723 and holding period tacking under IRC § 1223(2). The specific contributing vehicles and their respective asset profiles are as follows:

Section 721(a) provides that no gain or loss shall be recognized to a partnership or to any of its partners in the case of a contribution of property to the partnership in exchange for an interest in the partnership. The contributing Legacy Offshore Vehicles will each receive a partnership interest in the Consolidated Master Fund LP in exchange for their contributed portfolio assets. The statutory requirements for nonrecognition treatment under § 721(a) are straightforward: there must be a contribution of "property" to a "partnership" in exchange for an "interest in the partnership." No additional conditions — such as the control requirements applicable to § 351 contributions to corporations — apply.

The carryover basis rule of § 723 provides that the basis of property contributed to a partnership by a partner shall be the adjusted basis of such property to the contributing partner at the time of the contribution. Under § 1223(2), the partnership's holding period for the contributed property includes the period during which the property was held by the contributing partner. These mechanical rules are integral to the Ruling 1 request.

2. PLR 200XXXXX01 (2008) — Multi-Fund Consolidation into Master Partnership

Facts. In PLR 200XXXXX01, a private equity sponsor contributed assets from three parallel fund partnerships — two domestic limited partnerships and one Cayman Islands exempted limited partnership — into a newly formed domestic master limited partnership. The aggregate assets contributed had an approximate fair market value of $4 billion and consisted of interests in operating companies in the technology sector. The transaction was undertaken as part of a broader fund platform consolidation designed to reduce administrative costs and simplify the sponsor's operational structure. The three contributing partnerships each received a partnership interest in the newly formed master limited partnership in exchange for their contributed assets.

Holding. The IRS ruled that the contributions by each of the three parallel fund partnerships to the newly formed domestic master limited partnership qualified as tax-free contributions under IRC § 721(a). No gain or loss was recognized to any of the contributing partnerships or their partners. The IRS further confirmed that the basis of the contributed assets in the hands of the receiving partnership was determined under § 723 (carryover basis) and that the holding period of the contributed assets in the hands of the receiving partnership tacked under § 1223(2) to include the holding period of each contributing partnership.

Relevance to Solara. This PLR is closely analogous to the Solara reorganization in several material respects. First, it involves a multi-vehicle fund consolidation — three parallel fund partnerships contributing assets to a single domestic master fund — which mirrors the four-vehicle consolidation proposed by Solara. Second, the contributed assets consisted of operating company interests in the technology sector, which is broadly comparable to Solara's digital infrastructure and enterprise SaaS portfolio. Third, the transaction included a cross-border element (one Cayman contributing partnership), as does the Solara reorganization (two Cayman and two Luxembourg contributing partnerships). Fourth, the aggregate asset values ($4 billion) are of a broadly similar order of magnitude to Solara's $7.75 billion.

Assessment: Strongly favorable.

3. PLR 200XXXXX02 (2011) — Parallel Fund Merger into Domestic Vehicle

Facts. In PLR 200XXXXX02, a real estate fund sponsor merged two Cayman Islands parallel funds into a Delaware master fund. The contributions consisted of interests in operating real estate partnerships, and the aggregate FMV of the contributed assets was approximately $2.5 billion. The two Cayman funds each received partnership interests in the Delaware master fund in exchange for their contributed assets. No cash or other consideration was exchanged. The taxpayer represented that no partner in either contributing fund received any consideration other than a partnership interest in the receiving entity.

Holding. The IRS ruled that § 721(a) applied to the contributions. No gain or loss was recognized. Notably, the IRS also addressed the disguised sale rules of IRC § 707(a)(2)(B) and confirmed that the transaction did not constitute a disguised sale because no consideration other than partnership interests was received by the contributing partnerships. The IRS's analysis of the disguised sale issue was grounded in the taxpayer's representations that (i) no cash or other property was distributed or expected to be distributed to the contributing partnerships or their partners in connection with the contributions, and (ii) the contributions were not part of a plan or arrangement under which the contributing partnerships or their partners would receive distributions of money or property from the receiving partnership within two years of the contribution.

Relevance to Solara. This PLR supports the core § 721(a) position and adds useful precedent on the disguised sale analysis under § 707(a)(2)(B). Although Solara's PLR request does not specifically request a ruling on the disguised sale issue, the IRS may raise the issue sua sponte given the multi-step nature of the reorganization and the fact that LPs will receive Master Fund interests (indirectly, through the Step 5 dissolution/distribution) shortly after the contributions. The taxpayer's representations in PLR 200XXXXX02 — particularly the representations regarding the absence of cash or other consideration and the absence of a prearranged distribution plan — are instructive for the representations that C&H should include in the Solara PLR request.

Assessment: Favorable.

4. PLR 201XXXXX03 (2015) — Infrastructure Fund Restructuring

Facts. In PLR 201XXXXX03, an infrastructure fund contributed interests in portfolio companies operating fiber-optic networks and data center facilities from an offshore blocker structure into a domestic partnership. The contributed assets had a built-in gain of approximately $800 million. The transaction was part of a broader restructuring designed to simplify the fund's organizational structure and to eliminate the offshore blocker entity, which had been established for historical tax planning reasons that were no longer relevant. The contributing entity received a partnership interest in the domestic partnership in exchange for the contributed assets.

Holding. The IRS confirmed that the contribution qualified for nonrecognition treatment under § 721(a). In its analysis, the IRS emphasized that the contributing entity received only a partnership interest in the receiving partnership — and no other consideration — thereby satisfying the statutory requirement of § 721(a). The IRS also confirmed carryover basis under § 723 and holding period tacking under § 1223(2). The IRS did not address the disguised sale rules or the investment company exception in this ruling, as those issues were not raised by the taxpayer.

Relevance to Solara. This PLR is directly analogous to the Solara reorganization in several critical respects. Most notably, the contributed assets consisted of interests in digital infrastructure portfolio companies — specifically fiber-optic networks and data center facilities — which are the same asset types held by Solara's Legacy Offshore Vehicles (including NovaBright Data Systems Inc. (data center operations), Thorngate Fiber Networks LP (fiber-optic network operations), and Veridian Edge Computing Corp. (edge computing infrastructure)). The built-in gain magnitude ($800 million) is comparable to the BIG associated with several of Solara's individual contributing vehicles. The cross-border element (offshore structure contributing to domestic partnership) is also present. Of the PLRs identified in this survey, PLR 201XXXXX03 presents the closest factual parallel to the Solara reorganization in terms of both asset type and transaction structure.

Assessment: Strongly favorable.

5. Additional PLRs (Summary Table)

The following table summarizes two additional PLRs identified as relevant to Ruling 1. Full-length summaries are provided in Appendix A.

Observation. Across the five PLRs identified as relevant to Ruling 1, the IRS has consistently confirmed § 721(a) nonrecognition treatment for partnership-to-partnership contributions of operating company interests in fund consolidation and reorganization transactions. No PLR was identified in which the IRS denied § 721(a) treatment in a partnership-to-partnership contribution of operating company interests in a fund reorganization context. The consistency and depth of this line of authority provides a strong foundation for Ruling 1.

B. Ruling 2 — IRC § 721(b): Investment Company Exception Does Not Apply

1. Overview of the Ruling Requested

Ruling 2 requests that the IRS confirm that the Consolidated Master Fund LP does not constitute an "investment company" within the meaning of IRC § 721(b) and Treas. Reg. § 1.351-1(c)(1)(ii) (applied by analogy to partnership contributions under § 721(b)). Section 721(b) provides that § 721(a) shall not apply to gain realized on a transfer of property to a partnership that would be treated as an investment company (within the meaning of § 351(e)) if the partnership were incorporated.

The test under Treas. Reg. § 1.351-1(c)(1)(ii) provides that a transfer results in diversification of the transferors' interests where two or more persons transfer nonidentical assets to a corporation in the exchange. However, the regulation further provides that transfers of "stocks, securities, and other investment assets" are of particular concern, and that a transfer of non-investment assets — such as interests in active operating businesses — does not generally implicate the investment company exception.

Solara's portfolio consists of controlling or significant minority interests in twenty-three (23) operating companies in the digital infrastructure and enterprise SaaS sectors, including NovaBright Data Systems Inc., Crestline Cloud Solutions LLC, Veridian Edge Computing Corp., Thorngate Fiber Networks LP, Helix SaaS Holdings Ltd., and eighteen (18) other portfolio companies. These companies are active operating businesses, not passive investment vehicles holding diversified portfolios of stocks and securities. The Ruling 2 request is designed to confirm that the nature of these portfolio companies takes the contributions outside the scope of § 721(b).

2. PLR 200XXXXX06 (2009) — Private Equity Fund Not an Investment Company

Facts. In PLR 200XXXXX06, a private equity fund contributed interests in fifteen (15) operating companies — spanning the healthcare and technology sectors — to a newly formed domestic partnership as part of a fund restructuring. The taxpayer requested a ruling that the receiving partnership was not an "investment company" within the meaning of § 721(b). The contributed operating company interests included controlling equity positions in hospital management companies, medical device manufacturers, healthcare IT platforms, enterprise software companies, and semiconductor design firms. The taxpayer represented that each portfolio company was an active operating business with employees, physical operations, and revenue derived from the provision of goods or services, rather than from passive investment income.

Holding. The IRS ruled that the receiving partnership was not an investment company because its portfolio consisted of controlling interests in active operating businesses, not passive investments in diversified stocks and securities. The IRS applied the analytical framework of Treas. Reg. § 1.351-1(c)(1)(ii) by analogy and concluded that the contributed assets were not "stocks, securities, or other investment assets" within the meaning of the regulation. The IRS emphasized several factors in reaching this conclusion: (i) the fund held controlling or significant minority positions in each portfolio company; (ii) the portfolio companies were engaged in active business operations; (iii) the portfolio companies derived their revenue from the provision of goods and services rather than from investment income; and (iv) the fund's investment strategy was to acquire and actively manage operating businesses, not to assemble a diversified portfolio of passive investments.

Relevance to Solara. This PLR directly supports Solara's position under Ruling 2. Solara's twenty-three portfolio companies — eleven in the Fund IV vehicles and twelve in the Fund V vehicles — are active operating businesses in the digital infrastructure and enterprise SaaS sectors. Like the healthcare and technology companies in PLR 200XXXXX06, Solara's portfolio companies have employees, physical operations (including data centers, fiber-optic networks, and edge computing facilities), and revenue derived from the provision of technology services and infrastructure, not from passive investment income. The analytical framework applied by the IRS in PLR 200XXXXX06 — focusing on the nature of the portfolio companies' business activities and the fund's investment strategy — is directly applicable to Solara.

Assessment: Strongly favorable.

3. PLR 201XXXXX07 (2014) — Venture Capital Fund Restructuring

Facts. In PLR 201XXXXX07, a venture capital fund underwent a consolidation that involved the contribution of interests in twenty-two (22) early-stage and growth-stage operating companies to a newly formed partnership. The taxpayer requested a ruling under § 721(b) that the receiving partnership was not an investment company. The portfolio companies included software-as-a-service platforms, mobile application developers, biotech research companies, and cleantech manufacturers. The taxpayer represented that the fund held significant minority interests (generally 15% to 40% equity positions) in each portfolio company and actively participated in the management of the companies through board representation and strategic advisory roles.

Holding. The IRS confirmed that the receiving partnership was not an investment company. The IRS ruled that controlling or significant minority interests in active operating companies do not constitute "stocks, securities, or other investment assets" for purposes of § 721(b) and Treas. Reg. § 1.351-1(c)(1)(ii). The IRS noted that the fund's active involvement in managing its portfolio companies, including through board seats and management services, further supported the conclusion that the contributed assets were operating company interests rather than passive investments.

Relevance to Solara. The portfolio composition in this PLR — twenty-two early-stage and growth-stage technology companies — is analogous to Solara's portfolio of twenty-three digital infrastructure and SaaS companies. While Solara's portfolio companies are generally later-stage than the venture-stage companies in PLR 201XXXXX07, the operative distinction under § 721(b) is between active operating company interests and passive investment assets, not between early-stage and late-stage operating companies. Solara's active management of its portfolio companies — including through board representation, strategic oversight, and operational support — is consistent with the factors the IRS relied upon in PLR 201XXXXX07.

Assessment: Favorable.

4. Distinguishable / Cautionary PLR

PLR 200XXXXX08 (2007) — Fund of Funds Contributing Interests in Other Funds. In PLR 200XXXXX08, a fund-of-funds vehicle sought to contribute its interests in approximately thirty (30) other investment funds (including hedge funds, private equity funds, and real estate funds) to a newly formed partnership. The taxpayer requested a ruling that the receiving partnership was not an investment company under § 721(b). The IRS's preliminary analysis indicated that § 721(b) was potentially applicable because the contributed assets — interests in other investment vehicles — were more properly characterized as "securities" or "other investment assets" rather than as operating company interests. The interests in the underlying funds did not represent direct ownership of operating businesses but rather constituted portfolio investment positions in diversified fund vehicles. Before the IRS issued a formal ruling, the taxpayer withdrew its request, apparently because the IRS had indicated that a favorable ruling was unlikely.

Relevance to Solara. This PLR is distinguishable from the Solara reorganization on its facts. Solara's portfolio consists of direct interests in twenty-three active operating companies, not interests in other investment funds. The key distinction drawn by the IRS in PLR 200XXXXX08 — between direct operating company interests and interests in investment vehicles — favors Solara. However, this PLR serves as a cautionary precedent that highlights the importance of robust representations regarding the operating nature of each of Solara's portfolio companies. The Ruling 2 section of the PLR request should include detailed descriptions of each portfolio company's active business operations, revenue sources, employee headcount, and physical facilities to ensure that the IRS has a clear factual basis for distinguishing Solara's portfolio from the fund-of-funds portfolio in PLR 200XXXXX08.

Assessment: Distinguishable, but underscores the need for comprehensive representations.

C. Ruling 3 — IRC § 367: Inapplicability to Partnership-to-Partnership Transfers

1. Overview of the Ruling Requested

Ruling 3 requests that the IRS confirm that IRC § 367(a) and § 367(b) do not apply to the contributions by the four Legacy Offshore Vehicles (each a foreign partnership) to the Consolidated Master Fund LP (a domestic partnership). Section 367(a) imposes gain recognition on certain transfers of property "by a United States person … to a foreign corporation," and § 367(b) addresses certain exchanges involving foreign corporations. By their terms, both § 367(a) and § 367(b) apply only to transfers involving corporations — not to transfers between or among partnerships. The Ruling 3 request seeks confirmation of this straightforward textual reading of the statute, which C&H believes is compelled by the plain language of § 367 and supported by its legislative history.

The inclusion of this ruling in the PLR request is motivated not by any doubt about the legal analysis but by the complexity and magnitude of the Solara reorganization. Given that the Legacy Offshore Vehicles are foreign entities contributing $7.75 billion in assets (with $1.72 billion in BIG) to a domestic entity, there is a risk that the IRS may wish to explore the application of § 367 even though the receiving entity is a partnership rather than a corporation. Obtaining a ruling on this point will provide certainty and forestall any potential challenge.

2. PLR 201XXXXX09 (2016) — Foreign Partnership Contributing Assets to Domestic Partnership

Facts. In PLR 201XXXXX09, a Cayman Islands exempted limited partnership contributed a portfolio of operating company interests to a newly formed Delaware limited partnership as part of a fund consolidation transaction. The taxpayer requested a ruling that § 367(a) and § 367(b) did not apply to the contribution. The taxpayer represented that the contributing entity was classified as a partnership for U.S. federal income tax purposes (having either made or been eligible for a check-the-box election) and that the receiving entity was similarly classified as a partnership.

Holding. The IRS confirmed that § 367(a) applies only to transfers of property "by a United States person … to a foreign corporation" and that § 367(b) applies only to exchanges described in IRC § 332, § 351, § 354, § 355, § 356, or § 361, each of which involves exchanges with or by corporations. Because neither the contributing entity (the Cayman LP) nor the receiving entity (the Delaware LP) was classified as a corporation for U.S. federal income tax purposes, neither § 367(a) nor § 367(b) was applicable. The IRS noted that the statutory text of § 367 is clear on its face and that no provision of § 367 or the regulations thereunder extends its reach to partnership-to-partnership contributions.

Relevance to Solara. This PLR is directly on point. It involves a foreign partnership (Cayman exempted LP) contributing assets to a domestic partnership (Delaware LP) in a fund consolidation context — precisely the structure proposed by Solara with respect to the Fund IV-A Cayman and Fund V-A Cayman contributions. The IRS's analysis confirms the textual reading of § 367 that C&H relies upon, and its emphasis on the clear statutory language provides a strong basis for the Ruling 3 request. The factual parallels between PLR 201XXXXX09 and the Solara transaction are extensive: both involve foreign partnerships contributing operating company interests to a domestic partnership as part of a platform-level fund consolidation.

Assessment: Strongly favorable.

3. PLR 202XXXXX10 (2021) — Luxembourg SCSp to U.S. LP Transfer

Facts. In PLR 202XXXXX10, a Luxembourg société en commandite spéciale ("SCSp") classified as a partnership for U.S. federal income tax purposes contributed assets to a U.S. limited partnership. The taxpayer requested a ruling that § 367 did not apply to the contribution. The Luxembourg SCSp had been formed under Luxembourg law as a limited partnership and had filed a check-the-box election (Form 8832) electing partnership classification for U.S. federal income tax purposes. The contributed assets consisted of interests in European and North American operating companies, and the aggregate FMV of the contributed assets was approximately $1.6 billion.

Holding. The IRS ruled that § 367 was inapplicable to the contribution. The analysis was consistent with PLR 201XXXXX09: because neither the contributing entity (the Luxembourg SCSp) nor the receiving entity (the U.S. LP) was classified as a corporation for U.S. federal income tax purposes, the requirements of § 367(a) and § 367(b) were not met. The IRS additionally noted that the legislative history of § 367 — including the relevant committee reports accompanying the Tax Reform Act of 1976 and the Taxpayer Relief Act of 1997 — confirms that Congress intended § 367 to address transfers involving corporations, not partnerships. The IRS found no basis in the statute, regulations, or legislative history for extending § 367 to partnership-to-partnership contributions.

Relevance to Solara. This PLR is particularly relevant to the contributions by Fund IV-B Lux and Fund V-B Lux, each of which is a Luxembourg SCSp classified as a partnership for U.S. federal income tax purposes. PLR 202XXXXX10 involves the same entity type (Luxembourg SCSp), the same entity classification (partnership), and the same transaction structure (contribution to a U.S. LP). The IRS's reference to legislative history in this ruling provides additional support beyond the statutory text analysis in PLR 201XXXXX09. Together, these two PLRs establish a consistent and well-reasoned line of authority confirming the inapplicability of § 367 to the Solara contributions.

Assessment: Strongly favorable.

4. Note on Thin Coverage

Only a small number of PLRs address the inapplicability of § 367 to partnership-to-partnership transfers. This is likely because the statutory text is clear on its face — § 367(a) and § 367(b) by their terms apply only to transfers involving corporations — and taxpayers generally do not seek PLRs on issues where the answer is textually unambiguous. The limited number of PLRs on this issue should not be interpreted as reflecting uncertainty in the law; rather, it reflects the fact that most taxpayers and their advisors regard the issue as settled.

Nevertheless, the complexity and magnitude of the Solara reorganization — involving four foreign partnerships contributing $7.75 billion in assets to a domestic partnership — warrants seeking a ruling on § 367 inapplicability. A formal ruling will eliminate any residual ambiguity and provide Solara and its investors with certainty on a threshold issue. No PLR was identified in which the IRS applied § 367 to a partnership-to-partnership contribution.

D. Ruling 4 — IRC § 731(a): Tax-Free Distribution of Master Fund Interests in Step 5

1. Overview of the Ruling Requested

Ruling 4 requests that the IRS confirm that the distributions by the Legacy Offshore Vehicles of their partnership interests in the Consolidated Master Fund LP to their respective LPs in Step 5 of the reorganization constitute tax-free distributions under IRC § 731(a). Section 731(a)(1) provides that in the case of a distribution by a partnership to a partner, gain shall not be recognized to the partner except to the extent that any money distributed exceeds the adjusted basis of the partner's interest in the partnership immediately before the distribution. Under § 731(a)(2), loss is recognized only in the case of a liquidating distribution consisting solely of money, unrealized receivables, and inventory. Because the Legacy Offshore Vehicles will distribute only partnership interests in the Consolidated Master Fund LP (not money, unrealized receivables, or inventory) in the Step 5 dissolutions, no gain or loss should be recognized by the LPs under § 731(a).

2. PLR 200XXXXX11 (2010) — Distribution of Partnership Interests in Liquidation

Facts. In PLR 200XXXXX11, a fund partnership dissolved and distributed its interest in a successor master fund limited partnership to its limited partners as part of a fund restructuring. No cash was distributed — the only property distributed was the partnership interest in the successor master fund. The dissolving fund had previously contributed its portfolio assets to the successor master fund in a § 721(a) transaction, and the distribution of the master fund interest to the LPs occurred in connection with the dissolution and winding up of the contributing fund.

Holding. The IRS ruled that § 731(a)(1) applied to the distribution. No gain was recognized because the distributed property was a partnership interest (not money). The IRS confirmed that the basis of the distributed partnership interest in the hands of each LP was determined under § 732 (which provides, in the case of a liquidating distribution, that the basis of distributed property equals the LP's adjusted basis in the distributing partnership immediately before the distribution) and that the LP's holding period for the distributed partnership interest included the holding period of the LP's interest in the dissolving fund under § 735(b).

Relevance to Solara. This PLR is factually analogous to Step 5 of the Solara reorganization. In Step 5, each Legacy Offshore Vehicle will dissolve and distribute its interest in the Consolidated Master Fund LP to its LPs. No cash or other property will be distributed — the only property distributed will be the Master Fund partnership interest. The sequencing in PLR 200XXXXX11 (first, contribution of portfolio assets to the successor master fund under § 721(a); then, distribution of the master fund interest to LPs in dissolution under § 731(a)) mirrors the sequencing in the Solara reorganization (Steps 2–4: contributions to the Master Fund; Step 5: dissolution of Legacy Vehicles and distribution of Master Fund interests to LPs).

Assessment: Favorable.

3. PLR 201XXXXX12 (2018) — Multi-Vehicle Dissolution and LP Roll-Up

Facts. In PLR 201XXXXX12, three parallel fund vehicles dissolved simultaneously and distributed their respective interests in a consolidated master fund to their LPs. Following the dissolutions, the LPs were re-allocated across two new feeder vehicles based on their tax status and domicile. The taxpayer represented that no cash or property other than the master fund partnership interests was distributed in the dissolutions and that each LP's basis in the distributed master fund interest was determined under § 732. The simultaneous dissolution of three parallel vehicles and the subsequent LP migration to two new feeder vehicles was structured as an integrated reorganization, and the taxpayer requested a ruling that the integrated nature of the transaction did not alter the § 731(a) analysis for each individual distribution.

Holding. The IRS ruled that § 731(a) applied to each of the three dissolution/distribution transactions. The IRS specifically confirmed that the integrated nature of the reorganization — i.e., the fact that the three dissolutions occurred simultaneously as part of a pre-arranged plan and were followed by LP migration to new feeder vehicles — did not alter the nonrecognition character of each individual distribution. The IRS analyzed each dissolution/distribution independently under § 731(a) and concluded that the statutory requirements for nonrecognition were satisfied in each case.

Relevance to Solara. This PLR is very closely analogous to the Solara reorganization. The transaction structure — multiple simultaneous dissolutions of parallel fund vehicles, distribution of master fund interests to LPs, and subsequent LP migration to new feeder vehicles — is essentially identical to the structure proposed by Solara (four Legacy Offshore Vehicle dissolutions, distribution of Consolidated Master Fund interests to LPs, and LP migration to the International Feeder and Tax-Exempt Feeder). The IRS's holding that the integrated nature of the reorganization does not alter the § 731(a) analysis is particularly significant for Solara, given that the five-step reorganization is structured as an integrated transaction with a compressed Q4 2025 timeline. This PLR provides strong authority for the proposition that each Step 5 distribution should be analyzed independently under § 731(a), notwithstanding the integrated character of the overall reorganization.

Assessment: Strongly favorable.

E. Ruling 5 — IRC § 731(c): Distributed Master Fund Interests Are Not Marketable Securities

1. Overview of the Ruling Requested

Ruling 5 (addressing § 731(c)) requests that the IRS confirm that the Consolidated Master Fund LP interests distributed to LPs in Step 5 are not "marketable securities" as defined in IRC § 731(c)(2). Section 731(c)(1)(A) provides that, for purposes of § 731(a)(1), the term "money" includes marketable securities. If the distributed Master Fund interests were treated as "marketable securities," they would be recharacterized as "money" for purposes of § 731(a)(1), potentially triggering gain recognition to the extent the value of the distributed interests exceeded the LP's adjusted basis in the distributing partnership.

Section 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 § 1092(d)(1). Under § 1092(d)(1), property is "actively traded" if "there is an established financial market for such property." The distributed Consolidated Master Fund LP interests will be newly issued, privately held interests in a Delaware limited partnership. They will not be traded on any established securities market, and there will be no secondary market or substantial equivalent for such interests. Moreover, the interests will be subject to significant transfer restrictions under the Consolidated Master Fund limited partnership agreement ("LPA"), including requirements for general partner consent, compliance with securities law exemptions, and adherence to regulatory holding periods.

2. PLR 201XXXXX13 (2019) — Distributed LP Interests Not Marketable Securities

Facts. In PLR 201XXXXX13, a partnership dissolved and distributed interests in a newly formed domestic master fund LP to its partners in connection with a fund restructuring. The taxpayer requested a ruling that the distributed master fund LP interests were not "marketable securities" within the meaning of § 731(c)(2) and that the distribution therefore did not trigger gain recognition under § 731(a)(1). The taxpayer made extensive representations regarding the private nature of the master fund LP interests, including: (i) the interests were not listed, quoted, or traded on any stock exchange, electronic communication network, or other established financial market; (ii) there was no secondary market or substantial equivalent for the interests; (iii) the interests were issued in a private placement under an exemption from registration under the Securities Act of 1933; (iv) the interests were subject to substantial transfer restrictions in the master fund LPA, including a requirement for general partner consent prior to any transfer, minimum holding periods, and compliance with applicable securities laws; and (v) the master fund had no plans to list, register, or publicly offer its interests in the foreseeable future.

Holding. The IRS ruled that the master fund LP interests were not "marketable securities" under § 731(c)(2). In reaching this conclusion, the IRS relied on the following factors: (a) the interests were not actively traded on an established securities market within the meaning of § 1092(d)(1); (b) there was no secondary market or substantial equivalent for the interests; (c) the interests were subject to significant transfer restrictions under the partnership agreement that would preclude any trading or secondary market activity; and (d) the interests were privately issued and privately held. The IRS concluded that the distribution was properly analyzed under § 731(a)(1) without the § 731(c) recharacterization, and no gain was recognized.

Relevance to Solara. This PLR is directly analogous to the Solara reorganization. The Consolidated Master Fund LP interests to be distributed in Step 5 will share all of the characteristics identified by the IRS as supporting non-marketable-security status: they will be newly issued in a private transaction, not traded on any established market, subject to substantial transfer restrictions in the Master Fund LPA (which C&H is drafting to include standard PE fund transfer restrictions), and privately held by the LPs. The representations made by the taxpayer in PLR 201XXXXX13 should serve as a template for the representations to be included in Solara's PLR request.

Assessment: Strongly favorable.

3. Cautionary Note

The number of PLRs addressing § 731(c) in the private fund context is limited. Most published guidance and litigation addressing § 731(c) involves publicly traded partnership interests or interests in publicly traded REITs — contexts that are factually remote from the Solara reorganization. The thin PLR coverage in this area does not indicate adverse authority; rather, it reflects the fact that § 731(c) issues rarely arise in private fund restructurings because privately issued partnership interests are generally not "marketable securities." Nevertheless, the relatively limited body of PLR authority on this specific issue counsels in favor of including comprehensive representations in the PLR request regarding the transfer restrictions in the Consolidated Master Fund LPA, the absence of any trading market for the Master Fund interests, and the private nature of the interests. C&H should ensure that the transfer restriction provisions of the Master Fund LPA are finalized and available for submission with the PLR request.

F. Ruling 5 — IRC § 752: Liability Shifting Does Not Trigger Gain

1. Overview of the Ruling Requested

The second component of Ruling 5 (designated as Ruling 5 (§ 752) for purposes of this memorandum) requests that the IRS confirm that shifts in partner-level shares of the $1.34 billion in aggregate liabilities resulting from the reorganization do not trigger deemed contributions or distributions under IRC §§ 752(a) and 752(b) that would result in gain recognition under § 731. Under § 752(a), any increase in a partner's share of partnership liabilities is treated as a contribution of money by the partner to the partnership. Under § 752(b), any decrease in a partner's share of partnership liabilities is treated as a distribution of money by the partnership to the partner. A deemed distribution of money under § 752(b) can trigger gain under § 731(a)(1) if the deemed distribution exceeds the partner's adjusted basis in the partnership.

In a multi-step reorganization such as the Solara transaction, the shifting of liabilities across tiered partnership structures can result in simultaneous increases and decreases in individual partners' shares of liabilities. Treas. Reg. § 1.752-1(f) provides that if, as a result of a single transaction, a partner's share of liabilities increases and decreases, the deemed contributions and distributions are netted, and only the net increase or decrease is treated as a contribution or distribution. This netting rule is critical to the Solara reorganization, as it prevents gain recognition from mechanistic liability shifts that produce no economic change in the partners' positions.

2. PLR 201XXXXX14 (2013) — Liability Netting in Partnership Consolidation

Facts. In PLR 201XXXXX14, two partnerships merged via contribution of assets and liabilities to a newly formed partnership. The aggregate liabilities of the two contributing partnerships were approximately $1.8 billion. The merger resulted in significant shifts in individual partners' shares of liabilities, as the liability allocation rules (including the economic risk of loss and minimum gain allocation rules under Treas. Reg. §§ 1.752-1 through 1.752-7) produced different allocations in the receiving partnership than had existed in the contributing partnerships. The taxpayer provided detailed partner-by-partner schedules showing each partner's share of liabilities before and after the merger, including the calculation of net deemed contributions and distributions under Treas. Reg. § 1.752-1(f).

Holding. The IRS confirmed that where a partner's share of liabilities simultaneously increases and decreases as part of the same transaction, the deemed contributions and distributions are netted under Treas. Reg. § 1.752-1(f), and only the net increase or decrease is treated as a contribution or distribution under § 752(a) or § 752(b). The IRS further confirmed that no gain was recognized under § 731(a)(1) because, after netting, no partner's net deemed distribution exceeded the partner's adjusted basis in the partnership immediately before the transaction. The IRS relied heavily on the detailed partner-by-partner liability schedules provided by the taxpayer in reaching this conclusion.

Relevance to Solara. This PLR is directly analogous to the liability-shifting aspects of the Solara reorganization. The $1.34 billion in aggregate liabilities of the Legacy Offshore Vehicles will shift across the tiered partnership structures (from the Legacy Vehicles to the Consolidated Master Fund, and then from the Master Fund through the feeder vehicles to the individual LPs) as a result of the reorganization. The netting rule of Treas. Reg. § 1.752-1(f) is essential to ensuring that these mechanistic liability shifts do not trigger gain recognition. The IRS's emphasis on detailed partner-by-partner liability schedules in PLR 201XXXXX14 underscores the importance of including comprehensive liability schedules (referenced as PLR Exhibit E in our internal outline) with the Solara PLR request.

Assessment: Favorable.

3. PLR 202XXXXX15 (2022) — Tiered Partnership Liability Allocation

Facts. In PLR 202XXXXX15, a multi-tier fund structure was reorganized, with liabilities allocated across upper-tier and lower-tier partnerships. The reorganization involved contributions of assets and liabilities from upper-tier feeder partnerships to a lower-tier master fund partnership. The taxpayer requested a ruling that the liability allocations across the tiered structure were properly determined under Treas. Reg. §§ 1.752-1 through 1.752-7 and that the liability shifts did not trigger gain recognition under § 731. The taxpayer provided detailed schedules analyzing recourse and nonrecourse liabilities, economic risk of loss determinations, and the application of the tiered partnership rules under Treas. Reg. § 1.752-4.

Holding. The IRS confirmed the proper application of the tiered partnership liability allocation rules and the netting provisions of Treas. Reg. § 1.752-1(f). The IRS walked through the tiered partnership analysis, confirming that each partner's share of liabilities was determined at each tier in the partnership structure and that the netting rule applied to the overall effect on each partner's aggregate share of liabilities. No gain was triggered. The IRS noted that the tiered partnership rules require careful analysis of the look-through allocation of liabilities from the lower-tier partnership to the upper-tier partnership's partners, and that the taxpayer's schedules properly accounted for this look-through allocation.

Relevance to Solara. This PLR supports Solara's tiered structure liability allocation analysis. The Solara reorganization will result in a tiered structure (LPs → International Feeder / Tax-Exempt Feeder → Consolidated Master Fund), and the allocation of the $1.34 billion in liabilities must be analyzed at each tier. PLR 202XXXXX15 confirms that the IRS accepts the application of the tiered partnership liability allocation rules and netting provisions in the context of a multi-tier fund restructuring.

Assessment: Favorable.

4. Cautionary Note

The § 752 analysis is inherently and intensely fact-specific. While the favorable PLRs identified above confirm the general applicability of the Treas. Reg. § 1.752-1(f) netting rule and the tiered partnership allocation rules, the ultimate determination of whether any partner's net deemed distribution exceeds basis depends on the specific facts of each partner's situation — including each partner's adjusted basis in the distributing partnership immediately before the transaction, each partner's share of recourse and nonrecourse liabilities before and after the reorganization, and the character of each liability (recourse vs. nonrecourse, qualified nonrecourse financing, etc.).

For this reason, the PLR request must include comprehensive partner-by-partner liability schedules (referenced as PLR Exhibit E in our internal outline) that demonstrate, for each partner, the calculation of net deemed contributions and distributions and confirm that no partner's net deemed distribution exceeds basis. These schedules will require detailed financial data from Redstone Advisory Group LLC (Marco DeLuca) and Caldwell Pierce & Co. LLP (Helen Okamoto). C&H should recommend that Solara proactively engage on the § 752 analysis at the pre-submission conference scheduled for July 22, 2025, to identify any specific concerns the IRS may have and to ensure that the liability schedules are in the format and at the level of detail the IRS requires.

G. Ruling 6 — IRC § 704(c): Built-In Gain Carryover and Remedial Allocation Method

1. Overview of the Ruling Requested

Ruling 6 requests that the IRS confirm that the built-in gain and loss accounts tracked under IRC § 704(c) by the Legacy Offshore Vehicles carry over to the Consolidated Master Fund LP when the portfolio assets are contributed in Steps 2 through 4, and that the Consolidated Master Fund may continue to use the remedial allocation method under Treas. Reg. § 1.704-3(d) — the method currently employed by each of the Legacy Offshore Vehicles — to allocate the built-in gain among its partners.

The aggregate built-in gain across all contributed properties is approximately $1.72 billion. The principal § 704(c) layers are as follows:

Section 704(c)(1)(A) provides that income, gain, loss, and deduction with respect to property contributed to the partnership by a partner shall be shared among the partners so as to take account of the variation between the basis of the property to the partnership and its fair market value at the time of contribution. The regulations under § 704(c) provide three permissible allocation methods: the traditional method (Treas. Reg. § 1.704-3(b)), the traditional method with curative allocations (Treas. Reg. § 1.704-3(c)), and the remedial allocation method (Treas. Reg. § 1.704-3(d)). The remedial allocation method eliminates distortions caused by the ceiling rule by creating remedial items of income, gain, loss, or deduction that offset the ceiling rule limitation.

When property with a built-in gain is contributed by one partnership to another in a § 721(a) transaction, the § 704(c) layers must be preserved and carried over to the receiving partnership. Treas. Reg. § 1.704-3(a)(7) addresses tiered partnership structures and provides guidance on how § 704(c) principles apply when property is contributed through tiered partnerships. The allocation method election is treated as attaching to the property rather than to the entity, such that the receiving partnership must continue to use the same allocation method that the contributing partnership employed.

2. PLR 200XXXXX16 (2012) — § 704(c) Carryover in Fund Restructuring

Facts. In PLR 200XXXXX16, a partnership contributed properties with substantial built-in gains — approximately $600 million in the aggregate — to a newly formed partnership as part of a fund restructuring. The contributing partnership had employed the remedial allocation method under Treas. Reg. § 1.704-3(d) to allocate the built-in gain among its partners. The taxpayer requested a ruling that (i) the § 704(c) built-in gain accounts carried over to the receiving partnership when the properties were contributed in a § 721 transaction, and (ii) the receiving partnership could — and was required to — continue using the remedial allocation method for the contributed properties.

Holding. The IRS confirmed both requested rulings. First, the IRS ruled that § 704(c) built-in gain accounts carry over to the receiving partnership when property is contributed in a § 721 transaction from one partnership to another. The receiving partnership steps into the shoes of the contributing partnership with respect to the § 704(c) layers and must allocate the built-in gain among its partners in a manner consistent with § 704(c)(1)(A). Second, the IRS confirmed that the receiving partnership may — and must — continue using the same allocation method (in this case, the remedial allocation method) that the contributing partnership had employed. The IRS cited Treas. Reg. § 1.704-3(a)(2), which requires consistency in the application of § 704(c) allocation methods, and noted that the method election attaches to the property, not to the entity.

Relevance to Solara. This PLR is directly applicable to Ruling 6 of the Solara PLR request. Solara's Legacy Offshore Vehicles use the remedial allocation method for their § 704(c) properties, and the Ruling 6 request seeks confirmation that the § 704(c) layers carry over to the Consolidated Master Fund and that the Master Fund will continue to use the remedial method. PLR 200XXXXX16 confirms both propositions. The built-in gain magnitude in PLR 200XXXXX16 ($600 million) is substantial, though smaller than Solara's aggregate BIG of $1.72 billion. However, the legal analysis does not turn on the magnitude of the BIG, and the principles confirmed in PLR 200XXXXX16 are directly applicable regardless of the specific dollar amounts involved.

Assessment: Strongly favorable.

3. PLR 201XXXXX17 (2016) — Remedial Method Continuation Post-Restructuring

Facts. In PLR 201XXXXX17, a fund that used the remedial allocation method for its contributed properties restructured into a master-feeder arrangement. The fund contributed its portfolio assets to a newly formed master fund partnership and sought confirmation that the remedial method election survived the restructuring and continued to apply to the contributed properties in the master fund.

Holding. The IRS confirmed that the remedial method election survived the restructuring. The IRS reiterated that Treas. Reg. § 1.704-3(a)(2) requires consistency in the application of § 704(c) methods and that the method election attaches to the property rather than to the entity. Because the same properties (with the same § 704(c) layers) were now held by the master fund, the master fund was required to continue using the remedial method that the contributing fund had elected. The IRS noted that a change in allocation method would require the prior consent of the IRS and that no such consent had been sought or granted.

Relevance to Solara. This PLR directly supports Ruling 6 by confirming that the remedial method election survives a fund restructuring involving the formation of a master-feeder arrangement — precisely the structure

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
TO: Leonard Cross, Responsible Partner, Tax Sylvia Hartwell, Billing Partner, Tax Robert Jansen, Lead Associate, Tax
FROM: Garrett Simmons, Working Associate, Tax
DATE: June 10, 2025
RE: Survey of Analogous Private Letter Rulings — Multi-Vehicle Fund Reorganizations, Partnership-to-Partnership Contributions, and Cross-Border Partnership Restructurings
CLIENT: Solara Digital Infrastructure LP
MATTER NO.: 20250527-SDILP-PLR
FIRM: Calderwood & Harkness LLP
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I. Executive Summary
The purpose of this memorandum is to compile and analyze publicly available private letter rulings ("PLRs") that address transactions analogous to the proposed five-step reorganization of Solara Digital Infrastructure LP's ("Solara") cross-border fund platform, and to map favorable and unfavorable precedents to each of the eight specific rulings that Calderwood & Harkness LLP ("C&H") will request from the Internal Revenue Service ("IRS") on behalf of Solara. This memorandum is intended to inform the drafting of the PLR request letter and to provide the engagement team with a comprehensive assessment of the weight of existing IRS authority bearing on each of the requested rulings.
Research Scope. In preparing this memorandum, I searched the IRS Electronic Reading Room, as well as leading commercial tax research platforms, for rulings issued over the past approximately twenty years (January 2005 through May 2025) addressing the following topics:
(a) tax-free contributions by one partnership to another under Internal Revenue Code ("IRC" or "Code") § 721(a);
(b) the § 721(b) investment company exception in the fund context;
(c) the inapplicability of IRC § 367 to partnership-to-partnership transfers;
(d) tax-free distributions of partnership interests under IRC § 731(a);
(e) the § 731(c) marketable securities exception for distributed partnership interests;
(f) § 752 liability shifting in multi-step reorganizations;
(g) the carryover of § 704(c) built-in gain accounts through partnership restructurings;
(h) § 1446 withholding obligations in nonrecognition transactions; and
(i) entity classification under Treas. Reg. § 301.7701-3 (the "check-the-box" regulations).
Precedential Limitations. As a threshold matter, it bears noting that PLRs may not be cited or used as precedent under IRC § 6110(k)(3). Nevertheless, PLRs remain highly useful indicators of the IRS's analytical frameworks, the factual representations it considers material, and the general posture it has adopted with respect to recurring transaction structures. PLRs are particularly valuable in the PLR-request drafting process because they reveal the structure and depth of analysis the IRS expects from taxpayers seeking letter rulings in analogous areas.
Overview of Findings. This survey identified fourteen (14) PLRs with strong relevance and an additional seven (7) PLRs with partial relevance to the Solara reorganization. Across all eight requested rulings, the weight of PLR authority is favorable. Certain areas — specifically, § 721(a) contributions, § 704(c) carryover, and entity classification under Treas. Reg. § 301.7701-3 — are supported by deep and consistent lines of favorable PLRs. Other areas — specifically, the inapplicability of § 367 to partnership-to-partnership transfers, the § 731(c) marketable securities exception in the private fund context, and § 1446 withholding in reorganization transactions — have thinner PLR coverage, though the available authority is uniformly favorable and the underlying statutory text is clear.
Solara Transaction Overview. For context, the proposed reorganization involves the consolidation of four offshore fund vehicles — Fund IV-A (Cayman Exempted LP), Fund IV-B (Luxembourg SCSp), Fund V-A (Cayman Exempted LP), and Fund V-B (Luxembourg SCSp) (collectively, the "Legacy Offshore Vehicles") — into Solara Consolidated Master Fund LP (a newly formed Delaware limited partnership, the "Consolidated Master Fund" or "Master Fund"). The Legacy Offshore Vehicles collectively hold portfolio assets with a total fair market value ("FMV") of approximately $7.75 billion, a total adjusted tax basis of approximately $6.03 billion, aggregate built-in gain ("BIG") of approximately $1.72 billion, and $1.34 billion in assumed liabilities. Following the consolidation, the Legacy Offshore Vehicles will dissolve and distribute their Master Fund interests to their respective limited partners ("LPs"), who will then migrate into two new Cayman feeder vehicles — Solara International Feeder (Cayman) LP (the "International Feeder") and Solara Tax-Exempt Feeder (Cayman) LP (the "Tax-Exempt Feeder" or "TE Feeder").
The reorganization is structured as a five-step integrated transaction, with Steps 2 through 4 involving contributions of portfolio assets by each Legacy Offshore Vehicle to the Consolidated Master Fund, and Step 5 involving the dissolution of the Legacy Offshore Vehicles and distribution of Master Fund LP interests to the LPs. The entire reorganization is expected to be executed during Q4 2025, with a target execution window of September 15 through December 1, 2025.
II. Methodology
A. Search Parameters and Databases
The following databases and sources were searched in preparing this memorandum:
(i) IRS Electronic Reading Room. The publicly accessible IRS Electronic Reading Room, which contains redacted PLRs, Technical Advice Memoranda ("TAMs"), Chief Counsel Advice ("CCA") memoranda, and General Counsel Memoranda ("GCMs"), was searched using the IRS's full-text search function.
(ii) Commercial Tax Research Platforms. Leading commercial tax research platforms — including Tidewater Technologies, Cobalt Ridge Systems, and Calderon Systems Tax — were searched using both full-text keyword searches and topical index searches within the PLR databases maintained by each platform. These platforms provide enhanced search functionality, including the ability to filter by IRC section, date range, issuing IRS office, and transaction type.
The following search terms (and variations thereof) were used across all databases:
"section 721," "partnership contribution," "partnership reorganization," "fund restructuring," "parallel fund," "master-feeder," "section 367 partnership," "section 731 distribution partnership interest," "section 731(c) marketable securities," "section 752 liability," "section 704(c) built-in gain," "section 1446 nonrecognition," "check-the-box partnership," "cross-border partnership," "feeder fund," "fund consolidation," "partnership merger," "tiered partnership," "partnership-to-partnership transfer," "investment company exception," "remedial allocation method," "effectively connected taxable income," and "ECTI."
The search date range was January 1, 2005 through May 31, 2025. This twenty-year window was selected to ensure that the survey captures the current and recent regulatory environment while also including earlier PLRs that may reflect longstanding IRS positions on recurring issues.
In addition to PLRs, the following supplementary sources were reviewed:
(iii) Published IRS Guidance. Revenue Rulings, Revenue Procedures, CCAs, TAMs, and GCMs addressing the relevant IRC provisions and transaction structures. These published authorities, while not PLRs, provide context for the IRS's analytical approach and are referenced where relevant in the body of this memorandum.
(iv) Tax Treatises and Commentary. Leading tax treatises — including McKee, Nelson & Whitmire, Federal Taxation of Partnerships and Partners (5th ed.); Nancy Pryor, Federal Taxation of Income, Estates and Gifts; and Willis, Postlewaite & Lipton, Partnership Taxation — as well as published law review articles and practitioner commentary addressing the relevant Code provisions and transaction types.
B. Selection Criteria
PLRs were selected for inclusion in this memorandum based on their factual similarity to the Solara reorganization and their relevance to the eight specific rulings that C&H will request from the IRS. The following factual criteria guided the selection process:
• Multi-entity fund platform structures (i.e., transactions involving more than one fund vehicle within a common sponsor's platform);
• Parallel fund structures and master-feeder arrangements;
• Cross-border elements, including contributions by foreign partnerships to domestic partnerships and distributions by foreign partnerships to non-U.S. investors;
• Contributions of operating company interests (portfolio assets) by one partnership to another partnership;
• Distributions of partnership interests in connection with fund vehicle dissolutions or liquidations;
• Liability shifting across tiered partnership structures in reorganization transactions;
• Built-in gain carryover and allocation method elections in restructured partnership arrangements; and
• Entity classification elections under the check-the-box regulations for newly formed fund vehicles.
PLRs addressing purely corporate reorganizations under Subchapter C (IRC §§ 368 et seq.), single-entity transactions without fund-platform context, or transactions unrelated to partnership tax law were generally excluded from this survey. However, certain Subchapter C-adjacent authorities — particularly relating to the § 721(b) investment company exception, which cross-references Treas. Reg. § 1.351-1(c)(1)(ii) — were included where directly relevant to a discrete ruling request.
C. Organizational Framework
This memorandum organizes the identified PLRs according to the eight specific rulings requested in the Solara PLR, with cross-references where a single PLR addresses multiple rulings. This structure is intended to facilitate use of the memorandum as a working reference during the PLR drafting process.
Each PLR entry in Section III includes the following information:
(a) Citation (redacted PLR number, consistent with IRS redaction conventions);
(b) Year issued;
(c) Factual summary, highlighting the elements most relevant to the Solara reorganization;
(d) Key holdings;
(e) Analysis of relevance to Solara, noting both similarities and any distinguishing factors; and
(f) Overall assessment, categorized as "Strongly favorable," "Favorable," "Distinguishable," or "Unfavorable."
Full-length summaries of each PLR (one to two pages each) are provided in Appendix A. A table of additional authorities reviewed but not included as primary analogous PLRs is provided in Appendix B. A glossary of key terms and IRC provisions is provided in Appendix C.
III. Mapping of Analogous PLRs to Solara's Eight Requested Rulings
A. Ruling 1 — IRC § 721(a): Tax-Free Contribution of Portfolio Assets to the Consolidated Master Fund
1. Overview of the Ruling Requested
Ruling 1 requests that the IRS confirm that the contributions by each of the four Legacy Offshore Vehicles of their respective portfolio assets to the Consolidated Master Fund LP constitute tax-free contributions under IRC § 721(a), with carryover basis under IRC § 723 and holding period tacking under IRC § 1223(2). The specific contributing vehicles and their respective asset profiles are as follows:
Section 721(a) provides that no gain or loss shall be recognized to a partnership or to any of its partners in the case of a contribution of property to the partnership in exchange for an interest in the partnership. The contributing Legacy Offshore Vehicles will each receive a partnership interest in the Consolidated Master Fund LP in exchange for their contributed portfolio assets. The statutory requirements for nonrecognition treatment under § 721(a) are straightforward: there must be a contribution of "property" to a "partnership" in exchange for an "interest in the partnership." No additional conditions — such as the control requirements applicable to § 351 contributions to corporations — apply.
The carryover basis rule of § 723 provides that the basis of property contributed to a partnership by a partner shall be the adjusted basis of such property to the contributing partner at the time of the contribution. Under § 1223(2), the partnership's holding period for the contributed property includes the period during which the property was held by the contributing partner. These mechanical rules are integral to the Ruling 1 request.
2. PLR 200XXXXX01 (2008) — Multi-Fund Consolidation into Master Partnership
Facts. In PLR 200XXXXX01, a private equity sponsor contributed assets from three parallel fund partnerships — two domestic limited partnerships and one Cayman Islands exempted limited partnership — into a newly formed domestic master limited partnership. The aggregate assets contributed had an approximate fair market value of $4 billion and consisted of interests in operating companies in the technology sector. The transaction was undertaken as part of a broader fund platform consolidation designed to reduce administrative costs and simplify the sponsor's operational structure. The three contributing partnerships each received a partnership interest in the newly formed master limited partnership in exchange for their contributed assets.
Holding. The IRS ruled that the contributions by each of the three parallel fund partnerships to the newly formed domestic master limited partnership qualified as tax-free contributions under IRC § 721(a). No gain or loss was recognized to any of the contributing partnerships or their partners. The IRS further confirmed that the basis of the contributed assets in the hands of the receiving partnership was determined under § 723 (carryover basis) and that the holding period of the contributed assets in the hands of the receiving partnership tacked under § 1223(2) to include the holding period of each contributing partnership.
Relevance to Solara. This PLR is closely analogous to the Solara reorganization in several material respects. First, it involves a multi-vehicle fund consolidation — three parallel fund partnerships contributing assets to a single domestic master fund — which mirrors the four-vehicle consolidation proposed by Solara. Second, the contributed assets consisted of operating company interests in the technology sector, which is broadly comparable to Solara's digital infrastructure and enterprise SaaS portfolio. Third, the transaction included a cross-border element (one Cayman contributing partnership), as does the Solara reorganization (two Cayman and two Luxembourg contributing partnerships). Fourth, the aggregate asset values ($4 billion) are of a broadly similar order of magnitude to Solara's $7.75 billion.
Assessment: Strongly favorable.
3. PLR 200XXXXX02 (2011) — Parallel Fund Merger into Domestic Vehicle
Facts. In PLR 200XXXXX02, a real estate fund sponsor merged two Cayman Islands parallel funds into a Delaware master fund. The contributions consisted of interests in operating real estate partnerships, and the aggregate FMV of the contributed assets was approximately $2.5 billion. The two Cayman funds each received partnership interests in the Delaware master fund in exchange for their contributed assets. No cash or other consideration was exchanged. The taxpayer represented that no partner in either contributing fund received any consideration other than a partnership interest in the receiving entity.
Holding. The IRS ruled that § 721(a) applied to the contributions. No gain or loss was recognized. Notably, the IRS also addressed the disguised sale rules of IRC § 707(a)(2)(B) and confirmed that the transaction did not constitute a disguised sale because no consideration other than partnership interests was received by the contributing partnerships. The IRS's analysis of the disguised sale issue was grounded in the taxpayer's representations that (i) no cash or other property was distributed or expected to be distributed to the contributing partnerships or their partners in connection with the contributions, and (ii) the contributions were not part of a plan or arrangement under which the contributing partnerships or their partners would receive distributions of money or property from the receiving partnership within two years of the contribution.
Relevance to Solara. This PLR supports the core § 721(a) position and adds useful precedent on the disguised sale analysis under § 707(a)(2)(B). Although Solara's PLR request does not specifically request a ruling on the disguised sale issue, the IRS may raise the issue sua sponte given the multi-step nature of the reorganization and the fact that LPs will receive Master Fund interests (indirectly, through the Step 5 dissolution/distribution) shortly after the contributions. The taxpayer's representations in PLR 200XXXXX02 — particularly the representations regarding the absence of cash or other consideration and the absence of a prearranged distribution plan — are instructive for the representations that C&H should include in the Solara PLR request.
Assessment: Favorable.
4. PLR 201XXXXX03 (2015) — Infrastructure Fund Restructuring
Facts. In PLR 201XXXXX03, an infrastructure fund contributed interests in portfolio companies operating fiber-optic networks and data center facilities from an offshore blocker structure into a domestic partnership. The contributed assets had a built-in gain of approximately $800 million. The transaction was part of a broader restructuring designed to simplify the fund's organizational structure and to eliminate the offshore blocker entity, which had been established for historical tax planning reasons that were no longer relevant. The contributing entity received a partnership interest in the domestic partnership in exchange for the contributed assets.
Holding. The IRS confirmed that the contribution qualified for nonrecognition treatment under § 721(a). In its analysis, the IRS emphasized that the contributing entity received only a partnership interest in the receiving partnership — and no other consideration — thereby satisfying the statutory requirement of § 721(a). The IRS also confirmed carryover basis under § 723 and holding period tacking under § 1223(2). The IRS did not address the disguised sale rules or the investment company exception in this ruling, as those issues were not raised by the taxpayer.
Relevance to Solara. This PLR is directly analogous to the Solara reorganization in several critical respects. Most notably, the contributed assets consisted of interests in digital infrastructure portfolio companies — specifically fiber-optic networks and data center facilities — which are the same asset types held by Solara's Legacy Offshore Vehicles (including NovaBright Data Systems Inc. (data center operations), Thorngate Fiber Networks LP (fiber-optic network operations), and Veridian Edge Computing Corp. (edge computing infrastructure)). The built-in gain magnitude ($800 million) is comparable to the BIG associated with several of Solara's individual contributing vehicles. The cross-border element (offshore structure contributing to domestic partnership) is also present. Of the PLRs identified in this survey, PLR 201XXXXX03 presents the closest factual parallel to the Solara reorganization in terms of both asset type and transaction structure.
Assessment: Strongly favorable.
5. Additional PLRs (Summary Table)
The following table summarizes two additional PLRs identified as relevant to Ruling 1. Full-length summaries are provided in Appendix A.
Observation. Across the five PLRs identified as relevant to Ruling 1, the IRS has consistently confirmed § 721(a) nonrecognition treatment for partnership-to-partnership contributions of operating company interests in fund consolidation and reorganization transactions. No PLR was identified in which the IRS denied § 721(a) treatment in a partnership-to-partnership contribution of operating company interests in a fund reorganization context. The consistency and depth of this line of authority provides a strong foundation for Ruling 1.
B. Ruling 2 — IRC § 721(b): Investment Company Exception Does Not Apply
1. Overview of the Ruling Requested
Ruling 2 requests that the IRS confirm that the Consolidated Master Fund LP does not constitute an "investment company" within the meaning of IRC § 721(b) and Treas. Reg. § 1.351-1(c)(1)(ii) (applied by analogy to partnership contributions under § 721(b)). Section 721(b) provides that § 721(a) shall not apply to gain realized on a transfer of property to a partnership that would be treated as an investment company (within the meaning of § 351(e)) if the partnership were incorporated.
The test under Treas. Reg. § 1.351-1(c)(1)(ii) provides that a transfer results in diversification of the transferors' interests where two or more persons transfer nonidentical assets to a corporation in the exchange. However, the regulation further provides that transfers of "stocks, securities, and other investment assets" are of particular concern, and that a transfer of non-investment assets — such as interests in active operating businesses — does not generally implicate the investment company exception.
Solara's portfolio consists of controlling or significant minority interests in twenty-three (23) operating companies in the digital infrastructure and enterprise SaaS sectors, including NovaBright Data Systems Inc., Crestline Cloud Solutions LLC, Veridian Edge Computing Corp., Thorngate Fiber Networks LP, Helix SaaS Holdings Ltd., and eighteen (18) other portfolio companies. These companies are active operating businesses, not passive investment vehicles holding diversified portfolios of stocks and securities. The Ruling 2 request is designed to confirm that the nature of these portfolio companies takes the contributions outside the scope of § 721(b).
2. PLR 200XXXXX06 (2009) — Private Equity Fund Not an Investment Company
Facts. In PLR 200XXXXX06, a private equity fund contributed interests in fifteen (15) operating companies — spanning the healthcare and technology sectors — to a newly formed domestic partnership as part of a fund restructuring. The taxpayer requested a ruling that the receiving partnership was not an "investment company" within the meaning of § 721(b). The contributed operating company interests included controlling equity positions in hospital management companies, medical device manufacturers, healthcare IT platforms, enterprise software companies, and semiconductor design firms. The taxpayer represented that each portfolio company was an active operating business with employees, physical operations, and revenue derived from the provision of goods or services, rather than from passive investment income.
Holding. The IRS ruled that the receiving partnership was not an investment company because its portfolio consisted of controlling interests in active operating businesses, not passive investments in diversified stocks and securities. The IRS applied the analytical framework of Treas. Reg. § 1.351-1(c)(1)(ii) by analogy and concluded that the contributed assets were not "stocks, securities, or other investment assets" within the meaning of the regulation. The IRS emphasized several factors in reaching this conclusion: (i) the fund held controlling or significant minority positions in each portfolio company; (ii) the portfolio companies were engaged in active business operations; (iii) the portfolio companies derived their revenue from the provision of goods and services rather than from investment income; and (iv) the fund's investment strategy was to acquire and actively manage operating businesses, not to assemble a diversified portfolio of passive investments.
Relevance to Solara. This PLR directly supports Solara's position under Ruling 2. Solara's twenty-three portfolio companies — eleven in the Fund IV vehicles and twelve in the Fund V vehicles — are active operating businesses in the digital infrastructure and enterprise SaaS sectors. Like the healthcare and technology companies in PLR 200XXXXX06, Solara's portfolio companies have employees, physical operations (including data centers, fiber-optic networks, and edge computing facilities), and revenue derived from the provision of technology services and infrastructure, not from passive investment income. The analytical framework applied by the IRS in PLR 200XXXXX06 — focusing on the nature of the portfolio companies' business activities and the fund's investment strategy — is directly applicable to Solara.
Assessment: Strongly favorable.
3. PLR 201XXXXX07 (2014) — Venture Capital Fund Restructuring
Facts. In PLR 201XXXXX07, a venture capital fund underwent a consolidation that involved the contribution of interests in twenty-two (22) early-stage and growth-stage operating companies to a newly formed partnership. The taxpayer requested a ruling under § 721(b) that the receiving partnership was not an investment company. The portfolio companies included software-as-a-service platforms, mobile application developers, biotech research companies, and cleantech manufacturers. The taxpayer represented that the fund held significant minority interests (generally 15% to 40% equity positions) in each portfolio company and actively participated in the management of the companies through board representation and strategic advisory roles.
Holding. The IRS confirmed that the receiving partnership was not an investment company. The IRS ruled that controlling or significant minority interests in active operating companies do not constitute "stocks, securities, or other investment assets" for purposes of § 721(b) and Treas. Reg. § 1.351-1(c)(1)(ii). The IRS noted that the fund's active involvement in managing its portfolio companies, including through board seats and management services, further supported the conclusion that the contributed assets were operating company interests rather than passive investments.
Relevance to Solara. The portfolio composition in this PLR — twenty-two early-stage and growth-stage technology companies — is analogous to Solara's portfolio of twenty-three digital infrastructure and SaaS companies. While Solara's portfolio companies are generally later-stage than the venture-stage companies in PLR 201XXXXX07, the operative distinction under § 721(b) is between active operating company interests and passive investment assets, not between early-stage and late-stage operating companies. Solara's active management of its portfolio companies — including through board representation, strategic oversight, and operational support — is consistent with the factors the IRS relied upon in PLR 201XXXXX07.
Assessment: Favorable.
4. Distinguishable / Cautionary PLR
PLR 200XXXXX08 (2007) — Fund of Funds Contributing Interests in Other Funds. In PLR 200XXXXX08, a fund-of-funds vehicle sought to contribute its interests in approximately thirty (30) other investment funds (including hedge funds, private equity funds, and real estate funds) to a newly formed partnership. The taxpayer requested a ruling that the receiving partnership was not an investment company under § 721(b). The IRS's preliminary analysis indicated that § 721(b) was potentially applicable because the contributed assets — interests in other investment vehicles — were more properly characterized as "securities" or "other investment assets" rather than as operating company interests. The interests in the underlying funds did not represent direct ownership of operating businesses but rather constituted portfolio investment positions in diversified fund vehicles. Before the IRS issued a formal ruling, the taxpayer withdrew its request, apparently because the IRS had indicated that a favorable ruling was unlikely.
Relevance to Solara. This PLR is distinguishable from the Solara reorganization on its facts. Solara's portfolio consists of direct interests in twenty-three active operating companies, not interests in other investment funds. The key distinction drawn by the IRS in PLR 200XXXXX08 — between direct operating company interests and interests in investment vehicles — favors Solara. However, this PLR serves as a cautionary precedent that highlights the importance of robust representations regarding the operating nature of each of Solara's portfolio companies. The Ruling 2 section of the PLR request should include detailed descriptions of each portfolio company's active business operations, revenue sources, employee headcount, and physical facilities to ensure that the IRS has a clear factual basis for distinguishing Solara's portfolio from the fund-of-funds portfolio in PLR 200XXXXX08.
Assessment: Distinguishable, but underscores the need for comprehensive representations.
C. Ruling 3 — IRC § 367: Inapplicability to Partnership-to-Partnership Transfers
1. Overview of the Ruling Requested
Ruling 3 requests that the IRS confirm that IRC § 367(a) and § 367(b) do not apply to the contributions by the four Legacy Offshore Vehicles (each a foreign partnership) to the Consolidated Master Fund LP (a domestic partnership). Section 367(a) imposes gain recognition on certain transfers of property "by a United States person … to a foreign corporation," and § 367(b) addresses certain exchanges involving foreign corporations. By their terms, both § 367(a) and § 367(b) apply only to transfers involving corporations — not to transfers between or among partnerships. The Ruling 3 request seeks confirmation of this straightforward textual reading of the statute, which C&H believes is compelled by the plain language of § 367 and supported by its legislative history.
The inclusion of this ruling in the PLR request is motivated not by any doubt about the legal analysis but by the complexity and magnitude of the Solara reorganization. Given that the Legacy Offshore Vehicles are foreign entities contributing $7.75 billion in assets (with $1.72 billion in BIG) to a domestic entity, there is a risk that the IRS may wish to explore the application of § 367 even though the receiving entity is a partnership rather than a corporation. Obtaining a ruling on this point will provide certainty and forestall any potential challenge.
2. PLR 201XXXXX09 (2016) — Foreign Partnership Contributing Assets to Domestic Partnership
Facts. In PLR 201XXXXX09, a Cayman Islands exempted limited partnership contributed a portfolio of operating company interests to a newly formed Delaware limited partnership as part of a fund consolidation transaction. The taxpayer requested a ruling that § 367(a) and § 367(b) did not apply to the contribution. The taxpayer represented that the contributing entity was classified as a partnership for U.S. federal income tax purposes (having either made or been eligible for a check-the-box election) and that the receiving entity was similarly classified as a partnership.
Holding. The IRS confirmed that § 367(a) applies only to transfers of property "by a United States person … to a foreign corporation" and that § 367(b) applies only to exchanges described in IRC § 332, § 351, § 354, § 355, § 356, or § 361, each of which involves exchanges with or by corporations. Because neither the contributing entity (the Cayman LP) nor the receiving entity (the Delaware LP) was classified as a corporation for U.S. federal income tax purposes, neither § 367(a) nor § 367(b) was applicable. The IRS noted that the statutory text of § 367 is clear on its face and that no provision of § 367 or the regulations thereunder extends its reach to partnership-to-partnership contributions.
Relevance to Solara. This PLR is directly on point. It involves a foreign partnership (Cayman exempted LP) contributing assets to a domestic partnership (Delaware LP) in a fund consolidation context — precisely the structure proposed by Solara with respect to the Fund IV-A Cayman and Fund V-A Cayman contributions. The IRS's analysis confirms the textual reading of § 367 that C&H relies upon, and its emphasis on the clear statutory language provides a strong basis for the Ruling 3 request. The factual parallels between PLR 201XXXXX09 and the Solara transaction are extensive: both involve foreign partnerships contributing operating company interests to a domestic partnership as part of a platform-level fund consolidation.
Assessment: Strongly favorable.
3. PLR 202XXXXX10 (2021) — Luxembourg SCSp to U.S. LP Transfer
Facts. In PLR 202XXXXX10, a Luxembourg société en commandite spéciale ("SCSp") classified as a partnership for U.S. federal income tax purposes contributed assets to a U.S. limited partnership. The taxpayer requested a ruling that § 367 did not apply to the contribution. The Luxembourg SCSp had been formed under Luxembourg law as a limited partnership and had filed a check-the-box election (Form 8832) electing partnership classification for U.S. federal income tax purposes. The contributed assets consisted of interests in European and North American operating companies, and the aggregate FMV of the contributed assets was approximately $1.6 billion.
Holding. The IRS ruled that § 367 was inapplicable to the contribution. The analysis was consistent with PLR 201XXXXX09: because neither the contributing entity (the Luxembourg SCSp) nor the receiving entity (the U.S. LP) was classified as a corporation for U.S. federal income tax purposes, the requirements of § 367(a) and § 367(b) were not met. The IRS additionally noted that the legislative history of § 367 — including the relevant committee reports accompanying the Tax Reform Act of 1976 and the Taxpayer Relief Act of 1997 — confirms that Congress intended § 367 to address transfers involving corporations, not partnerships. The IRS found no basis in the statute, regulations, or legislative history for extending § 367 to partnership-to-partnership contributions.
Relevance to Solara. This PLR is particularly relevant to the contributions by Fund IV-B Lux and Fund V-B Lux, each of which is a Luxembourg SCSp classified as a partnership for U.S. federal income tax purposes. PLR 202XXXXX10 involves the same entity type (Luxembourg SCSp), the same entity classification (partnership), and the same transaction structure (contribution to a U.S. LP). The IRS's reference to legislative history in this ruling provides additional support beyond the statutory text analysis in PLR 201XXXXX09. Together, these two PLRs establish a consistent and well-reasoned line of authority confirming the inapplicability of § 367 to the Solara contributions.
Assessment: Strongly favorable.
4. Note on Thin Coverage
Only a small number of PLRs address the inapplicability of § 367 to partnership-to-partnership transfers. This is likely because the statutory text is clear on its face — § 367(a) and § 367(b) by their terms apply only to transfers involving corporations — and taxpayers generally do not seek PLRs on issues where the answer is textually unambiguous. The limited number of PLRs on this issue should not be interpreted as reflecting uncertainty in the law; rather, it reflects the fact that most taxpayers and their advisors regard the issue as settled.
Nevertheless, the complexity and magnitude of the Solara reorganization — involving four foreign partnerships contributing $7.75 billion in assets to a domestic partnership — warrants seeking a ruling on § 367 inapplicability. A formal ruling will eliminate any residual ambiguity and provide Solara and its investors with certainty on a threshold issue. No PLR was identified in which the IRS applied § 367 to a partnership-to-partnership contribution.
D. Ruling 4 — IRC § 731(a): Tax-Free Distribution of Master Fund Interests in Step 5
1. Overview of the Ruling Requested
Ruling 4 requests that the IRS confirm that the distributions by the Legacy Offshore Vehicles of their partnership interests in the Consolidated Master Fund LP to their respective LPs in Step 5 of the reorganization constitute tax-free distributions under IRC § 731(a). Section 731(a)(1) provides that in the case of a distribution by a partnership to a partner, gain shall not be recognized to the partner except to the extent that any money distributed exceeds the adjusted basis of the partner's interest in the partnership immediately before the distribution. Under § 731(a)(2), loss is recognized only in the case of a liquidating distribution consisting solely of money, unrealized receivables, and inventory. Because the Legacy Offshore Vehicles will distribute only partnership interests in the Consolidated Master Fund LP (not money, unrealized receivables, or inventory) in the Step 5 dissolutions, no gain or loss should be recognized by the LPs under § 731(a).
2. PLR 200XXXXX11 (2010) — Distribution of Partnership Interests in Liquidation
Facts. In PLR 200XXXXX11, a fund partnership dissolved and distributed its interest in a successor master fund limited partnership to its limited partners as part of a fund restructuring. No cash was distributed — the only property distributed was the partnership interest in the successor master fund. The dissolving fund had previously contributed its portfolio assets to the successor master fund in a § 721(a) transaction, and the distribution of the master fund interest to the LPs occurred in connection with the dissolution and winding up of the contributing fund.
Holding. The IRS ruled that § 731(a)(1) applied to the distribution. No gain was recognized because the distributed property was a partnership interest (not money). The IRS confirmed that the basis of the distributed partnership interest in the hands of each LP was determined under § 732 (which provides, in the case of a liquidating distribution, that the basis of distributed property equals the LP's adjusted basis in the distributing partnership immediately before the distribution) and that the LP's holding period for the distributed partnership interest included the holding period of the LP's interest in the dissolving fund under § 735(b).
Relevance to Solara. This PLR is factually analogous to Step 5 of the Solara reorganization. In Step 5, each Legacy Offshore Vehicle will dissolve and distribute its interest in the Consolidated Master Fund LP to its LPs. No cash or other property will be distributed — the only property distributed will be the Master Fund partnership interest. The sequencing in PLR 200XXXXX11 (first, contribution of portfolio assets to the successor master fund under § 721(a); then, distribution of the master fund interest to LPs in dissolution under § 731(a)) mirrors the sequencing in the Solara reorganization (Steps 2–4: contributions to the Master Fund; Step 5: dissolution of Legacy Vehicles and distribution of Master Fund interests to LPs).
Assessment: Favorable.
3. PLR 201XXXXX12 (2018) — Multi-Vehicle Dissolution and LP Roll-Up
Facts. In PLR 201XXXXX12, three parallel fund vehicles dissolved simultaneously and distributed their respective interests in a consolidated master fund to their LPs. Following the dissolutions, the LPs were re-allocated across two new feeder vehicles based on their tax status and domicile. The taxpayer represented that no cash or property other than the master fund partnership interests was distributed in the dissolutions and that each LP's basis in the distributed master fund interest was determined under § 732. The simultaneous dissolution of three parallel vehicles and the subsequent LP migration to two new feeder vehicles was structured as an integrated reorganization, and the taxpayer requested a ruling that the integrated nature of the transaction did not alter the § 731(a) analysis for each individual distribution.
Holding. The IRS ruled that § 731(a) applied to each of the three dissolution/distribution transactions. The IRS specifically confirmed that the integrated nature of the reorganization — i.e., the fact that the three dissolutions occurred simultaneously as part of a pre-arranged plan and were followed by LP migration to new feeder vehicles — did not alter the nonrecognition character of each individual distribution. The IRS analyzed each dissolution/distribution independently under § 731(a) and concluded that the statutory requirements for nonrecognition were satisfied in each case.
Relevance to Solara. This PLR is very closely analogous to the Solara reorganization. The transaction structure — multiple simultaneous dissolutions of parallel fund vehicles, distribution of master fund interests to LPs, and subsequent LP migration to new feeder vehicles — is essentially identical to the structure proposed by Solara (four Legacy Offshore Vehicle dissolutions, distribution of Consolidated Master Fund interests to LPs, and LP migration to the International Feeder and Tax-Exempt Feeder). The IRS's holding that the integrated nature of the reorganization does not alter the § 731(a) analysis is particularly significant for Solara, given that the five-step reorganization is structured as an integrated transaction with a compressed Q4 2025 timeline. This PLR provides strong authority for the proposition that each Step 5 distribution should be analyzed independently under § 731(a), notwithstanding the integrated character of the overall reorganization.
Assessment: Strongly favorable.
E. Ruling 5 — IRC § 731(c): Distributed Master Fund Interests Are Not Marketable Securities
1. Overview of the Ruling Requested
Ruling 5 (addressing § 731(c)) requests that the IRS confirm that the Consolidated Master Fund LP interests distributed to LPs in Step 5 are not "marketable securities" as defined in IRC § 731(c)(2). Section 731(c)(1)(A) provides that, for purposes of § 731(a)(1), the term "money" includes marketable securities. If the distributed Master Fund interests were treated as "marketable securities," they would be recharacterized as "money" for purposes of § 731(a)(1), potentially triggering gain recognition to the extent the value of the distributed interests exceeded the LP's adjusted basis in the distributing partnership.
Section 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 § 1092(d)(1). Under § 1092(d)(1), property is "actively traded" if "there is an established financial market for such property." The distributed Consolidated Master Fund LP interests will be newly issued, privately held interests in a Delaware limited partnership. They will not be traded on any established securities market, and there will be no secondary market or substantial equivalent for such interests. Moreover, the interests will be subject to significant transfer restrictions under the Consolidated Master Fund limited partnership agreement ("LPA"), including requirements for general partner consent, compliance with securities law exemptions, and adherence to regulatory holding periods.
2. PLR 201XXXXX13 (2019) — Distributed LP Interests Not Marketable Securities
Facts. In PLR 201XXXXX13, a partnership dissolved and distributed interests in a newly formed domestic master fund LP to its partners in connection with a fund restructuring. The taxpayer requested a ruling that the distributed master fund LP interests were not "marketable securities" within the meaning of § 731(c)(2) and that the distribution therefore did not trigger gain recognition under § 731(a)(1). The taxpayer made extensive representations regarding the private nature of the master fund LP interests, including: (i) the interests were not listed, quoted, or traded on any stock exchange, electronic communication network, or other established financial market; (ii) there was no secondary market or substantial equivalent for the interests; (iii) the interests were issued in a private placement under an exemption from registration under the Securities Act of 1933; (iv) the interests were subject to substantial transfer restrictions in the master fund LPA, including a requirement for general partner consent prior to any transfer, minimum holding periods, and compliance with applicable securities laws; and (v) the master fund had no plans to list, register, or publicly offer its interests in the foreseeable future.
Holding. The IRS ruled that the master fund LP interests were not "marketable securities" under § 731(c)(2). In reaching this conclusion, the IRS relied on the following factors: (a) the interests were not actively traded on an established securities market within the meaning of § 1092(d)(1); (b) there was no secondary market or substantial equivalent for the interests; (c) the interests were subject to significant transfer restrictions under the partnership agreement that would preclude any trading or secondary market activity; and (d) the interests were privately issued and privately held. The IRS concluded that the distribution was properly analyzed under § 731(a)(1) without the § 731(c) recharacterization, and no gain was recognized.
Relevance to Solara. This PLR is directly analogous to the Solara reorganization. The Consolidated Master Fund LP interests to be distributed in Step 5 will share all of the characteristics identified by the IRS as supporting non-marketable-security status: they will be newly issued in a private transaction, not traded on any established market, subject to substantial transfer restrictions in the Master Fund LPA (which C&H is drafting to include standard PE fund transfer restrictions), and privately held by the LPs. The representations made by the taxpayer in PLR 201XXXXX13 should serve as a template for the representations to be included in Solara's PLR request.
Assessment: Strongly favorable.
3. Cautionary Note
The number of PLRs addressing § 731(c) in the private fund context is limited. Most published guidance and litigation addressing § 731(c) involves publicly traded partnership interests or interests in publicly traded REITs — contexts that are factually remote from the Solara reorganization. The thin PLR coverage in this area does not indicate adverse authority; rather, it reflects the fact that § 731(c) issues rarely arise in private fund restructurings because privately issued partnership interests are generally not "marketable securities." Nevertheless, the relatively limited body of PLR authority on this specific issue counsels in favor of including comprehensive representations in the PLR request regarding the transfer restrictions in the Consolidated Master Fund LPA, the absence of any trading market for the Master Fund interests, and the private nature of the interests. C&H should ensure that the transfer restriction provisions of the Master Fund LPA are finalized and available for submission with the PLR request.
F. Ruling 5 — IRC § 752: Liability Shifting Does Not Trigger Gain
1. Overview of the Ruling Requested
The second component of Ruling 5 (designated as Ruling 5 (§ 752) for purposes of this memorandum) requests that the IRS confirm that shifts in partner-level shares of the $1.34 billion in aggregate liabilities resulting from the reorganization do not trigger deemed contributions or distributions under IRC §§ 752(a) and 752(b) that would result in gain recognition under § 731. Under § 752(a), any increase in a partner's share of partnership liabilities is treated as a contribution of money by the partner to the partnership. Under § 752(b), any decrease in a partner's share of partnership liabilities is treated as a distribution of money by the partnership to the partner. A deemed distribution of money under § 752(b) can trigger gain under § 731(a)(1) if the deemed distribution exceeds the partner's adjusted basis in the partnership.
In a multi-step reorganization such as the Solara transaction, the shifting of liabilities across tiered partnership structures can result in simultaneous increases and decreases in individual partners' shares of liabilities. Treas. Reg. § 1.752-1(f) provides that if, as a result of a single transaction, a partner's share of liabilities increases and decreases, the deemed contributions and distributions are netted, and only the net increase or decrease is treated as a contribution or distribution. This netting rule is critical to the Solara reorganization, as it prevents gain recognition from mechanistic liability shifts that produce no economic change in the partners' positions.
2. PLR 201XXXXX14 (2013) — Liability Netting in Partnership Consolidation
Facts. In PLR 201XXXXX14, two partnerships merged via contribution of assets and liabilities to a newly formed partnership. The aggregate liabilities of the two contributing partnerships were approximately $1.8 billion. The merger resulted in significant shifts in individual partners' shares of liabilities, as the liability allocation rules (including the economic risk of loss and minimum gain allocation rules under Treas. Reg. §§ 1.752-1 through 1.752-7) produced different allocations in the receiving partnership than had existed in the contributing partnerships. The taxpayer provided detailed partner-by-partner schedules showing each partner's share of liabilities before and after the merger, including the calculation of net deemed contributions and distributions under Treas. Reg. § 1.752-1(f).
Holding. The IRS confirmed that where a partner's share of liabilities simultaneously increases and decreases as part of the same transaction, the deemed contributions and distributions are netted under Treas. Reg. § 1.752-1(f), and only the net increase or decrease is treated as a contribution or distribution under § 752(a) or § 752(b). The IRS further confirmed that no gain was recognized under § 731(a)(1) because, after netting, no partner's net deemed distribution exceeded the partner's adjusted basis in the partnership immediately before the transaction. The IRS relied heavily on the detailed partner-by-partner liability schedules provided by the taxpayer in reaching this conclusion.
Relevance to Solara. This PLR is directly analogous to the liability-shifting aspects of the Solara reorganization. The $1.34 billion in aggregate liabilities of the Legacy Offshore Vehicles will shift across the tiered partnership structures (from the Legacy Vehicles to the Consolidated Master Fund, and then from the Master Fund through the feeder vehicles to the individual LPs) as a result of the reorganization. The netting rule of Treas. Reg. § 1.752-1(f) is essential to ensuring that these mechanistic liability shifts do not trigger gain recognition. The IRS's emphasis on detailed partner-by-partner liability schedules in PLR 201XXXXX14 underscores the importance of including comprehensive liability schedules (referenced as PLR Exhibit E in our internal outline) with the Solara PLR request.
Assessment: Favorable.
3. PLR 202XXXXX15 (2022) — Tiered Partnership Liability Allocation
Facts. In PLR 202XXXXX15, a multi-tier fund structure was reorganized, with liabilities allocated across upper-tier and lower-tier partnerships. The reorganization involved contributions of assets and liabilities from upper-tier feeder partnerships to a lower-tier master fund partnership. The taxpayer requested a ruling that the liability allocations across the tiered structure were properly determined under Treas. Reg. §§ 1.752-1 through 1.752-7 and that the liability shifts did not trigger gain recognition under § 731. The taxpayer provided detailed schedules analyzing recourse and nonrecourse liabilities, economic risk of loss determinations, and the application of the tiered partnership rules under Treas. Reg. § 1.752-4.
Holding. The IRS confirmed the proper application of the tiered partnership liability allocation rules and the netting provisions of Treas. Reg. § 1.752-1(f). The IRS walked through the tiered partnership analysis, confirming that each partner's share of liabilities was determined at each tier in the partnership structure and that the netting rule applied to the overall effect on each partner's aggregate share of liabilities. No gain was triggered. The IRS noted that the tiered partnership rules require careful analysis of the look-through allocation of liabilities from the lower-tier partnership to the upper-tier partnership's partners, and that the taxpayer's schedules properly accounted for this look-through allocation.
Relevance to Solara. This PLR supports Solara's tiered structure liability allocation analysis. The Solara reorganization will result in a tiered structure (LPs → International Feeder / Tax-Exempt Feeder → Consolidated Master Fund), and the allocation of the $1.34 billion in liabilities must be analyzed at each tier. PLR 202XXXXX15 confirms that the IRS accepts the application of the tiered partnership liability allocation rules and netting provisions in the context of a multi-tier fund restructuring.
Assessment: Favorable.
4. Cautionary Note
The § 752 analysis is inherently and intensely fact-specific. While the favorable PLRs identified above confirm the general applicability of the Treas. Reg. § 1.752-1(f) netting rule and the tiered partnership allocation rules, the ultimate determination of whether any partner's net deemed distribution exceeds basis depends on the specific facts of each partner's situation — including each partner's adjusted basis in the distributing partnership immediately before the transaction, each partner's share of recourse and nonrecourse liabilities before and after the reorganization, and the character of each liability (recourse vs. nonrecourse, qualified nonrecourse financing, etc.).
For this reason, the PLR request must include comprehensive partner-by-partner liability schedules (referenced as PLR Exhibit E in our internal outline) that demonstrate, for each partner, the calculation of net deemed contributions and distributions and confirm that no partner's net deemed distribution exceeds basis. These schedules will require detailed financial data from Redstone Advisory Group LLC (Marco DeLuca) and Caldwell Pierce & Co. LLP (Helen Okamoto). C&H should recommend that Solara proactively engage on the § 752 analysis at the pre-submission conference scheduled for July 22, 2025, to identify any specific concerns the IRS may have and to ensure that the liability schedules are in the format and at the level of detail the IRS requires.
G. Ruling 6 — IRC § 704(c): Built-In Gain Carryover and Remedial Allocation Method
1. Overview of the Ruling Requested
Ruling 6 requests that the IRS confirm that the built-in gain and loss accounts tracked under IRC § 704(c) by the Legacy Offshore Vehicles carry over to the Consolidated Master Fund LP when the portfolio assets are contributed in Steps 2 through 4, and that the Consolidated Master Fund may continue to use the remedial allocation method under Treas. Reg. § 1.704-3(d) — the method currently employed by each of the Legacy Offshore Vehicles — to allocate the built-in gain among its partners.
The aggregate built-in gain across all contributed properties is approximately $1.72 billion. The principal § 704(c) layers are as follows:
Section 704(c)(1)(A) provides that income, gain, loss, and deduction with respect to property contributed to the partnership by a partner shall be shared among the partners so as to take account of the variation between the basis of the property to the partnership and its fair market value at the time of contribution. The regulations under § 704(c) provide three permissible allocation methods: the traditional method (Treas. Reg. § 1.704-3(b)), the traditional method with curative allocations (Treas. Reg. § 1.704-3(c)), and the remedial allocation method (Treas. Reg. § 1.704-3(d)). The remedial allocation method eliminates distortions caused by the ceiling rule by creating remedial items of income, gain, loss, or deduction that offset the ceiling rule limitation.
When property with a built-in gain is contributed by one partnership to another in a § 721(a) transaction, the § 704(c) layers must be preserved and carried over to the receiving partnership. Treas. Reg. § 1.704-3(a)(7) addresses tiered partnership structures and provides guidance on how § 704(c) principles apply when property is contributed through tiered partnerships. The allocation method election is treated as attaching to the property rather than to the entity, such that the receiving partnership must continue to use the same allocation method that the contributing partnership employed.
2. PLR 200XXXXX16 (2012) — § 704(c) Carryover in Fund Restructuring
Facts. In PLR 200XXXXX16, a partnership contributed properties with substantial built-in gains — approximately $600 million in the aggregate — to a newly formed partnership as part of a fund restructuring. The contributing partnership had employed the remedial allocation method under Treas. Reg. § 1.704-3(d) to allocate the built-in gain among its partners. The taxpayer requested a ruling that (i) the § 704(c) built-in gain accounts carried over to the receiving partnership when the properties were contributed in a § 721 transaction, and (ii) the receiving partnership could — and was required to — continue using the remedial allocation method for the contributed properties.
Holding. The IRS confirmed both requested rulings. First, the IRS ruled that § 704(c) built-in gain accounts carry over to the receiving partnership when property is contributed in a § 721 transaction from one partnership to another. The receiving partnership steps into the shoes of the contributing partnership with respect to the § 704(c) layers and must allocate the built-in gain among its partners in a manner consistent with § 704(c)(1)(A). Second, the IRS confirmed that the receiving partnership may — and must — continue using the same allocation method (in this case, the remedial allocation method) that the contributing partnership had employed. The IRS cited Treas. Reg. § 1.704-3(a)(2), which requires consistency in the application of § 704(c) allocation methods, and noted that the method election attaches to the property, not to the entity.
Relevance to Solara. This PLR is directly applicable to Ruling 6 of the Solara PLR request. Solara's Legacy Offshore Vehicles use the remedial allocation method for their § 704(c) properties, and the Ruling 6 request seeks confirmation that the § 704(c) layers carry over to the Consolidated Master Fund and that the Master Fund will continue to use the remedial method. PLR 200XXXXX16 confirms both propositions. The built-in gain magnitude in PLR 200XXXXX16 ($600 million) is substantial, though smaller than Solara's aggregate BIG of $1.72 billion. However, the legal analysis does not turn on the magnitude of the BIG, and the principles confirmed in PLR 200XXXXX16 are directly applicable regardless of the specific dollar amounts involved.
Assessment: Strongly favorable.
3. PLR 201XXXXX17 (2016) — Remedial Method Continuation Post-Restructuring
Facts. In PLR 201XXXXX17, a fund that used the remedial allocation method for its contributed properties restructured into a master-feeder arrangement. The fund contributed its portfolio assets to a newly formed master fund partnership and sought confirmation that the remedial method election survived the restructuring and continued to apply to the contributed properties in the master fund.
Holding. The IRS confirmed that the remedial method election survived the restructuring. The IRS reiterated that Treas. Reg. § 1.704-3(a)(2) requires consistency in the application of § 704(c) methods and that the method election attaches to the property rather than to the entity. Because the same properties (with the same § 704(c) layers) were now held by the master fund, the master fund was required to continue using the remedial method that the contributing fund had elected. The IRS noted that a change in allocation method would require the prior consent of the IRS and that no such consent had been sought or granted.
Relevance to Solara. This PLR directly supports Ruling 6 by confirming that the remedial method election survives a fund restructuring involving the formation of a master-feeder arrangement — precisely the structure

MEMORANDUM

MATTER NO.: 20250527-SDILP-PLR

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