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PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION

CALDERWOOD & HARKNESS LLP

Attorneys at Law

600 Lexington Avenue, 38th Floor New York, New York 10022

Telephone: (212) 555-7400 Facsimile: (212) 555-7401

www.calderwoodharkness.com

July __, 2025

CONFIDENTIAL — PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION

To the Limited Partners of:

Solara Digital Partners Fund IV LP

Solara Digital Partners Fund IV-A (Cayman) LP

Solara Digital Partners Fund IV-B (Luxembourg) SCSp

Solara Digital Partners Fund V LP

Solara Digital Partners Fund V-A (Cayman) LP

Solara Digital Partners Fund V-B (Luxembourg) SCSp

c/o Solara Digital Infrastructure LP 1200 Market Street, Suite 3400 Wilmington, Delaware 19801

Attention: Stefan Dalmqvist, Head of Tax; Priya Narasimhan, General Counsel

Re: Summary of Anticipated U.S. Federal Income Tax Consequences of Proposed Cross-Border Fund-Platform Reorganization of Solara Digital Infrastructure LP Fund Vehicles

I. Introduction and Purpose of This Letter

Dear Limited Partners:

This letter has been prepared by Calderwood & Harkness LLP ("Calderwood & Harkness" or "we"), U.S. tax counsel to Solara Digital Infrastructure LP ("Solara" or "SDILP"), at the direction of Solara Digital Infrastructure GP LLC, the general partner of each of the above-captioned fund vehicles (each, a "Fund" and collectively, the "Funds"), for distribution to the limited partners ("LPs") of each of the six Fund vehicles listed above.

The purpose of this letter is to provide a plain-language summary of the anticipated U.S. federal income tax consequences of the proposed reorganization of Solara's fund platform (the "Reorganization") for each category of limited partner. The Reorganization, as described more fully in Section III below, involves the consolidation of certain offshore parallel fund vehicles into a new master-feeder structure through a series of asset contributions, dissolutions, and LP migrations across multiple jurisdictions.

We note at the outset that Calderwood & Harkness LLP (engagement number 20250527-SDILP-PLR) represents Solara and the Funds in this matter, and does not represent any individual limited partner. The legal and tax analysis set forth in this letter has been prepared solely for the benefit of Solara and the Funds in connection with the LP consent solicitation for the Reorganization, and is being furnished to LPs for informational purposes only.

This letter is being provided in connection with the LP consent solicitation for the Reorganization, which is being conducted pursuant to the amendment provisions of each Fund's respective limited partnership agreement. LPs should refer to the LP Consent Solicitation Letter and all related Reorganization materials (including the term sheet, structural diagram, pro forma financial projections, and the Form of LP Consent) for a full description of the transaction terms, conditions, timeline, and mechanics. This letter is intended to supplement, and should be read in conjunction with, those materials.

II. Important Disclaimers and Limitations

This letter provides a general summary only and does not constitute legal or tax advice to any individual LP. The discussion herein is intended to summarize the principal anticipated U.S. federal income tax consequences of the Reorganization at a general level and is not intended to address all potential tax consequences that may be relevant to any particular LP. The tax consequences of the Reorganization will depend upon each LP's individual circumstances, including, without limitation, its tax classification (e.g., corporation, partnership, individual, trust, or tax-exempt entity), its jurisdiction of formation, organization, or residence, its basis in its partnership interest, its share of partnership liabilities, and any applicable tax treaty provisions.

Each LP is strongly urged to consult its own independent tax advisors regarding the specific tax consequences of the Reorganization to such LP, taking into account its particular circumstances. Neither Calderwood & Harkness LLP nor Solara assumes any responsibility to any LP for the tax consequences of the Reorganization.

Calderwood & Harkness LLP does not represent any individual LP in this matter. LPs should be aware that Whitfield, Carruthers & Doyle LLP (Diana Carruthers, Partner), serving as LPAC counsel, has reviewed the proposed Reorganization on behalf of the LP Advisory Committee and has provided its own independent assessment to the LPAC members. In addition, certain non-U.S. investors have engaged their own independent tax counsel in connection with the Reorganization. By way of example, Bramhall & Quelwick LLP advises Nordhaven Sovereign Wealth Fund on certain aspects of the proposed transaction. We encourage all LPs, including those represented on the LPAC, to consult their own advisors to the extent they have not already done so.

This summary addresses only anticipated U.S. federal income tax consequences of the Reorganization. It does not address state, local, or non-U.S. tax consequences of the Reorganization, including, without limitation, Cayman Islands tax matters (such as any implications under the International Tax Co-operation (Economic Substance) Act (As Revised) of the Cayman Islands), Luxembourg tax matters (such as any implications under Luxembourg tax law, including the Luxembourg participation exemption regime and the application of EU Anti-Tax Avoidance Directives), or the tax laws of any other non-U.S. jurisdiction in which any LP may be organized, resident, or subject to tax. Non-U.S. LPs and LPs subject to tax in multiple jurisdictions should consult their own advisors regarding the non-U.S. tax consequences of the Reorganization.

The tax analysis set forth in this letter is based on the Internal Revenue Code of 1986, as amended (the "Code"), the Treasury Regulations promulgated thereunder ("Treasury Regulations" or "Treas. Reg."), published guidance of the Internal Revenue Service (the "IRS"), and judicial and administrative precedent, in each case as in effect and as interpreted as of the date of this letter. All of the foregoing authorities are subject to change, possibly with retroactive effect, and any such change could affect the accuracy of the statements and conclusions set forth herein. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described in this letter.

Solara has engaged Calderwood & Harkness LLP to prepare and submit a private letter ruling ("PLR") request to the IRS to confirm the intended tax treatment described herein. As discussed more fully in Section XII below, the PLR request has not yet been submitted (with a target submission date of August 15, 2025), and there can be no assurance that the IRS will issue a favorable ruling on all matters addressed in the request, that any ruling will be issued prior to the target transaction dates, or that the IRS will not impose conditions or limitations on any favorable ruling that it may issue.

III. Overview of the Reorganization

A. Current Fund Structure

Solara currently operates its investment program through six parallel fund vehicles organized across three jurisdictions, designed to accommodate the tax, regulatory, and reporting needs of its diverse investor base:

Delaware Main Funds. Solara Digital Partners Fund IV LP ("Fund IV") and Solara Digital Partners Fund V LP ("Fund V") are each organized as Delaware limited partnerships. Fund IV, a vintage 2021 fund with aggregate capital commitments of approximately $4.2 billion, is approximately 72% deployed as of the date of this letter. Fund V, a vintage 2023 fund with aggregate capital commitments of approximately $5.6 billion, is approximately 38% deployed. The Delaware main funds serve primarily U.S. taxable investors, including high-net-worth individuals, family offices, and domestic institutional investors.

Cayman Islands Parallel Vehicles. Solara Digital Partners Fund IV-A (Cayman) LP ("Fund IV-A Cayman") and Solara Digital Partners Fund V-A (Cayman) LP ("Fund V-A Cayman") are each organized as Cayman Islands exempted limited partnerships. Fund IV-A Cayman has aggregate capital commitments of approximately $1.85 billion, and Fund V-A Cayman has aggregate capital commitments of approximately $2.45 billion. These vehicles serve non-U.S. investors (including sovereign wealth funds, non-U.S. pension funds, and non-U.S. insurance companies) and U.S. tax-exempt investors (including public pension plans and university endowments), for whom the Cayman structure provides certain tax efficiencies and UBTI protections.

Luxembourg Parallel Vehicles. Solara Digital Partners Fund IV-B (Luxembourg) SCSp ("Fund IV-B Lux") and Solara Digital Partners Fund V-B (Luxembourg) SCSp ("Fund V-B Lux") are each organized as Luxembourg special limited partnerships (sociétés en commandite spéciale). Fund IV-B Lux has aggregate capital commitments of approximately €1.15 billion (approximately $1.24 billion at an exchange rate of 1.08 EUR/USD), and Fund V-B Lux has aggregate capital commitments of approximately €1.38 billion (approximately $1.49 billion at an exchange rate of 1.08 EUR/USD). These vehicles serve certain non-U.S. investors with specific tax treaty or regulatory considerations, including investors who benefit from Luxembourg's extensive network of bilateral investment treaties and EU regulatory passporting.

In aggregate, as of March 31, 2025, Solara has approximately $14.7 billion in assets under management across the six fund vehicles, invested in digital infrastructure (including data centers, fiber-optic networks, and edge computing facilities) and enterprise software-as-a-service ("SaaS") verticals. The Funds collectively hold interests in 23 portfolio companies, with 11 portfolio companies held through the Fund IV vehicles and 12 portfolio companies held through the Fund V vehicles.

B. Business Rationale for the Reorganization

The Reorganization is being undertaken for several significant business and operational reasons, each of which has been reviewed and endorsed by the LP Advisory Committee:

Operational Cost Reduction. The consolidation of the four offshore parallel vehicles into a single master-feeder structure is expected to yield approximately $3.8 million in annual savings by eliminating duplicative offshore administration, audit, legal, regulatory, and compliance fees. These cost savings will be shared pro rata among LPs in accordance with the applicable expense allocation provisions of the partnership agreements.

Impact of OECD Pillar Two GloBE Rules. The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting Pillar Two Global Anti-Base Erosion ("GloBE") rules, which became effective for Luxembourg entities beginning in fiscal year 2025, impose a minimum effective tax rate of 15% on the income of certain multinational enterprise groups. The implementation of these rules by Luxembourg substantially diminishes the historic benefits of the Luxembourg SCSp structures, and in certain scenarios may impose incremental tax costs that would not arise under the proposed consolidated structure.

Simplified FATCA and CRS Compliance. The consolidation is expected to simplify compliance with the Foreign Account Tax Compliance Act ("FATCA") and the OECD Common Reporting Standard ("CRS") by reducing the number of reporting entities and eliminating cross-jurisdictional coordination complexities.

LP-Requested Governance Simplification. Several significant LPs, including members of the LP Advisory Committee, have requested structural simplification to reduce governance overhead, streamline capital call and distribution mechanics, and improve transparency across the platform.

C. Summary of the Five-Step Transaction

The Reorganization will be effected through a series of five integrated steps, which are summarized below. A more detailed description of each step, including the specific transaction documents, conditions precedent, and representations, is set forth in the LP Consent Solicitation Letter and accompanying term sheet.

Step 1 — Formation of New Entities (Target: September 15, 2025). Solara will cause the formation of four new entities:

(i) Solara Consolidated Master Fund GP LLC, a Delaware limited liability company that will serve as the general partner of the Consolidated Master Fund LP;

(ii) Solara Consolidated Master Fund LP (the "Consolidated Master Fund LP"), a Delaware limited partnership that will serve as the master fund in the new structure;

(iii) Solara International Feeder (Cayman) LP (the "International Feeder"), a Cayman Islands exempted limited partnership that will serve as the feeder vehicle for non-U.S. investors; and

(iv) Solara Tax-Exempt Feeder (Cayman) LP (the "Tax-Exempt Feeder"), a Cayman Islands exempted limited partnership that will serve as the feeder vehicle for U.S. tax-exempt investors.

Each newly formed entity will file a Form 8832 (Entity Classification Election) with the IRS to be classified as a partnership for U.S. federal income tax purposes, effective as of the date of its formation, in accordance with the "check-the-box" regulations under Treas. Reg. § 301.7701-3.

Step 2 — Contribution of Fund IV-A Cayman Assets (Target: October 1, 2025). Fund IV-A (Cayman) LP will contribute all of its portfolio assets to the Consolidated Master Fund LP in exchange for a limited partnership interest in the Consolidated Master Fund LP. The aggregate fair market value ("FMV") of the assets to be contributed in Step 2 is approximately $2.31 billion, with an aggregate adjusted tax basis of approximately $1.62 billion, resulting in aggregate built-in gain of approximately $690 million.

Step 3 — Contribution of Fund IV-B Luxembourg Assets (Target: October 15, 2025). Fund IV-B (Luxembourg) SCSp will contribute all of its portfolio assets to the Consolidated Master Fund LP in exchange for a limited partnership interest in the Consolidated Master Fund LP. The aggregate FMV of the assets to be contributed in Step 3 is approximately $1.16 billion, with an aggregate adjusted tax basis of approximately $844.6 million, resulting in aggregate built-in gain of approximately $311 million.

Step 4 — Contribution of Fund V Offshore Assets (Target: November 1, 2025). Fund V-A (Cayman) LP will contribute all of its portfolio assets to the Consolidated Master Fund LP in exchange for a limited partnership interest in the Consolidated Master Fund LP. The aggregate FMV of the assets contributed by Fund V-A Cayman is approximately $2.89 billion, with an aggregate adjusted tax basis of approximately $2.34 billion, resulting in aggregate built-in gain of approximately $550 million. Simultaneously, Fund V-B (Luxembourg) SCSp will contribute all of its portfolio assets to the Consolidated Master Fund LP in exchange for a limited partnership interest in the Consolidated Master Fund LP. The aggregate FMV of the assets contributed by Fund V-B Lux is approximately $1.39 billion, with an aggregate adjusted tax basis of approximately $1.23 billion, resulting in aggregate built-in gain of approximately $162 million.

Step 5 — Dissolution and LP Migration (Target Effective Date: December 1, 2025). Following the completion of Steps 2 through 4, each of the four Legacy Offshore Vehicles (Fund IV-A Cayman, Fund IV-B Lux, Fund V-A Cayman, and Fund V-B Lux, collectively, the "Legacy Offshore Vehicles") will dissolve in accordance with its governing documents and applicable law. Upon dissolution, each Legacy Offshore Vehicle will distribute to its existing LPs their respective pro rata shares of the partnership interest in the Consolidated Master Fund LP that such Legacy Offshore Vehicle received in the applicable contribution step. Following the dissolution distributions:

• Non-U.S. LPs will roll their received Consolidated Master Fund LP interests into the Solara International Feeder (Cayman) LP.

• U.S. tax-exempt LPs will roll their received Consolidated Master Fund LP interests into the Solara Tax-Exempt Feeder (Cayman) LP.

• U.S. taxable investors will remain directly invested in Fund IV LP and Fund V LP, which will continue to exist as standalone vehicles and will co-invest alongside the Consolidated Master Fund LP on a going-forward basis.

D. Aggregate Financial Summary

The following table summarizes the aggregate financial parameters of the Reorganization transactions:

The following table sets forth representative portfolio company interests being transferred in the Reorganization, which together account for a substantial portion of the aggregate value being contributed:

The foregoing valuations are based on the most recent independent third-party appraisals and internal valuations as of March 31, 2025, and are subject to adjustment based on updated valuations as of each applicable transaction date.

IV. Tax Treatment of the Contributions (Steps 2–4): IRC § 721

A. General Rule — Nonrecognition Under § 721(a)

Section 721(a) of the Code provides the general rule that "[n]o 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." This rule applies regardless of the character or type of property contributed and regardless of whether the contributing partner receives a general or limited partnership interest. The legislative purpose of § 721(a) is to permit taxpayers to aggregate their separately owned assets in a partnership form for the conduct of a business or investment activity without triggering an immediate recognition event, on the theory that the contributor has merely changed the form, but not the substance, of its investment.

It is anticipated that the contributions of portfolio assets by each of the four Legacy Offshore Vehicles — Fund IV-A (Cayman) LP, Fund IV-B (Luxembourg) SCSp, Fund V-A (Cayman) LP, and Fund V-B (Luxembourg) SCSp — to the Consolidated Master Fund LP in exchange for limited partnership interests in the Consolidated Master Fund LP will qualify as tax-free contributions under § 721(a) of the Code. In each case, the contributing Legacy Offshore Vehicle will transfer all of its portfolio company interests, together with associated assets and liabilities, to the Consolidated Master Fund LP in exchange solely for a limited partnership interest in the Consolidated Master Fund LP. No cash or other consideration (other than the assumption of liabilities) will be received by any contributing entity.

Accordingly, no gain or loss is expected to be recognized by the contributing partnerships or by the individual LPs of those partnerships as a result of these contributions. The contributions will be treated as nonrecognition events for U.S. federal income tax purposes, and the taxable income of LPs should not be affected by the contributions themselves.

Under Section 723 of the Code, the Consolidated Master Fund LP will take a carryover basis in each contributed asset — that is, the same adjusted tax basis that the contributing Legacy Offshore Vehicle had in that asset immediately before the contribution. For example, if Fund IV-A Cayman had an adjusted tax basis of $520 million in its interest in NovaBright Data Systems Inc. immediately before contributing that interest to the Consolidated Master Fund LP, the Consolidated Master Fund LP's adjusted tax basis in that interest will be $520 million immediately after the contribution.

Under Section 1223(2) of the Code, the Consolidated Master Fund LP's holding period for each contributed asset will include the holding period of the contributing Legacy Offshore Vehicle. This "tacking" of holding periods is significant because it preserves the long-term capital gain character of any appreciation that occurred during the contributing entity's holding period, which in turn may affect the character of gain allocated to LPs upon a future disposition of those assets.

B. Investment Company Exception — § 721(b)

Section 721(b) of the Code provides an important exception to the general nonrecognition rule of § 721(a). Under § 721(b), gain may be recognized on a contribution of property to a partnership if the contribution results in diversification of the transferor's interests and the transferee partnership would be treated as an "investment company" within the meaning of Section 351 of the Code and Treasury Regulation § 1.351-1(c)(1)(ii).

Under Treas. Reg. § 1.351-1(c)(1)(ii), a transfer results in the formation or continued existence of an "investment company" if (i) the transfer results, directly or indirectly, in diversification of the transferors' interests, and (ii) the transferee is a regulated investment company, a real estate investment trust, or a corporation more than 80 percent of the value of whose assets (excluding cash and nonconvertible debt obligations) consists of readily marketable stocks or securities held for investment (or interests in regulated investment companies or real estate investment trusts).

Solara's position is that the Consolidated Master Fund LP does not constitute an "investment company" within the meaning of these provisions. The portfolio of the Consolidated Master Fund LP will consist entirely of interests in operating companies — specifically, digital infrastructure businesses (including data centers, fiber-optic networks, and edge computing facilities) and enterprise SaaS platforms. These portfolio companies are active operating businesses that derive their revenues from the provision of goods and services, the ownership and operation of physical infrastructure, and the development and licensing of proprietary technology. None of the portfolio companies are passive investment vehicles, and none of the contributed assets constitute "stocks, securities, or other investment assets" of the type that would cause the Consolidated Master Fund LP to be characterized as an investment company.

All 23 portfolio companies held across the Fund IV and Fund V vehicles satisfy the "active business" standard, as evidenced by, among other things, their significant employee headcount, revenue-generating operations, capital expenditure programs, and operational management structures. Accordingly, we believe the investment company exception under § 721(b) should not apply to the contributions contemplated by the Reorganization.

A specific ruling confirming that the Consolidated Master Fund LP is not an "investment company" within the meaning of § 721(b) and Treas. Reg. § 1.351-1(c)(1)(ii) has been requested from the IRS as part of the PLR submission.

C. Cross-Border Considerations — IRC § 367

Sections 367(a) and 367(b) of the Code impose gain recognition and other adverse tax consequences on certain transfers of property to or from foreign corporations. Specifically, § 367(a)(1) provides that, in certain cases involving the transfer of property by a U.S. person to a foreign corporation, the foreign corporation shall not be treated as a corporation for purposes of determining whether the transfer qualifies for nonrecognition under various provisions of the Code (including § 351). Section 367(b) addresses certain exchanges involving foreign corporations where § 367(a) does not apply.

Solara's position is that § 367 does not apply to the contributions contemplated in Steps 2 through 4 of the Reorganization. By its express terms, § 367 applies only to transfers involving corporations, whether domestic or foreign. The Consolidated Master Fund LP, as the transferee entity, is classified as a partnership for U.S. federal income tax purposes, not as a corporation. Accordingly, the transfer of property to the Consolidated Master Fund LP does not involve a transfer to or from a corporation, and § 367 is not implicated.

The fact that the contributing entities — Fund IV-A (Cayman) LP, Fund IV-B (Luxembourg) SCSp, Fund V-A (Cayman) LP, and Fund V-B (Luxembourg) SCSp — are organized under the laws of foreign jurisdictions (the Cayman Islands and Luxembourg, respectively) does not, in and of itself, trigger the application of § 367. Each of the contributing entities is classified as a partnership (not a corporation) for U.S. federal income tax purposes, either by operation of the default classification rules or by prior entity classification election. Since there is no transfer to or from a corporation on either side of the transaction, § 367 has no application.

A specific ruling confirming the inapplicability of § 367 to the contribution transactions has been requested from the IRS as part of the PLR submission.

V. Tax Treatment of the Distributions (Step 5): IRC § 731

A. General Rule — Nonrecognition Under § 731(a)

Section 731(a) of the Code provides the general rule governing distributions from partnerships to partners. Under § 731(a)(1), gain is not recognized by a partner upon a distribution from a partnership, except to the extent that any money distributed exceeds the partner's adjusted basis in its partnership interest. Under § 731(a)(2), loss is not recognized to a partner upon a distribution from a partnership except upon a liquidating distribution consisting solely of money, unrealized receivables, and inventory items.

In Step 5 of the Reorganization, each Legacy Offshore Vehicle will dissolve and distribute to its LPs the partnership interest in the Consolidated Master Fund LP that the Legacy Offshore Vehicle received in the applicable contribution step (Steps 2 through 4). These distributions will constitute liquidating distributions from the Legacy Offshore Vehicles to their respective partners.

Because the distributed property consists solely of partnership interests in the Consolidated Master Fund LP — and not of money — no gain is expected to be recognized by any LP upon receipt of its share of the Consolidated Master Fund LP interest from the dissolving Legacy Offshore Vehicle. The distributions will be treated as nonrecognition events for U.S. federal income tax purposes.

Each LP's adjusted tax basis in its received Consolidated Master Fund LP interest will be determined under Section 732 of the Code. Under the general rules of § 732 applicable to liquidating distributions, an LP will take a substituted basis in the distributed Consolidated Master Fund LP interest equal to the LP's adjusted basis in its interest in the dissolving Legacy Offshore Vehicle, reduced by any money deemed distributed to the LP and adjusted for any deemed distributions or contributions arising under § 752 (as discussed in Section VI below). This substituted basis approach preserves the LP's built-in gain or loss position and defers any recognition event to a future taxable transaction.

B. Marketable Securities Exception — § 731(c)

Section 731(c) of the Code provides an exception to the general nonrecognition rule of § 731(a) for certain distributions of "marketable securities." Under § 731(c)(1), a distribution of marketable securities by a partnership to a partner is treated as a distribution of money to the extent of the FMV of the securities at the time of the distribution. If the deemed money distribution exceeds the partner's adjusted basis in its partnership interest, gain would be recognized under § 731(a)(1).

Under § 731(c)(2), the term "marketable securities" means financial instruments (including stocks, debt instruments, options, and similar instruments) that are, as of the date of the distribution, "actively traded" within the meaning of § 1092(d)(1) — generally, instruments traded on an established securities market or that are readily tradable on a secondary market or the substantial equivalent thereof.

Solara's position is that the partnership interests in the Consolidated Master Fund LP being distributed to LPs in Step 5 do not constitute "marketable securities" within the meaning of § 731(c)(2). The limited partnership interests in the Consolidated Master Fund LP are not actively traded on any established securities market, are not listed on any exchange, and are not readily tradable on any secondary market or the substantial equivalent thereof. The Consolidated Master Fund LP is a private investment fund with significant transfer restrictions contained in its limited partnership agreement, and there is no public or secondary market for its interests.

Accordingly, § 731(c) should not apply to the distributions in Step 5, and the distributions should be eligible for nonrecognition treatment under § 731(a). A specific ruling confirming the inapplicability of § 731(c) to the distributions has been requested from the IRS as part of the PLR submission.

VI. Liability Shifting: IRC § 752

Section 752 of the Code governs the treatment of partnership liabilities for purposes of determining partners' adjusted bases in their partnership interests. Under § 752(a), any increase in a partner's share of the liabilities of a partnership is treated as a deemed cash contribution by that partner to the partnership, which increases the partner's outside basis. Under § 752(b), any decrease in a partner's share of the liabilities of a partnership is treated as a deemed cash distribution to that partner from the partnership, which decreases the partner's outside basis. A deemed cash distribution under § 752(b) that exceeds a partner's adjusted basis in its partnership interest would trigger gain recognition under § 731(a)(1).

The Reorganization involves the assumption by the Consolidated Master Fund LP of approximately $1.34 billion in aggregate portfolio-level liabilities currently held at the Legacy Offshore Vehicle level. These liabilities include, among others, subscription credit facility obligations, portfolio company-level indebtedness that is recourse to the Legacy Offshore Vehicles, and certain guarantees and other contingent liabilities. As a consequence of these liability shifts, individual partners' shares of partnership liabilities will change — in some cases increasing and in other cases decreasing — as the partners' interests are re-oriented from the Legacy Offshore Vehicles to the Consolidated Master Fund LP and, subsequently, to the feeder vehicles.

These changes will cause simultaneous deemed contributions under § 752(a) and deemed distributions under § 752(b) at the partner level. The critical question is whether any individual LP will experience a net deemed distribution (i.e., deemed distributions under § 752(b) in excess of deemed contributions under § 752(a)) that exceeds such LP's adjusted basis in its partnership interest, which would trigger gain recognition.

Solara's position, supported by detailed analysis under the netting rules of Treasury Regulation § 1.752-1(f) and the tiered partnership rules of Treasury Regulation § 1.752-4, is that when deemed contributions under § 752(a) are netted against deemed distributions under § 752(b) occurring as part of the same transaction or integrated series of transactions (as is the case with the Reorganization), no LP will experience a net deemed distribution in excess of its adjusted basis, and therefore no gain will be recognized by any LP as a result of liability shifting.

This analysis has been performed on a partner-by-partner basis using the capital account and outside basis data maintained by Solara's fund administrator. The analysis takes into account the allocation of liabilities under the general rules of § 752 and the Treasury Regulations thereunder, including the allocation of recourse liabilities under Treas. Reg. § 1.752-2 and the allocation of nonrecourse liabilities under Treas. Reg. § 1.752-3.

Notwithstanding the foregoing, LPs should consult their own tax advisors regarding the specific impact of liability shifts on their individual tax positions, as the analysis necessarily depends on each LP's particular adjusted basis, share of liabilities, and other individual circumstances. A specific ruling confirming the application of the § 752 netting rules and the absence of gain recognition from liability shifting in the context of this Reorganization has been requested from the IRS as part of the PLR submission.

VII. Built-In Gain Carryover: IRC § 704(c)

Section 704(c) of the Code addresses the allocation of income, gain, loss, and deductions with respect to property contributed to a partnership where there is a difference between the property's fair market value and the contributing partner's adjusted tax basis at the time of contribution (i.e., "built-in gain" or "built-in loss"). The purpose of § 704(c) is to prevent the shifting of tax consequences between contributing and non-contributing partners by requiring that the partnership's allocations with respect to contributed property take into account the variation between the contributing partner's basis and the property's FMV at the time of contribution.

The Legacy Offshore Vehicles currently maintain § 704(c) accounts for their respective contributed properties. As of the most recent valuation date, the aggregate § 704(c) built-in gain across all four Legacy Offshore Vehicles is approximately $1.72 billion. This built-in gain represents the cumulative excess of FMV over adjusted tax basis for all contributed properties, as tracked through the § 704(c) layer methodology maintained by the Funds' tax department and external accountants.

It is expected that these § 704(c) built-in gain accounts will carry over to the Consolidated Master Fund LP in connection with the contributions in Steps 2 through 4. That is, the Consolidated Master Fund LP will "inherit" the existing § 704(c) layers and will be required to make allocations that take into account the pre-existing built-in gain, in the same manner as the Legacy Offshore Vehicles were required to do prior to the Reorganization.

The Consolidated Master Fund LP intends to continue using the remedial allocation method under Treasury Regulation § 1.704-3(d) for each contributed property, consistent with the method used by the Legacy Offshore Vehicles. The remedial allocation method is generally the most precise and LP-friendly method available for addressing § 704(c) disparities, as it creates notional tax items to correct for any book-tax disparities that cannot be eliminated through allocations of actual tax items.

What this means for LPs: Allocations of income, gain, loss, and deductions attributable to contributed assets will continue to take into account the pre-existing built-in gain, in substantially the same manner as they did under the prior fund structure. LPs should not experience a material change in how § 704(c) allocations affect them solely as a result of the Reorganization. The Reorganization is intended to be neutral with respect to § 704(c) allocations — it does not accelerate, defer, or alter the character of any LP's share of built-in gain.

A specific ruling confirming the carryover of § 704(c) accounts and the continued application of the remedial allocation method has been requested from the IRS as part of the PLR submission.

VIII. Withholding Tax Considerations: IRC § 1446

Section 1446(a) of the Code requires a partnership that is engaged in a trade or business within the United States (or is treated as being so engaged) to withhold tax on the effectively connected taxable income ("ECTI") allocable to its foreign partners. The withholding tax is imposed at the highest rate of tax specified in § 1 (for non-corporate foreign partners) or § 11 (for corporate foreign partners), as applicable, and is intended to ensure collection of U.S. tax on income that is effectively connected with the conduct of a U.S. trade or business.

Solara's position is that no withholding under § 1446 is required in connection with the contributions in Steps 2 through 4 or the distributions in Step 5 of the Reorganization, for the following reasons:

(a) Contributions (Steps 2–4). The contributions of portfolio assets by the Legacy Offshore Vehicles to the Consolidated Master Fund LP are intended to qualify as nonrecognition transactions under § 721(a) of the Code. Because no gain or loss is recognized on these contributions, no ECTI is generated, and there is no "amount subject to withholding" under Treasury Regulations §§ 1.1446-1 through 1.1446-6.

(b) Distributions (Step 5). The liquidating distributions of Consolidated Master Fund LP interests by the Legacy Offshore Vehicles to their respective LPs are intended to qualify as nonrecognition transactions under § 731(a) of the Code. Because no gain or loss is recognized on these distributions (subject to the liability analysis discussed in Section VI above), no ECTI is generated, and there is no "amount subject to withholding" under the applicable Treasury Regulations.

Accordingly, non-U.S. LPs — including, by way of example, Nordhaven Sovereign Wealth Fund and Kestrel Pacific Insurance Group — should not be subject to any additional U.S. withholding tax as a direct result of the Reorganization. The Reorganization is not expected to change the aggregate amount of U.S. withholding tax to which any non-U.S. LP is subject.

Non-U.S. LPs are encouraged to consult their own tax advisors regarding their ongoing § 1446 withholding obligations after the Reorganization, which will depend on the nature and amount of ECTI allocable to such LPs through the Consolidated Master Fund LP and the International Feeder in future taxable periods.

A specific ruling confirming the absence of § 1446 withholding obligations in connection with the Reorganization transactions has been requested from the IRS as part of the PLR submission.

IX. FIRPTA Considerations: IRC § 897

The Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA"), as codified principally in Section 897 of the Code, provides that gain recognized by a non-U.S. person on the disposition of a "United States real property interest" ("USRPI") is treated as income effectively connected with the conduct of a U.S. trade or business and is subject to U.S. federal income tax. A USRPI includes any interest in real property located in the United States, as well as any interest (other than an interest solely as a creditor) in a domestic corporation that is a "United States real property holding corporation" ("USRPHC") — generally, a corporation in which the FMV of its USRPIs equals or exceeds 50% of the aggregate FMV of its USRPIs, foreign real property interests, and other trade or business assets.

Solara's analysis addresses whether certain portfolio company interests — particularly interests in companies whose assets include data centers and fiber-optic networks — may constitute USRPIs for FIRPTA purposes. Of particular relevance are the interests in NovaBright Data Systems Inc. (which owns and operates data center facilities in the United States with significant real property components) and Thorngate Fiber Networks LP (which owns fiber-optic cable routes and conduit infrastructure with potential real property characteristics). Whether these interests constitute USRPIs depends on a detailed factual analysis of the underlying asset composition of each portfolio company, including the relative FMV of its real property assets compared to its total assets.

Even if certain portfolio company interests were determined to be USRPIs, the contributions in Steps 2 through 4 of the Reorganization are intended to qualify as nonrecognition transactions under § 721(a) of the Code. Because § 721(a) provides that no gain or loss is recognized on the contribution of property to a partnership, and because FIRPTA tax is triggered only upon the recognition of gain on the disposition of a USRPI, the contributions should not trigger any FIRPTA tax liability for non-U.S. LPs.

Non-U.S. LPs should be aware, however, that following the Reorganization, their indirect exposure to potential USRPIs through the Consolidated Master Fund LP will continue. FIRPTA may apply upon the ultimate disposition of USRPI assets by the Consolidated Master Fund LP in the ordinary course of its investment activities. The Reorganization does not eliminate any pre-existing FIRPTA exposure; it merely shifts the level at which that exposure is held from the Legacy Offshore Vehicles to the Consolidated Master Fund LP.

Non-U.S. LPs should consult their own tax advisors regarding their particular FIRPTA exposure, both in connection with the Reorganization and on an ongoing basis. The FIRPTA analysis may be particularly relevant for LPs that are eligible for FIRPTA exemptions, such as qualified foreign pension funds under § 897(l) of the Code or sovereign wealth funds that may qualify for exemption under § 892 of the Code.

X. Entity Classification

Under the "check-the-box" regulations set forth in Treasury Regulation § 301.7701-3, an eligible entity that is not automatically classified as a corporation may elect its classification for U.S. federal income tax purposes by filing Form 8832 (Entity Classification Election) with the IRS.

Each of the newly formed entities — Solara Consolidated Master Fund LP, Solara International Feeder (Cayman) LP, and Solara Tax-Exempt Feeder (Cayman) LP — will file Form 8832 elections to be classified as partnerships for U.S. federal income tax purposes, effective as of the respective date of formation of each entity. Solara Consolidated Master Fund GP LLC, as a single-member LLC that is the general partner of the Consolidated Master Fund LP, will be disregarded as an entity separate from its owner for U.S. federal income tax purposes under the default classification rules.

These entity classification elections are critical to the Reorganization, as the tax analysis described throughout this letter depends on the partnership classification of the Consolidated Master Fund LP and each feeder vehicle. If any such entity were to be classified as a corporation rather than a partnership, the tax consequences of the Reorganization could differ materially from those described herein.

A specific ruling confirming these entity classifications under Treas. Reg. § 301.7701-3 has been requested from the IRS as part of the PLR submission.

Following the Reorganization, LPs will receive Schedule K-1s (Partner's Share of Income, Deductions, Credits, etc.) from the applicable entity in the post-Reorganization structure. Non-U.S. LPs investing through the International Feeder will receive Schedule K-1s from the International Feeder, and U.S. tax-exempt LPs investing through the Tax-Exempt Feeder will receive Schedule K-1s from the Tax-Exempt Feeder. U.S. taxable investors that remain directly in Fund IV LP or Fund V LP will continue to receive Schedule K-1s from those vehicles, as they do currently.

XI. Tax Consequences by Investor Category

The following discussion summarizes the anticipated U.S. federal income tax consequences of the Reorganization for each principal category of limited partner.

A. U.S. Taxable Investors

Representative LP: Argyle Family Office Holdings LLC

U.S. taxable investors that are currently invested directly in Fund IV LP and Fund V LP (the Delaware main funds) are not expected to be directly affected by the Reorganization in a material way. Fund IV LP and Fund V LP will continue to exist as standalone Delaware limited partnerships and will co-invest alongside the Consolidated Master Fund LP on a going-forward basis. No change in any such investor's direct partnership interest in Fund IV LP or Fund V LP is anticipated as a result of the Reorganization.

The Reorganization principally affects the four Legacy Offshore Vehicles and their respective LPs. To the extent that any U.S. taxable investor holds an interest through one of the Legacy Offshore Vehicles (rather than directly through Fund IV LP or Fund V LP), the analysis set forth in Sections IV through IX above applies to such investor in the same manner as it applies to other LPs of the Legacy Offshore Vehicles. Such investors should consult their own tax advisors regarding the specific consequences of the Reorganization to them.

B. U.S. Tax-Exempt Investors

Representative LPs: Pinnacle State Employees' Retirement System; Grandview University Endowment

U.S. tax-exempt LPs that are currently invested in the Cayman parallel vehicles (Fund IV-A Cayman and Fund V-A Cayman) will, following the completion of the Reorganization, migrate to the Solara Tax-Exempt Feeder (Cayman) LP, which will in turn invest into the Consolidated Master Fund LP. The Tax-Exempt Feeder is specifically designed to preserve existing protections against unrelated business taxable income ("UBTI") for tax-exempt investors, including public pension plans, university endowments, charitable foundations, and other organizations exempt from tax under § 501(a) of the Code.

The contributions of assets by the Legacy Offshore Vehicles to the Consolidated Master Fund LP in Steps 2 through 4 are expected to be tax-free under § 721(a) of the Code, as discussed in Section IV above. The liquidating distributions of Consolidated Master Fund LP interests to LPs in Step 5 are expected to be tax-free under § 731(a), as discussed in Section V above. Neither the contributions nor the distributions should generate UBTI for U.S. tax-exempt LPs.

U.S. tax-exempt LPs should consult their own advisors regarding the ongoing UBTI analysis under the new structure. In particular, tax-exempt LPs should evaluate whether the interposition of the Tax-Exempt Feeder (as a Cayman blocker entity) continues to provide effective UBTI protection with respect to (i) income from debt-financed property under § 514 of the Code, and (ii) income from the conduct of an unrelated trade or business under § 512 of the Code.

C. Non-U.S. Investors

Representative LPs: Nordhaven Sovereign Wealth Fund; Kestrel Pacific Insurance Group

Non-U.S. LPs that are currently invested in the Cayman parallel vehicles or the Luxembourg parallel vehicles will, following the completion of the Reorganization, migrate to the Solara International Feeder (Cayman) LP, which will in turn invest into the Consolidated Master Fund LP.

No U.S. withholding tax under § 1446 of the Code is expected to arise from the Reorganization transactions, as discussed in Section VIII above. The contributions and distributions are intended to be nonrecognition transactions that do not generate ECTI or otherwise trigger withholding obligations.

FIRPTA considerations relevant to non-U.S. LPs are discussed in Section IX above. Non-U.S. LPs should be aware that the Reorganization does not eliminate any pre-existing FIRPTA exposure; rather, such exposure will continue on an ongoing basis through the Consolidated Master Fund LP's ownership of portfolio companies that may hold USRPIs.

Non-U.S. LPs that are currently benefiting from income tax treaty provisions — particularly those investing through the Luxembourg SCSp vehicles, which may provide access to Luxembourg's extensive bilateral tax treaty network — should consult their own tax advisors regarding the impact of the change in investment structure on their treaty positions. The migration from a Luxembourg SCSp to a Delaware limited partnership (through a Cayman feeder) may affect the availability of certain treaty benefits, including reduced withholding rates on dividends, interest, or royalties, as well as treaty-based exemptions from taxation of business profits or capital gains. The specific impact will depend on the terms of the applicable tax treaty, the LP's country of residence, and the LP's individual circumstances.

Sovereign wealth funds and other governmental entities should consult their own advisors regarding the application of sovereign immunity doctrines — including the exemption for income of foreign governments under § 892 of the Code — to the post-Reorganization structure. The restructuring of investment vehicles may affect the availability or scope of the § 892 exemption depending on the nature and level of commercial activity conducted through the Consolidated Master Fund LP.

XII. PLR Request Status

Solara has engaged Calderwood & Harkness LLP to prepare and submit a private letter ruling request to the IRS in connection with the Reorganization. The PLR request will be submitted to the IRS's Office of the Associate Chief Counsel (International) ("CC:INTL"), with secondary jurisdiction in the Office of the Associate Chief Counsel (Passthroughs & Special Industries) ("CC:PSI"), reflecting the cross-border and partnership aspects of the transaction.

The PLR request seeks eight specific rulings confirming the tax-free treatment of the Reorganization as described in this letter. The rulings sought address the following issues:

1. Nonrecognition of gain or loss on the contributions under IRC § 721(a);

2. Inapplicability of the investment company exception under IRC § 721(b) and Treas. Reg. § 1.351-1(c)(1)(ii);

3. Inapplicability of IRC § 367 to the contribution transactions;

4. Nonrecognition of gain or loss on the liquidating distributions under IRC § 731(a);

5. Inapplicability of the marketable securities exception under IRC § 731(c) to the distributed partnership interests;

6. Application of the § 752 netting rules and absence of gain recognition from liability shifts;

7. Carryover of § 704(c) built-in gain accounts and continued application of the remedial allocation method; and

8. Confirmation of entity classification of each newly formed entity as a partnership under Treas. Reg. § 301.7701-3, including confirmation that no § 1446 withholding obligations arise from the Reorganization transactions.

The target submission date for the PLR request is August 15, 2025. In advance of the formal submission, a pre-submission conference with IRS CC:INTL Branch 1 has been requested for July 22, 2025, to discuss the scope and substance of the ruling request and to address any preliminary questions or concerns that the IRS may have regarding the proposed transactions.

The IRS user fee of $38,000, as prescribed by Rev. Proc. 2025-1 (or the applicable successor revenue procedure), will accompany the submission.

There can be no assurance that the IRS will issue a favorable PLR on all or any of the issues addressed in the ruling request, or that any favorable ruling will be issued before the target transaction dates set forth in Section XIII below. If the IRS declines to rule favorably on one or more issues, or if the IRS imposes conditions or limitations that materially affect the structure or tax treatment of the Reorganization, Solara will evaluate the impact on the Reorganization timeline and structure and will inform LPs accordingly through a supplemental communication. Solara reserves the right to modify, delay, or abandon the Reorganization in its sole discretion based on the outcome of the PLR process or other developments.

XIII. Reorganization Timeline Summary

The following table sets forth the target dates for each step of the Reorganization. All dates are subject to adjustment based on the status of the PLR request, the satisfaction of conditions precedent, and other factors:

LPs should refer to the LP Consent Solicitation Letter and term sheet for a more detailed description of the conditions precedent to each step and the mechanics of LP migration.

XIV. LP Consent

LP consent for the Reorganization is being solicited under the amendment provisions of each Fund's limited partnership agreement. The Reorganization requires the affirmative consent of LPs holding a specified percentage in interest of each Fund, as set forth in the applicable limited partnership agreement.

Preliminary LP consent was obtained at the LP Advisory Committee meeting held on April 22, 2025, at which LPs representing approximately 78% in interest of aggregate capital commitments across the six Funds indicated their support for the Reorganization in principle. This preliminary expression of support is not binding and does not substitute for the formal consent process now being undertaken.

The formal Form of LP Consent is enclosed with the LP Consent Solicitation Letter. LPs are encouraged to review all Reorganization materials carefully — including this letter, the LP Consent Solicitation Letter, the term sheet, the structural diagrams, the pro forma financial projections, and any other materials provided — and to consult their own legal, tax, and financial advisors before executing and returning the Form of LP Consent.

The deadline for the return of executed LP Consents is set forth in the LP Consent Solicitation Letter. Solara reserves the right to extend the consent deadline in its discretion.

XV. Questions and Contacts

LPs with questions regarding the Reorganization generally, including questions about the transaction structure, timeline, mechanics, or LP consent process, should contact:

Stefan Dalmqvist Head of Tax Solara Digital Infrastructure LP 1200 Market Street, Suite 3400 Wilmington, Delaware 19801 Telephone: (302) 555-8200

Email: slindqvist@solaradigital.com

Priya Narasimhan General Counsel Solara Digital Infrastructure LP 1200 Market Street, Suite 3400 Wilmington, Delaware 19801 Telephone: (302) 555-8210

Email: pnarasimhan@solaradigital.com

LPs who wish to discuss the PLR request or the tax analysis set forth in this letter directly with Solara's outside tax counsel may contact:

Leonard Cross Partner Calderwood & Harkness LLP 1900 K Street NW, Suite 1100 Washington, DC 20006 Telephone: (202) 555-6300

Email: lcross@calderwoodharkness.com

Sylvia Hartwell Partner Calderwood & Harkness LLP 600 Lexington Avenue, 38th Floor New York, New York 10022 Telephone: (212) 555-7425

Email: shartwell@calderwoodharkness.com

LPs represented on the LP Advisory Committee may direct questions through LPAC counsel:

Diana Carruthers Partner Whitfield, Carruthers & Doyle LLP 200 South Biscayne Boulevard, Suite 4000 Miami, Florida 33131 Telephone: (305) 555-4400

Email: dcarruthers@wcdlaw.com

XVI. Closing

This letter is intended to provide a general summary of the anticipated U.S. federal income tax consequences of the proposed Reorganization for informational purposes only. This summary does not constitute legal or tax advice to any individual LP and should not be relied upon as such. Each LP is urged to consult its own independent legal, tax, and financial advisors regarding the specific tax consequences of the Reorganization to such LP, taking into account its particular circumstances, including its tax classification, jurisdiction of residence, basis in its partnership interest, share of partnership liabilities, and any applicable tax treaty provisions.

The analysis set forth herein is subject to the outcome of the pending PLR request described in Section XII and to changes in applicable law, including changes to the Code, Treasury Regulations, IRS guidance, and judicial precedent, any of which could occur after the date of this letter, possibly with retroactive effect.

We appreciate the opportunity to assist in this matter and remain available to address any questions that may arise.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Leonard Cross Partner Calderwood & Harkness LLP 1900 K Street NW, Suite 1100 Washington, DC 20006

By: ________

Sylvia Hartwell Partner Calderwood & Harkness LLP 600 Lexington Avenue, 38th Floor New York, New York 10022

Engagement Reference: 20250527-SDILP-PLR

cc: Viktor Raines, Managing Partner & Founder, Solara Digital Infrastructure LP

cc: Douglas Wexford, Chief Financial Officer, Solara Digital Infrastructure LP

cc: Meredith Tsao, Chief Operating Officer, Solara Digital Infrastructure LP

Metric	Amount
Total FMV of assets being transferred to the Consolidated Master Fund LP	$7.75 billion
Total adjusted tax basis of assets being transferred	$6.03 billion
Total aggregate built-in gain	$1.72 billion
Aggregate liabilities assumed by the Consolidated Master Fund LP	$1.34 billion
Portfolio Company	FMV	Adjusted Tax Basis	Built-In Gain
NovaBright Data Systems Inc.	$890 million	$520 million	$370 million
Veridian Edge Computing Corp.	$1.12 billion	$780 million	$340 million
Thorngate Fiber Networks LP	$670 million	$490 million	$180 million
Crestline Cloud Solutions LLC	€340 million ($367 million)	€195 million ($211 million)	$156 million
Helix SaaS Holdings Ltd.	$445 million	$310 million	$135 million
Other portfolio companies (18)	$4.26 billion	$3.72 billion	$539 million
Total	$7.75 billion	$6.03 billion	$1.72 billion
Target Date	Event
September 15, 2025	Step 1: Formation of new entities (Solara Consolidated Master Fund LP, Solara Consolidated Master Fund GP LLC, Solara International Feeder (Cayman) LP, Solara Tax-Exempt Feeder (Cayman) LP) and filing of Form 8832 entity classification elections
October 1, 2025	Step 2: Fund IV-A (Cayman) LP contributes all portfolio assets to Consolidated Master Fund LP
October 15, 2025	Step 3: Fund IV-B (Luxembourg) SCSp contributes all portfolio assets to Consolidated Master Fund LP
November 1, 2025	Step 4: Fund V-A (Cayman) LP and Fund V-B (Luxembourg) SCSp contribute all portfolio assets to Consolidated Master Fund LP
December 1, 2025	Step 5: Dissolution of Legacy Offshore Vehicles and LP migration to applicable feeder vehicles (International Feeder or Tax-Exempt Feeder, as applicable)

PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION
CALDERWOOD & HARKNESS LLP
Attorneys at Law
600 Lexington Avenue, 38th Floor New York, New York 10022
Telephone: (212) 555-7400 Facsimile: (212) 555-7401
www.calderwoodharkness.com
July __, 2025
CONFIDENTIAL — PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION
To the Limited Partners of:
Solara Digital Partners Fund IV LP
Solara Digital Partners Fund IV-A (Cayman) LP
Solara Digital Partners Fund IV-B (Luxembourg) SCSp
Solara Digital Partners Fund V LP
Solara Digital Partners Fund V-A (Cayman) LP
Solara Digital Partners Fund V-B (Luxembourg) SCSp
c/o Solara Digital Infrastructure LP 1200 Market Street, Suite 3400 Wilmington, Delaware 19801
Attention: Stefan Dalmqvist, Head of Tax; Priya Narasimhan, General Counsel
Re: Summary of Anticipated U.S. Federal Income Tax Consequences of Proposed Cross-Border Fund-Platform Reorganization of Solara Digital Infrastructure LP Fund Vehicles
I. Introduction and Purpose of This Letter
Dear Limited Partners:
This letter has been prepared by Calderwood & Harkness LLP ("Calderwood & Harkness" or "we"), U.S. tax counsel to Solara Digital Infrastructure LP ("Solara" or "SDILP"), at the direction of Solara Digital Infrastructure GP LLC, the general partner of each of the above-captioned fund vehicles (each, a "Fund" and collectively, the "Funds"), for distribution to the limited partners ("LPs") of each of the six Fund vehicles listed above.
The purpose of this letter is to provide a plain-language summary of the anticipated U.S. federal income tax consequences of the proposed reorganization of Solara's fund platform (the "Reorganization") for each category of limited partner. The Reorganization, as described more fully in Section III below, involves the consolidation of certain offshore parallel fund vehicles into a new master-feeder structure through a series of asset contributions, dissolutions, and LP migrations across multiple jurisdictions.
We note at the outset that Calderwood & Harkness LLP (engagement number 20250527-SDILP-PLR) represents Solara and the Funds in this matter, and does not represent any individual limited partner. The legal and tax analysis set forth in this letter has been prepared solely for the benefit of Solara and the Funds in connection with the LP consent solicitation for the Reorganization, and is being furnished to LPs for informational purposes only.
This letter is being provided in connection with the LP consent solicitation for the Reorganization, which is being conducted pursuant to the amendment provisions of each Fund's respective limited partnership agreement. LPs should refer to the LP Consent Solicitation Letter and all related Reorganization materials (including the term sheet, structural diagram, pro forma financial projections, and the Form of LP Consent) for a full description of the transaction terms, conditions, timeline, and mechanics. This letter is intended to supplement, and should be read in conjunction with, those materials.
II. Important Disclaimers and Limitations
This letter provides a general summary only and does not constitute legal or tax advice to any individual LP. The discussion herein is intended to summarize the principal anticipated U.S. federal income tax consequences of the Reorganization at a general level and is not intended to address all potential tax consequences that may be relevant to any particular LP. The tax consequences of the Reorganization will depend upon each LP's individual circumstances, including, without limitation, its tax classification (e.g., corporation, partnership, individual, trust, or tax-exempt entity), its jurisdiction of formation, organization, or residence, its basis in its partnership interest, its share of partnership liabilities, and any applicable tax treaty provisions.
Each LP is strongly urged to consult its own independent tax advisors regarding the specific tax consequences of the Reorganization to such LP, taking into account its particular circumstances. Neither Calderwood & Harkness LLP nor Solara assumes any responsibility to any LP for the tax consequences of the Reorganization.
Calderwood & Harkness LLP does not represent any individual LP in this matter. LPs should be aware that Whitfield, Carruthers & Doyle LLP (Diana Carruthers, Partner), serving as LPAC counsel, has reviewed the proposed Reorganization on behalf of the LP Advisory Committee and has provided its own independent assessment to the LPAC members. In addition, certain non-U.S. investors have engaged their own independent tax counsel in connection with the Reorganization. By way of example, Bramhall & Quelwick LLP advises Nordhaven Sovereign Wealth Fund on certain aspects of the proposed transaction. We encourage all LPs, including those represented on the LPAC, to consult their own advisors to the extent they have not already done so.
This summary addresses only anticipated U.S. federal income tax consequences of the Reorganization. It does not address state, local, or non-U.S. tax consequences of the Reorganization, including, without limitation, Cayman Islands tax matters (such as any implications under the International Tax Co-operation (Economic Substance) Act (As Revised) of the Cayman Islands), Luxembourg tax matters (such as any implications under Luxembourg tax law, including the Luxembourg participation exemption regime and the application of EU Anti-Tax Avoidance Directives), or the tax laws of any other non-U.S. jurisdiction in which any LP may be organized, resident, or subject to tax. Non-U.S. LPs and LPs subject to tax in multiple jurisdictions should consult their own advisors regarding the non-U.S. tax consequences of the Reorganization.
The tax analysis set forth in this letter is based on the Internal Revenue Code of 1986, as amended (the "Code"), the Treasury Regulations promulgated thereunder ("Treasury Regulations" or "Treas. Reg."), published guidance of the Internal Revenue Service (the "IRS"), and judicial and administrative precedent, in each case as in effect and as interpreted as of the date of this letter. All of the foregoing authorities are subject to change, possibly with retroactive effect, and any such change could affect the accuracy of the statements and conclusions set forth herein. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described in this letter.
Solara has engaged Calderwood & Harkness LLP to prepare and submit a private letter ruling ("PLR") request to the IRS to confirm the intended tax treatment described herein. As discussed more fully in Section XII below, the PLR request has not yet been submitted (with a target submission date of August 15, 2025), and there can be no assurance that the IRS will issue a favorable ruling on all matters addressed in the request, that any ruling will be issued prior to the target transaction dates, or that the IRS will not impose conditions or limitations on any favorable ruling that it may issue.
III. Overview of the Reorganization
A. Current Fund Structure
Solara currently operates its investment program through six parallel fund vehicles organized across three jurisdictions, designed to accommodate the tax, regulatory, and reporting needs of its diverse investor base:
Delaware Main Funds. Solara Digital Partners Fund IV LP ("Fund IV") and Solara Digital Partners Fund V LP ("Fund V") are each organized as Delaware limited partnerships. Fund IV, a vintage 2021 fund with aggregate capital commitments of approximately $4.2 billion, is approximately 72% deployed as of the date of this letter. Fund V, a vintage 2023 fund with aggregate capital commitments of approximately $5.6 billion, is approximately 38% deployed. The Delaware main funds serve primarily U.S. taxable investors, including high-net-worth individuals, family offices, and domestic institutional investors.
Cayman Islands Parallel Vehicles. Solara Digital Partners Fund IV-A (Cayman) LP ("Fund IV-A Cayman") and Solara Digital Partners Fund V-A (Cayman) LP ("Fund V-A Cayman") are each organized as Cayman Islands exempted limited partnerships. Fund IV-A Cayman has aggregate capital commitments of approximately $1.85 billion, and Fund V-A Cayman has aggregate capital commitments of approximately $2.45 billion. These vehicles serve non-U.S. investors (including sovereign wealth funds, non-U.S. pension funds, and non-U.S. insurance companies) and U.S. tax-exempt investors (including public pension plans and university endowments), for whom the Cayman structure provides certain tax efficiencies and UBTI protections.
Luxembourg Parallel Vehicles. Solara Digital Partners Fund IV-B (Luxembourg) SCSp ("Fund IV-B Lux") and Solara Digital Partners Fund V-B (Luxembourg) SCSp ("Fund V-B Lux") are each organized as Luxembourg special limited partnerships (sociétés en commandite spéciale). Fund IV-B Lux has aggregate capital commitments of approximately €1.15 billion (approximately $1.24 billion at an exchange rate of 1.08 EUR/USD), and Fund V-B Lux has aggregate capital commitments of approximately €1.38 billion (approximately $1.49 billion at an exchange rate of 1.08 EUR/USD). These vehicles serve certain non-U.S. investors with specific tax treaty or regulatory considerations, including investors who benefit from Luxembourg's extensive network of bilateral investment treaties and EU regulatory passporting.
In aggregate, as of March 31, 2025, Solara has approximately $14.7 billion in assets under management across the six fund vehicles, invested in digital infrastructure (including data centers, fiber-optic networks, and edge computing facilities) and enterprise software-as-a-service ("SaaS") verticals. The Funds collectively hold interests in 23 portfolio companies, with 11 portfolio companies held through the Fund IV vehicles and 12 portfolio companies held through the Fund V vehicles.
B. Business Rationale for the Reorganization
The Reorganization is being undertaken for several significant business and operational reasons, each of which has been reviewed and endorsed by the LP Advisory Committee:
Operational Cost Reduction. The consolidation of the four offshore parallel vehicles into a single master-feeder structure is expected to yield approximately $3.8 million in annual savings by eliminating duplicative offshore administration, audit, legal, regulatory, and compliance fees. These cost savings will be shared pro rata among LPs in accordance with the applicable expense allocation provisions of the partnership agreements.
Impact of OECD Pillar Two GloBE Rules. The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting Pillar Two Global Anti-Base Erosion ("GloBE") rules, which became effective for Luxembourg entities beginning in fiscal year 2025, impose a minimum effective tax rate of 15% on the income of certain multinational enterprise groups. The implementation of these rules by Luxembourg substantially diminishes the historic benefits of the Luxembourg SCSp structures, and in certain scenarios may impose incremental tax costs that would not arise under the proposed consolidated structure.
Simplified FATCA and CRS Compliance. The consolidation is expected to simplify compliance with the Foreign Account Tax Compliance Act ("FATCA") and the OECD Common Reporting Standard ("CRS") by reducing the number of reporting entities and eliminating cross-jurisdictional coordination complexities.
LP-Requested Governance Simplification. Several significant LPs, including members of the LP Advisory Committee, have requested structural simplification to reduce governance overhead, streamline capital call and distribution mechanics, and improve transparency across the platform.
C. Summary of the Five-Step Transaction
The Reorganization will be effected through a series of five integrated steps, which are summarized below. A more detailed description of each step, including the specific transaction documents, conditions precedent, and representations, is set forth in the LP Consent Solicitation Letter and accompanying term sheet.
Step 1 — Formation of New Entities (Target: September 15, 2025). Solara will cause the formation of four new entities:
(i) Solara Consolidated Master Fund GP LLC, a Delaware limited liability company that will serve as the general partner of the Consolidated Master Fund LP;
(ii) Solara Consolidated Master Fund LP (the "Consolidated Master Fund LP"), a Delaware limited partnership that will serve as the master fund in the new structure;
(iii) Solara International Feeder (Cayman) LP (the "International Feeder"), a Cayman Islands exempted limited partnership that will serve as the feeder vehicle for non-U.S. investors; and
(iv) Solara Tax-Exempt Feeder (Cayman) LP (the "Tax-Exempt Feeder"), a Cayman Islands exempted limited partnership that will serve as the feeder vehicle for U.S. tax-exempt investors.
Each newly formed entity will file a Form 8832 (Entity Classification Election) with the IRS to be classified as a partnership for U.S. federal income tax purposes, effective as of the date of its formation, in accordance with the "check-the-box" regulations under Treas. Reg. § 301.7701-3.
Step 2 — Contribution of Fund IV-A Cayman Assets (Target: October 1, 2025). Fund IV-A (Cayman) LP will contribute all of its portfolio assets to the Consolidated Master Fund LP in exchange for a limited partnership interest in the Consolidated Master Fund LP. The aggregate fair market value ("FMV") of the assets to be contributed in Step 2 is approximately $2.31 billion, with an aggregate adjusted tax basis of approximately $1.62 billion, resulting in aggregate built-in gain of approximately $690 million.
Step 3 — Contribution of Fund IV-B Luxembourg Assets (Target: October 15, 2025). Fund IV-B (Luxembourg) SCSp will contribute all of its portfolio assets to the Consolidated Master Fund LP in exchange for a limited partnership interest in the Consolidated Master Fund LP. The aggregate FMV of the assets to be contributed in Step 3 is approximately $1.16 billion, with an aggregate adjusted tax basis of approximately $844.6 million, resulting in aggregate built-in gain of approximately $311 million.
Step 4 — Contribution of Fund V Offshore Assets (Target: November 1, 2025). Fund V-A (Cayman) LP will contribute all of its portfolio assets to the Consolidated Master Fund LP in exchange for a limited partnership interest in the Consolidated Master Fund LP. The aggregate FMV of the assets contributed by Fund V-A Cayman is approximately $2.89 billion, with an aggregate adjusted tax basis of approximately $2.34 billion, resulting in aggregate built-in gain of approximately $550 million. Simultaneously, Fund V-B (Luxembourg) SCSp will contribute all of its portfolio assets to the Consolidated Master Fund LP in exchange for a limited partnership interest in the Consolidated Master Fund LP. The aggregate FMV of the assets contributed by Fund V-B Lux is approximately $1.39 billion, with an aggregate adjusted tax basis of approximately $1.23 billion, resulting in aggregate built-in gain of approximately $162 million.
Step 5 — Dissolution and LP Migration (Target Effective Date: December 1, 2025). Following the completion of Steps 2 through 4, each of the four Legacy Offshore Vehicles (Fund IV-A Cayman, Fund IV-B Lux, Fund V-A Cayman, and Fund V-B Lux, collectively, the "Legacy Offshore Vehicles") will dissolve in accordance with its governing documents and applicable law. Upon dissolution, each Legacy Offshore Vehicle will distribute to its existing LPs their respective pro rata shares of the partnership interest in the Consolidated Master Fund LP that such Legacy Offshore Vehicle received in the applicable contribution step. Following the dissolution distributions:
• Non-U.S. LPs will roll their received Consolidated Master Fund LP interests into the Solara International Feeder (Cayman) LP.
• U.S. tax-exempt LPs will roll their received Consolidated Master Fund LP interests into the Solara Tax-Exempt Feeder (Cayman) LP.
• U.S. taxable investors will remain directly invested in Fund IV LP and Fund V LP, which will continue to exist as standalone vehicles and will co-invest alongside the Consolidated Master Fund LP on a going-forward basis.
D. Aggregate Financial Summary
The following table summarizes the aggregate financial parameters of the Reorganization transactions:
The following table sets forth representative portfolio company interests being transferred in the Reorganization, which together account for a substantial portion of the aggregate value being contributed:
The foregoing valuations are based on the most recent independent third-party appraisals and internal valuations as of March 31, 2025, and are subject to adjustment based on updated valuations as of each applicable transaction date.
IV. Tax Treatment of the Contributions (Steps 2–4): IRC § 721
A. General Rule — Nonrecognition Under § 721(a)
Section 721(a) of the Code provides the general rule that "[n]o 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." This rule applies regardless of the character or type of property contributed and regardless of whether the contributing partner receives a general or limited partnership interest. The legislative purpose of § 721(a) is to permit taxpayers to aggregate their separately owned assets in a partnership form for the conduct of a business or investment activity without triggering an immediate recognition event, on the theory that the contributor has merely changed the form, but not the substance, of its investment.
It is anticipated that the contributions of portfolio assets by each of the four Legacy Offshore Vehicles — Fund IV-A (Cayman) LP, Fund IV-B (Luxembourg) SCSp, Fund V-A (Cayman) LP, and Fund V-B (Luxembourg) SCSp — to the Consolidated Master Fund LP in exchange for limited partnership interests in the Consolidated Master Fund LP will qualify as tax-free contributions under § 721(a) of the Code. In each case, the contributing Legacy Offshore Vehicle will transfer all of its portfolio company interests, together with associated assets and liabilities, to the Consolidated Master Fund LP in exchange solely for a limited partnership interest in the Consolidated Master Fund LP. No cash or other consideration (other than the assumption of liabilities) will be received by any contributing entity.
Accordingly, no gain or loss is expected to be recognized by the contributing partnerships or by the individual LPs of those partnerships as a result of these contributions. The contributions will be treated as nonrecognition events for U.S. federal income tax purposes, and the taxable income of LPs should not be affected by the contributions themselves.
Under Section 723 of the Code, the Consolidated Master Fund LP will take a carryover basis in each contributed asset — that is, the same adjusted tax basis that the contributing Legacy Offshore Vehicle had in that asset immediately before the contribution. For example, if Fund IV-A Cayman had an adjusted tax basis of $520 million in its interest in NovaBright Data Systems Inc. immediately before contributing that interest to the Consolidated Master Fund LP, the Consolidated Master Fund LP's adjusted tax basis in that interest will be $520 million immediately after the contribution.
Under Section 1223(2) of the Code, the Consolidated Master Fund LP's holding period for each contributed asset will include the holding period of the contributing Legacy Offshore Vehicle. This "tacking" of holding periods is significant because it preserves the long-term capital gain character of any appreciation that occurred during the contributing entity's holding period, which in turn may affect the character of gain allocated to LPs upon a future disposition of those assets.
B. Investment Company Exception — § 721(b)
Section 721(b) of the Code provides an important exception to the general nonrecognition rule of § 721(a). Under § 721(b), gain may be recognized on a contribution of property to a partnership if the contribution results in diversification of the transferor's interests and the transferee partnership would be treated as an "investment company" within the meaning of Section 351 of the Code and Treasury Regulation § 1.351-1(c)(1)(ii).
Under Treas. Reg. § 1.351-1(c)(1)(ii), a transfer results in the formation or continued existence of an "investment company" if (i) the transfer results, directly or indirectly, in diversification of the transferors' interests, and (ii) the transferee is a regulated investment company, a real estate investment trust, or a corporation more than 80 percent of the value of whose assets (excluding cash and nonconvertible debt obligations) consists of readily marketable stocks or securities held for investment (or interests in regulated investment companies or real estate investment trusts).
Solara's position is that the Consolidated Master Fund LP does not constitute an "investment company" within the meaning of these provisions. The portfolio of the Consolidated Master Fund LP will consist entirely of interests in operating companies — specifically, digital infrastructure businesses (including data centers, fiber-optic networks, and edge computing facilities) and enterprise SaaS platforms. These portfolio companies are active operating businesses that derive their revenues from the provision of goods and services, the ownership and operation of physical infrastructure, and the development and licensing of proprietary technology. None of the portfolio companies are passive investment vehicles, and none of the contributed assets constitute "stocks, securities, or other investment assets" of the type that would cause the Consolidated Master Fund LP to be characterized as an investment company.
All 23 portfolio companies held across the Fund IV and Fund V vehicles satisfy the "active business" standard, as evidenced by, among other things, their significant employee headcount, revenue-generating operations, capital expenditure programs, and operational management structures. Accordingly, we believe the investment company exception under § 721(b) should not apply to the contributions contemplated by the Reorganization.
A specific ruling confirming that the Consolidated Master Fund LP is not an "investment company" within the meaning of § 721(b) and Treas. Reg. § 1.351-1(c)(1)(ii) has been requested from the IRS as part of the PLR submission.
C. Cross-Border Considerations — IRC § 367
Sections 367(a) and 367(b) of the Code impose gain recognition and other adverse tax consequences on certain transfers of property to or from foreign corporations. Specifically, § 367(a)(1) provides that, in certain cases involving the transfer of property by a U.S. person to a foreign corporation, the foreign corporation shall not be treated as a corporation for purposes of determining whether the transfer qualifies for nonrecognition under various provisions of the Code (including § 351). Section 367(b) addresses certain exchanges involving foreign corporations where § 367(a) does not apply.
Solara's position is that § 367 does not apply to the contributions contemplated in Steps 2 through 4 of the Reorganization. By its express terms, § 367 applies only to transfers involving corporations, whether domestic or foreign. The Consolidated Master Fund LP, as the transferee entity, is classified as a partnership for U.S. federal income tax purposes, not as a corporation. Accordingly, the transfer of property to the Consolidated Master Fund LP does not involve a transfer to or from a corporation, and § 367 is not implicated.
The fact that the contributing entities — Fund IV-A (Cayman) LP, Fund IV-B (Luxembourg) SCSp, Fund V-A (Cayman) LP, and Fund V-B (Luxembourg) SCSp — are organized under the laws of foreign jurisdictions (the Cayman Islands and Luxembourg, respectively) does not, in and of itself, trigger the application of § 367. Each of the contributing entities is classified as a partnership (not a corporation) for U.S. federal income tax purposes, either by operation of the default classification rules or by prior entity classification election. Since there is no transfer to or from a corporation on either side of the transaction, § 367 has no application.
A specific ruling confirming the inapplicability of § 367 to the contribution transactions has been requested from the IRS as part of the PLR submission.
V. Tax Treatment of the Distributions (Step 5): IRC § 731
A. General Rule — Nonrecognition Under § 731(a)
Section 731(a) of the Code provides the general rule governing distributions from partnerships to partners. Under § 731(a)(1), gain is not recognized by a partner upon a distribution from a partnership, except to the extent that any money distributed exceeds the partner's adjusted basis in its partnership interest. Under § 731(a)(2), loss is not recognized to a partner upon a distribution from a partnership except upon a liquidating distribution consisting solely of money, unrealized receivables, and inventory items.
In Step 5 of the Reorganization, each Legacy Offshore Vehicle will dissolve and distribute to its LPs the partnership interest in the Consolidated Master Fund LP that the Legacy Offshore Vehicle received in the applicable contribution step (Steps 2 through 4). These distributions will constitute liquidating distributions from the Legacy Offshore Vehicles to their respective partners.
Because the distributed property consists solely of partnership interests in the Consolidated Master Fund LP — and not of money — no gain is expected to be recognized by any LP upon receipt of its share of the Consolidated Master Fund LP interest from the dissolving Legacy Offshore Vehicle. The distributions will be treated as nonrecognition events for U.S. federal income tax purposes.
Each LP's adjusted tax basis in its received Consolidated Master Fund LP interest will be determined under Section 732 of the Code. Under the general rules of § 732 applicable to liquidating distributions, an LP will take a substituted basis in the distributed Consolidated Master Fund LP interest equal to the LP's adjusted basis in its interest in the dissolving Legacy Offshore Vehicle, reduced by any money deemed distributed to the LP and adjusted for any deemed distributions or contributions arising under § 752 (as discussed in Section VI below). This substituted basis approach preserves the LP's built-in gain or loss position and defers any recognition event to a future taxable transaction.
B. Marketable Securities Exception — § 731(c)
Section 731(c) of the Code provides an exception to the general nonrecognition rule of § 731(a) for certain distributions of "marketable securities." Under § 731(c)(1), a distribution of marketable securities by a partnership to a partner is treated as a distribution of money to the extent of the FMV of the securities at the time of the distribution. If the deemed money distribution exceeds the partner's adjusted basis in its partnership interest, gain would be recognized under § 731(a)(1).
Under § 731(c)(2), the term "marketable securities" means financial instruments (including stocks, debt instruments, options, and similar instruments) that are, as of the date of the distribution, "actively traded" within the meaning of § 1092(d)(1) — generally, instruments traded on an established securities market or that are readily tradable on a secondary market or the substantial equivalent thereof.
Solara's position is that the partnership interests in the Consolidated Master Fund LP being distributed to LPs in Step 5 do not constitute "marketable securities" within the meaning of § 731(c)(2). The limited partnership interests in the Consolidated Master Fund LP are not actively traded on any established securities market, are not listed on any exchange, and are not readily tradable on any secondary market or the substantial equivalent thereof. The Consolidated Master Fund LP is a private investment fund with significant transfer restrictions contained in its limited partnership agreement, and there is no public or secondary market for its interests.
Accordingly, § 731(c) should not apply to the distributions in Step 5, and the distributions should be eligible for nonrecognition treatment under § 731(a). A specific ruling confirming the inapplicability of § 731(c) to the distributions has been requested from the IRS as part of the PLR submission.
VI. Liability Shifting: IRC § 752
Section 752 of the Code governs the treatment of partnership liabilities for purposes of determining partners' adjusted bases in their partnership interests. Under § 752(a), any increase in a partner's share of the liabilities of a partnership is treated as a deemed cash contribution by that partner to the partnership, which increases the partner's outside basis. Under § 752(b), any decrease in a partner's share of the liabilities of a partnership is treated as a deemed cash distribution to that partner from the partnership, which decreases the partner's outside basis. A deemed cash distribution under § 752(b) that exceeds a partner's adjusted basis in its partnership interest would trigger gain recognition under § 731(a)(1).
The Reorganization involves the assumption by the Consolidated Master Fund LP of approximately $1.34 billion in aggregate portfolio-level liabilities currently held at the Legacy Offshore Vehicle level. These liabilities include, among others, subscription credit facility obligations, portfolio company-level indebtedness that is recourse to the Legacy Offshore Vehicles, and certain guarantees and other contingent liabilities. As a consequence of these liability shifts, individual partners' shares of partnership liabilities will change — in some cases increasing and in other cases decreasing — as the partners' interests are re-oriented from the Legacy Offshore Vehicles to the Consolidated Master Fund LP and, subsequently, to the feeder vehicles.
These changes will cause simultaneous deemed contributions under § 752(a) and deemed distributions under § 752(b) at the partner level. The critical question is whether any individual LP will experience a net deemed distribution (i.e., deemed distributions under § 752(b) in excess of deemed contributions under § 752(a)) that exceeds such LP's adjusted basis in its partnership interest, which would trigger gain recognition.
Solara's position, supported by detailed analysis under the netting rules of Treasury Regulation § 1.752-1(f) and the tiered partnership rules of Treasury Regulation § 1.752-4, is that when deemed contributions under § 752(a) are netted against deemed distributions under § 752(b) occurring as part of the same transaction or integrated series of transactions (as is the case with the Reorganization), no LP will experience a net deemed distribution in excess of its adjusted basis, and therefore no gain will be recognized by any LP as a result of liability shifting.
This analysis has been performed on a partner-by-partner basis using the capital account and outside basis data maintained by Solara's fund administrator. The analysis takes into account the allocation of liabilities under the general rules of § 752 and the Treasury Regulations thereunder, including the allocation of recourse liabilities under Treas. Reg. § 1.752-2 and the allocation of nonrecourse liabilities under Treas. Reg. § 1.752-3.
Notwithstanding the foregoing, LPs should consult their own tax advisors regarding the specific impact of liability shifts on their individual tax positions, as the analysis necessarily depends on each LP's particular adjusted basis, share of liabilities, and other individual circumstances. A specific ruling confirming the application of the § 752 netting rules and the absence of gain recognition from liability shifting in the context of this Reorganization has been requested from the IRS as part of the PLR submission.
VII. Built-In Gain Carryover: IRC § 704(c)
Section 704(c) of the Code addresses the allocation of income, gain, loss, and deductions with respect to property contributed to a partnership where there is a difference between the property's fair market value and the contributing partner's adjusted tax basis at the time of contribution (i.e., "built-in gain" or "built-in loss"). The purpose of § 704(c) is to prevent the shifting of tax consequences between contributing and non-contributing partners by requiring that the partnership's allocations with respect to contributed property take into account the variation between the contributing partner's basis and the property's FMV at the time of contribution.
The Legacy Offshore Vehicles currently maintain § 704(c) accounts for their respective contributed properties. As of the most recent valuation date, the aggregate § 704(c) built-in gain across all four Legacy Offshore Vehicles is approximately $1.72 billion. This built-in gain represents the cumulative excess of FMV over adjusted tax basis for all contributed properties, as tracked through the § 704(c) layer methodology maintained by the Funds' tax department and external accountants.
It is expected that these § 704(c) built-in gain accounts will carry over to the Consolidated Master Fund LP in connection with the contributions in Steps 2 through 4. That is, the Consolidated Master Fund LP will "inherit" the existing § 704(c) layers and will be required to make allocations that take into account the pre-existing built-in gain, in the same manner as the Legacy Offshore Vehicles were required to do prior to the Reorganization.
The Consolidated Master Fund LP intends to continue using the remedial allocation method under Treasury Regulation § 1.704-3(d) for each contributed property, consistent with the method used by the Legacy Offshore Vehicles. The remedial allocation method is generally the most precise and LP-friendly method available for addressing § 704(c) disparities, as it creates notional tax items to correct for any book-tax disparities that cannot be eliminated through allocations of actual tax items.
What this means for LPs: Allocations of income, gain, loss, and deductions attributable to contributed assets will continue to take into account the pre-existing built-in gain, in substantially the same manner as they did under the prior fund structure. LPs should not experience a material change in how § 704(c) allocations affect them solely as a result of the Reorganization. The Reorganization is intended to be neutral with respect to § 704(c) allocations — it does not accelerate, defer, or alter the character of any LP's share of built-in gain.
A specific ruling confirming the carryover of § 704(c) accounts and the continued application of the remedial allocation method has been requested from the IRS as part of the PLR submission.
VIII. Withholding Tax Considerations: IRC § 1446
Section 1446(a) of the Code requires a partnership that is engaged in a trade or business within the United States (or is treated as being so engaged) to withhold tax on the effectively connected taxable income ("ECTI") allocable to its foreign partners. The withholding tax is imposed at the highest rate of tax specified in § 1 (for non-corporate foreign partners) or § 11 (for corporate foreign partners), as applicable, and is intended to ensure collection of U.S. tax on income that is effectively connected with the conduct of a U.S. trade or business.
Solara's position is that no withholding under § 1446 is required in connection with the contributions in Steps 2 through 4 or the distributions in Step 5 of the Reorganization, for the following reasons:
(a) Contributions (Steps 2–4). The contributions of portfolio assets by the Legacy Offshore Vehicles to the Consolidated Master Fund LP are intended to qualify as nonrecognition transactions under § 721(a) of the Code. Because no gain or loss is recognized on these contributions, no ECTI is generated, and there is no "amount subject to withholding" under Treasury Regulations §§ 1.1446-1 through 1.1446-6.
(b) Distributions (Step 5). The liquidating distributions of Consolidated Master Fund LP interests by the Legacy Offshore Vehicles to their respective LPs are intended to qualify as nonrecognition transactions under § 731(a) of the Code. Because no gain or loss is recognized on these distributions (subject to the liability analysis discussed in Section VI above), no ECTI is generated, and there is no "amount subject to withholding" under the applicable Treasury Regulations.
Accordingly, non-U.S. LPs — including, by way of example, Nordhaven Sovereign Wealth Fund and Kestrel Pacific Insurance Group — should not be subject to any additional U.S. withholding tax as a direct result of the Reorganization. The Reorganization is not expected to change the aggregate amount of U.S. withholding tax to which any non-U.S. LP is subject.
Non-U.S. LPs are encouraged to consult their own tax advisors regarding their ongoing § 1446 withholding obligations after the Reorganization, which will depend on the nature and amount of ECTI allocable to such LPs through the Consolidated Master Fund LP and the International Feeder in future taxable periods.
A specific ruling confirming the absence of § 1446 withholding obligations in connection with the Reorganization transactions has been requested from the IRS as part of the PLR submission.
IX. FIRPTA Considerations: IRC § 897
The Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA"), as codified principally in Section 897 of the Code, provides that gain recognized by a non-U.S. person on the disposition of a "United States real property interest" ("USRPI") is treated as income effectively connected with the conduct of a U.S. trade or business and is subject to U.S. federal income tax. A USRPI includes any interest in real property located in the United States, as well as any interest (other than an interest solely as a creditor) in a domestic corporation that is a "United States real property holding corporation" ("USRPHC") — generally, a corporation in which the FMV of its USRPIs equals or exceeds 50% of the aggregate FMV of its USRPIs, foreign real property interests, and other trade or business assets.
Solara's analysis addresses whether certain portfolio company interests — particularly interests in companies whose assets include data centers and fiber-optic networks — may constitute USRPIs for FIRPTA purposes. Of particular relevance are the interests in NovaBright Data Systems Inc. (which owns and operates data center facilities in the United States with significant real property components) and Thorngate Fiber Networks LP (which owns fiber-optic cable routes and conduit infrastructure with potential real property characteristics). Whether these interests constitute USRPIs depends on a detailed factual analysis of the underlying asset composition of each portfolio company, including the relative FMV of its real property assets compared to its total assets.
Even if certain portfolio company interests were determined to be USRPIs, the contributions in Steps 2 through 4 of the Reorganization are intended to qualify as nonrecognition transactions under § 721(a) of the Code. Because § 721(a) provides that no gain or loss is recognized on the contribution of property to a partnership, and because FIRPTA tax is triggered only upon the recognition of gain on the disposition of a USRPI, the contributions should not trigger any FIRPTA tax liability for non-U.S. LPs.
Non-U.S. LPs should be aware, however, that following the Reorganization, their indirect exposure to potential USRPIs through the Consolidated Master Fund LP will continue. FIRPTA may apply upon the ultimate disposition of USRPI assets by the Consolidated Master Fund LP in the ordinary course of its investment activities. The Reorganization does not eliminate any pre-existing FIRPTA exposure; it merely shifts the level at which that exposure is held from the Legacy Offshore Vehicles to the Consolidated Master Fund LP.
Non-U.S. LPs should consult their own tax advisors regarding their particular FIRPTA exposure, both in connection with the Reorganization and on an ongoing basis. The FIRPTA analysis may be particularly relevant for LPs that are eligible for FIRPTA exemptions, such as qualified foreign pension funds under § 897(l) of the Code or sovereign wealth funds that may qualify for exemption under § 892 of the Code.
X. Entity Classification
Under the "check-the-box" regulations set forth in Treasury Regulation § 301.7701-3, an eligible entity that is not automatically classified as a corporation may elect its classification for U.S. federal income tax purposes by filing Form 8832 (Entity Classification Election) with the IRS.
Each of the newly formed entities — Solara Consolidated Master Fund LP, Solara International Feeder (Cayman) LP, and Solara Tax-Exempt Feeder (Cayman) LP — will file Form 8832 elections to be classified as partnerships for U.S. federal income tax purposes, effective as of the respective date of formation of each entity. Solara Consolidated Master Fund GP LLC, as a single-member LLC that is the general partner of the Consolidated Master Fund LP, will be disregarded as an entity separate from its owner for U.S. federal income tax purposes under the default classification rules.
These entity classification elections are critical to the Reorganization, as the tax analysis described throughout this letter depends on the partnership classification of the Consolidated Master Fund LP and each feeder vehicle. If any such entity were to be classified as a corporation rather than a partnership, the tax consequences of the Reorganization could differ materially from those described herein.
A specific ruling confirming these entity classifications under Treas. Reg. § 301.7701-3 has been requested from the IRS as part of the PLR submission.
Following the Reorganization, LPs will receive Schedule K-1s (Partner's Share of Income, Deductions, Credits, etc.) from the applicable entity in the post-Reorganization structure. Non-U.S. LPs investing through the International Feeder will receive Schedule K-1s from the International Feeder, and U.S. tax-exempt LPs investing through the Tax-Exempt Feeder will receive Schedule K-1s from the Tax-Exempt Feeder. U.S. taxable investors that remain directly in Fund IV LP or Fund V LP will continue to receive Schedule K-1s from those vehicles, as they do currently.
XI. Tax Consequences by Investor Category
The following discussion summarizes the anticipated U.S. federal income tax consequences of the Reorganization for each principal category of limited partner.
A. U.S. Taxable Investors
Representative LP: Argyle Family Office Holdings LLC
U.S. taxable investors that are currently invested directly in Fund IV LP and Fund V LP (the Delaware main funds) are not expected to be directly affected by the Reorganization in a material way. Fund IV LP and Fund V LP will continue to exist as standalone Delaware limited partnerships and will co-invest alongside the Consolidated Master Fund LP on a going-forward basis. No change in any such investor's direct partnership interest in Fund IV LP or Fund V LP is anticipated as a result of the Reorganization.
The Reorganization principally affects the four Legacy Offshore Vehicles and their respective LPs. To the extent that any U.S. taxable investor holds an interest through one of the Legacy Offshore Vehicles (rather than directly through Fund IV LP or Fund V LP), the analysis set forth in Sections IV through IX above applies to such investor in the same manner as it applies to other LPs of the Legacy Offshore Vehicles. Such investors should consult their own tax advisors regarding the specific consequences of the Reorganization to them.
B. U.S. Tax-Exempt Investors
Representative LPs: Pinnacle State Employees' Retirement System; Grandview University Endowment
U.S. tax-exempt LPs that are currently invested in the Cayman parallel vehicles (Fund IV-A Cayman and Fund V-A Cayman) will, following the completion of the Reorganization, migrate to the Solara Tax-Exempt Feeder (Cayman) LP, which will in turn invest into the Consolidated Master Fund LP. The Tax-Exempt Feeder is specifically designed to preserve existing protections against unrelated business taxable income ("UBTI") for tax-exempt investors, including public pension plans, university endowments, charitable foundations, and other organizations exempt from tax under § 501(a) of the Code.
The contributions of assets by the Legacy Offshore Vehicles to the Consolidated Master Fund LP in Steps 2 through 4 are expected to be tax-free under § 721(a) of the Code, as discussed in Section IV above. The liquidating distributions of Consolidated Master Fund LP interests to LPs in Step 5 are expected to be tax-free under § 731(a), as discussed in Section V above. Neither the contributions nor the distributions should generate UBTI for U.S. tax-exempt LPs.
U.S. tax-exempt LPs should consult their own advisors regarding the ongoing UBTI analysis under the new structure. In particular, tax-exempt LPs should evaluate whether the interposition of the Tax-Exempt Feeder (as a Cayman blocker entity) continues to provide effective UBTI protection with respect to (i) income from debt-financed property under § 514 of the Code, and (ii) income from the conduct of an unrelated trade or business under § 512 of the Code.
C. Non-U.S. Investors
Representative LPs: Nordhaven Sovereign Wealth Fund; Kestrel Pacific Insurance Group
Non-U.S. LPs that are currently invested in the Cayman parallel vehicles or the Luxembourg parallel vehicles will, following the completion of the Reorganization, migrate to the Solara International Feeder (Cayman) LP, which will in turn invest into the Consolidated Master Fund LP.
No U.S. withholding tax under § 1446 of the Code is expected to arise from the Reorganization transactions, as discussed in Section VIII above. The contributions and distributions are intended to be nonrecognition transactions that do not generate ECTI or otherwise trigger withholding obligations.
FIRPTA considerations relevant to non-U.S. LPs are discussed in Section IX above. Non-U.S. LPs should be aware that the Reorganization does not eliminate any pre-existing FIRPTA exposure; rather, such exposure will continue on an ongoing basis through the Consolidated Master Fund LP's ownership of portfolio companies that may hold USRPIs.
Non-U.S. LPs that are currently benefiting from income tax treaty provisions — particularly those investing through the Luxembourg SCSp vehicles, which may provide access to Luxembourg's extensive bilateral tax treaty network — should consult their own tax advisors regarding the impact of the change in investment structure on their treaty positions. The migration from a Luxembourg SCSp to a Delaware limited partnership (through a Cayman feeder) may affect the availability of certain treaty benefits, including reduced withholding rates on dividends, interest, or royalties, as well as treaty-based exemptions from taxation of business profits or capital gains. The specific impact will depend on the terms of the applicable tax treaty, the LP's country of residence, and the LP's individual circumstances.
Sovereign wealth funds and other governmental entities should consult their own advisors regarding the application of sovereign immunity doctrines — including the exemption for income of foreign governments under § 892 of the Code — to the post-Reorganization structure. The restructuring of investment vehicles may affect the availability or scope of the § 892 exemption depending on the nature and level of commercial activity conducted through the Consolidated Master Fund LP.
XII. PLR Request Status
Solara has engaged Calderwood & Harkness LLP to prepare and submit a private letter ruling request to the IRS in connection with the Reorganization. The PLR request will be submitted to the IRS's Office of the Associate Chief Counsel (International) ("CC:INTL"), with secondary jurisdiction in the Office of the Associate Chief Counsel (Passthroughs & Special Industries) ("CC:PSI"), reflecting the cross-border and partnership aspects of the transaction.
The PLR request seeks eight specific rulings confirming the tax-free treatment of the Reorganization as described in this letter. The rulings sought address the following issues:
1. Nonrecognition of gain or loss on the contributions under IRC § 721(a);
2. Inapplicability of the investment company exception under IRC § 721(b) and Treas. Reg. § 1.351-1(c)(1)(ii);
3. Inapplicability of IRC § 367 to the contribution transactions;
4. Nonrecognition of gain or loss on the liquidating distributions under IRC § 731(a);
5. Inapplicability of the marketable securities exception under IRC § 731(c) to the distributed partnership interests;
6. Application of the § 752 netting rules and absence of gain recognition from liability shifts;
7. Carryover of § 704(c) built-in gain accounts and continued application of the remedial allocation method; and
8. Confirmation of entity classification of each newly formed entity as a partnership under Treas. Reg. § 301.7701-3, including confirmation that no § 1446 withholding obligations arise from the Reorganization transactions.
The target submission date for the PLR request is August 15, 2025. In advance of the formal submission, a pre-submission conference with IRS CC:INTL Branch 1 has been requested for July 22, 2025, to discuss the scope and substance of the ruling request and to address any preliminary questions or concerns that the IRS may have regarding the proposed transactions.
The IRS user fee of $38,000, as prescribed by Rev. Proc. 2025-1 (or the applicable successor revenue procedure), will accompany the submission.
There can be no assurance that the IRS will issue a favorable PLR on all or any of the issues addressed in the ruling request, or that any favorable ruling will be issued before the target transaction dates set forth in Section XIII below. If the IRS declines to rule favorably on one or more issues, or if the IRS imposes conditions or limitations that materially affect the structure or tax treatment of the Reorganization, Solara will evaluate the impact on the Reorganization timeline and structure and will inform LPs accordingly through a supplemental communication. Solara reserves the right to modify, delay, or abandon the Reorganization in its sole discretion based on the outcome of the PLR process or other developments.
XIII. Reorganization Timeline Summary
The following table sets forth the target dates for each step of the Reorganization. All dates are subject to adjustment based on the status of the PLR request, the satisfaction of conditions precedent, and other factors:
LPs should refer to the LP Consent Solicitation Letter and term sheet for a more detailed description of the conditions precedent to each step and the mechanics of LP migration.
XIV. LP Consent
LP consent for the Reorganization is being solicited under the amendment provisions of each Fund's limited partnership agreement. The Reorganization requires the affirmative consent of LPs holding a specified percentage in interest of each Fund, as set forth in the applicable limited partnership agreement.
Preliminary LP consent was obtained at the LP Advisory Committee meeting held on April 22, 2025, at which LPs representing approximately 78% in interest of aggregate capital commitments across the six Funds indicated their support for the Reorganization in principle. This preliminary expression of support is not binding and does not substitute for the formal consent process now being undertaken.
The formal Form of LP Consent is enclosed with the LP Consent Solicitation Letter. LPs are encouraged to review all Reorganization materials carefully — including this letter, the LP Consent Solicitation Letter, the term sheet, the structural diagrams, the pro forma financial projections, and any other materials provided — and to consult their own legal, tax, and financial advisors before executing and returning the Form of LP Consent.
The deadline for the return of executed LP Consents is set forth in the LP Consent Solicitation Letter. Solara reserves the right to extend the consent deadline in its discretion.
XV. Questions and Contacts
LPs with questions regarding the Reorganization generally, including questions about the transaction structure, timeline, mechanics, or LP consent process, should contact:
Stefan Dalmqvist Head of Tax Solara Digital Infrastructure LP 1200 Market Street, Suite 3400 Wilmington, Delaware 19801 Telephone: (302) 555-8200
Email: slindqvist@solaradigital.com
Priya Narasimhan General Counsel Solara Digital Infrastructure LP 1200 Market Street, Suite 3400 Wilmington, Delaware 19801 Telephone: (302) 555-8210
Email: pnarasimhan@solaradigital.com
LPs who wish to discuss the PLR request or the tax analysis set forth in this letter directly with Solara's outside tax counsel may contact:
Leonard Cross Partner Calderwood & Harkness LLP 1900 K Street NW, Suite 1100 Washington, DC 20006 Telephone: (202) 555-6300
Email: lcross@calderwoodharkness.com
Sylvia Hartwell Partner Calderwood & Harkness LLP 600 Lexington Avenue, 38th Floor New York, New York 10022 Telephone: (212) 555-7425
Email: shartwell@calderwoodharkness.com
LPs represented on the LP Advisory Committee may direct questions through LPAC counsel:
Diana Carruthers Partner Whitfield, Carruthers & Doyle LLP 200 South Biscayne Boulevard, Suite 4000 Miami, Florida 33131 Telephone: (305) 555-4400
Email: dcarruthers@wcdlaw.com
XVI. Closing
This letter is intended to provide a general summary of the anticipated U.S. federal income tax consequences of the proposed Reorganization for informational purposes only. This summary does not constitute legal or tax advice to any individual LP and should not be relied upon as such. Each LP is urged to consult its own independent legal, tax, and financial advisors regarding the specific tax consequences of the Reorganization to such LP, taking into account its particular circumstances, including its tax classification, jurisdiction of residence, basis in its partnership interest, share of partnership liabilities, and any applicable tax treaty provisions.
The analysis set forth herein is subject to the outcome of the pending PLR request described in Section XII and to changes in applicable law, including changes to the Code, Treasury Regulations, IRS guidance, and judicial precedent, any of which could occur after the date of this letter, possibly with retroactive effect.
We appreciate the opportunity to assist in this matter and remain available to address any questions that may arise.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Leonard Cross Partner Calderwood & Harkness LLP 1900 K Street NW, Suite 1100 Washington, DC 20006
By: ________
Sylvia Hartwell Partner Calderwood & Harkness LLP 600 Lexington Avenue, 38th Floor New York, New York 10022
Engagement Reference: 20250527-SDILP-PLR
cc: Viktor Raines, Managing Partner & Founder, Solara Digital Infrastructure LP
cc: Douglas Wexford, Chief Financial Officer, Solara Digital Infrastructure LP
cc: Meredith Tsao, Chief Operating Officer, Solara Digital Infrastructure LP
Metric | Amount
Total FMV of assets being transferred to the Consolidated Master Fund LP | $7.75 billion
Total adjusted tax basis of assets being transferred | $6.03 billion
Total aggregate built-in gain | $1.72 billion
Aggregate liabilities assumed by the Consolidated Master Fund LP | $1.34 billion
Portfolio Company | FMV | Adjusted Tax Basis | Built-In Gain
NovaBright Data Systems Inc. | $890 million | $520 million | $370 million
Veridian Edge Computing Corp. | $1.12 billion | $780 million | $340 million
Thorngate Fiber Networks LP | $670 million | $490 million | $180 million
Crestline Cloud Solutions LLC | €340 million ($367 million) | €195 million ($211 million) | $156 million
Helix SaaS Holdings Ltd. | $445 million | $310 million | $135 million
Other portfolio companies (18) | $4.26 billion | $3.72 billion | $539 million
Total | $7.75 billion | $6.03 billion | $1.72 billion
Target Date | Event
September 15, 2025 | Step 1: Formation of new entities (Solara Consolidated Master Fund LP, Solara Consolidated Master Fund GP LLC, Solara International Feeder (Cayman) LP, Solara Tax-Exempt Feeder (Cayman) LP) and filing of Form 8832 entity classification elections
October 1, 2025 | Step 2: Fund IV-A (Cayman) LP contributes all portfolio assets to Consolidated Master Fund LP
October 15, 2025 | Step 3: Fund IV-B (Luxembourg) SCSp contributes all portfolio assets to Consolidated Master Fund LP
November 1, 2025 | Step 4: Fund V-A (Cayman) LP and Fund V-B (Luxembourg) SCSp contribute all portfolio assets to Consolidated Master Fund LP
December 1, 2025 | Step 5: Dissolution of Legacy Offshore Vehicles and LP migration to applicable feeder vehicles (International Feeder or Tax-Exempt Feeder, as applicable)

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