CALDERWOOD & HARKNESS LLP 600 Lexington Avenue, 38th Floor
MEMORANDUM
TO: Leonard Cross, Responsible Partner, Tax (Washington, D.C. Office) Sylvia Hartwell, Billing Partner, Tax (New York Office)
FROM: Robert Jansen, Lead Associate, Tax (Washington, D.C. Office) Garrett Simmons, Working Associate, Tax (New York Office)
DATE: July 9, 2025
RE: Client Comments on Draft Private Letter Ruling Request — Version 2.0; Solara Digital Infrastructure LP Cross-Border Fund-Platform Reorganization
MATTER NO.: 20250527-SDILP-PLR
PRIVILEGE DESIGNATION: Attorney-Client Privileged / Attorney Work Product
This memorandum is protected by the attorney-client privilege and the work product doctrine. It is intended solely for the use of the attorneys and personnel of Calderwood & Harkness LLP identified above. Any dissemination, distribution, or copying of this memorandum without express authorization is strictly prohibited.
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I. Purpose and Background
This memorandum transmits and summarizes the comments received from the Solara Digital Infrastructure LP ("Solara" or the "Client") in-house legal and finance team on Draft Private Letter Ruling Request Version 2.0 (the "Draft v2.0" or the "Draft PLR"). The purpose of this memorandum is to organize those comments thematically, present Calderwood & Harkness's recommended responses to each comment, and identify the proposed revisions to be incorporated into Draft PLR Request Version 3.0 ("Draft v3.0").
Draft v2.0 was circulated to the Client on July 1, 2025, consistent with the target delivery date established in the matter timeline. Draft v2.0 incorporated the internal review comments of Leonard Cross on Draft v1.0, which were substantive in nature and included, among other things: (i) the strengthened argument for the inapplicability of Section 367 of the Internal Revenue Code of 1986, as amended (the "Code" or "IRC") to the reorganization steps involving the Cayman and Luxembourg vehicles; (ii) an expanded discussion of the IRC § 752 liability netting analysis as applied to the tiered partnership structures; and (iii) additional business purpose representations designed to reinforce the economic substance and non-tax motivations underlying the proposed reorganization.
Comments on Draft v2.0 were received from two primary reviewers at Solara:
• Stefan Dalmqvist, Head of Tax — Mr. Dalmqvist provided substantive and factual comments regarding portfolio company holdings, entity descriptions, ownership percentages, regulatory registration numbers, and tax-specific representations throughout the PLR. Mr. Dalmqvist's review was thorough and reflected deep familiarity with the fund structures and portfolio company characteristics relevant to the ruling request.
• Douglas Wexford, Chief Financial Officer — Mr. Wexford provided comments directed at financial data accuracy, including fair market values, adjusted tax bases, liability figures, EUR/USD foreign currency conversions, fund size and deployment data, and employer identification numbers. Mr. Wexford's comments were essential to ensuring the financial integrity of the PLR's factual recitations and supporting exhibits.
The consolidated comments from Mr. Dalmqvist and Mr. Wexford were transmitted to Calderwood & Harkness by Priya Narasimhan, General Counsel of Solara, on behalf of the in-house team. Ms. Narasimhan's transmittal email confirmed that the comments reflected the final consolidated views of the Solara in-house team and that no additional reviewers would be providing separate comments on Draft v2.0.
This memorandum organizes the Client's comments into four thematic categories, presents each comment alongside the relevant Draft v2.0 language under review, and sets forth Calderwood & Harkness's recommended responses and proposed revisions for incorporation into Draft v3.0. Part IV of this memorandum includes a tabular comment matrix for ease of reference, and Part V identifies outstanding items requiring additional data from third-party advisors as well as the proposed revision timeline and action items.
II. Summary of Comments Received
A. Overview. The Client's in-house team provided a total of approximately 31 discrete comments and corrections on Draft v2.0. These comments ranged from substantive factual corrections to minor typographical observations. Taken as a whole, the comments were constructive, well-organized, and reflected the Client's careful review of the Draft PLR's factual recitations, financial data, and representational language.
The comments may be characterized as falling into four principal categories:
1. Factual corrections to portfolio company holdings and ownership percentages — These comments addressed the accuracy of the PLR's recitation of which fund vehicles hold which portfolio companies, the applicable ownership percentages, the entity classifications and jurisdictions of formation, and the regulatory registration numbers of the offshore fund entities. These corrections are essential to ensuring that the IRS has an accurate factual foundation upon which to issue the requested rulings.
2. Clarifications on aggregate liability amounts and § 752 analysis inputs — These comments addressed the $1.34 billion aggregate liability figure, the vehicle-by-vehicle breakdown of assumed liabilities, and the recourse versus non-recourse characterization of portfolio-level debt. These inputs are critical to the § 752 netting analysis and the determination of whether liability shifts in connection with the reorganization steps will trigger deemed distributions under § 752(b) that could exceed any contributing partner's adjusted basis.
3. Financial data accuracy adjustments — These comments addressed EUR/USD exchange rate uniformity, the distinction between fund commitment sizes and current fair market values of portfolio assets, the sourcing of adjusted tax basis figures, the accuracy of employer identification numbers, and various dollar-denominated figures cited in the business purpose section.
4. Drafting suggestions on representations and business-purpose language — These comments proposed enhancements to the business purpose representations, additional specificity regarding investor categories and their tax profiles, more precise language regarding the Step 5 dissolution mechanics and investor routing, and clarifying representations regarding the subscription credit facilities.
Importantly, no comments challenged the fundamental legal analysis set forth in Draft v2.0 or the eight specific rulings being requested from the IRS. The Client's reviewers did not raise objections to the § 721(a) nonrecognition analysis, the § 704(c) allocation methodology, the § 721(b) investment company exception analysis, the § 367 inapplicability argument, the § 752 netting framework, the § 1446 withholding analysis, the FIRPTA/§ 897 analysis, or the anti-abuse/step transaction analysis. The comments were primarily factual and data-driven in nature, which is consistent with the Client's in-house team deferring to outside counsel on the legal analysis while maintaining primary responsibility for the accuracy of the underlying facts and financial data.
B. Categorization. The following is a summary categorization of the 31 comments received:
The four typographical and formatting issues (inconsistent capitalization of "Consolidated Master Fund" in certain instances, a missing cross-reference in the § 704(c) analysis section, a duplicated footnote number, and a spacing error in Exhibit D) are not individually discussed in Part III of this memorandum but will be corrected in Draft v3.0 as a matter of course.
III. Detailed Comment Summary and Proposed Responses
A. Factual Corrections Regarding Portfolio Company Holdings (Stefan Dalmqvist)
The following twelve comments were submitted by Stefan Dalmqvist, Head of Tax, and relate primarily to the accuracy of the PLR's factual recitation of portfolio company holdings, ownership structures, entity classifications, asset values, and regulatory identification numbers.
Comment 1 — NovaBright Data Systems Inc. Ownership Split. Draft v2.0 Statement Under Review: The ownership percentages of NovaBright Data Systems Inc. as recited in the Step 2 narrative and in Exhibit D.
Client Comment: Mr. Dalmqvist confirmed that NovaBright Data Systems Inc., a Delaware corporation engaged in the development and operation of hyperscale data center facilities, is held 60% by Fund IV-A (Cayman) LP and 40% by Solara Digital Partners Fund IV LP ("Fund IV LP"). Mr. Dalmqvist noted the need to confirm that the PLR recitation accurately reflects that the Fund IV-A Cayman 60% interest — with a pro rata share of the $890 million aggregate fair market value ("FMV") and $520 million aggregate adjusted tax basis, yielding approximately $370 million in built-in gain — is the portion being contributed to the Consolidated Master Fund LP (the "Master Fund") in Step 2 of the reorganization. The Fund IV LP 40% interest remains in Fund IV LP and is not part of the contribution described in Step 2. Mr. Dalmqvist emphasized that this distinction must be clearly stated in the PLR to avoid any ambiguity regarding which interests are the subject of the ruling request.
Proposed Response: Calderwood & Harkness will verify the 60/40 ownership split against the records maintained by Caldwell Pierce & Co. LLP ("Caldwell Pierce") and the underlying limited partnership agreements. The 60/40 split will be confirmed in the revised draft, and a footnote will be added to the Step 2 narrative clarifying that only the Fund IV-A (Cayman) LP 60% interest in NovaBright is being contributed to the Master Fund in Step 2, while the Fund IV LP 40% interest is retained by Fund IV LP and is unaffected by the reorganization. The corresponding FMV, adjusted tax basis, and built-in gain figures will be updated to reflect the pro rata share attributable to the 60% interest, as distinct from the aggregate figures for NovaBright as a whole.
Comment 2 — Veridian Edge Computing Corp. Ownership Split. Draft v2.0 Statement Under Review: The ownership percentages of Veridian Edge Computing Corp. as recited in the Step 4 narrative and in Exhibit D.
Client Comment: Mr. Dalmqvist confirmed that Veridian Edge Computing Corp., a Delaware corporation operating edge computing infrastructure and distributed processing facilities, is held 55% by Fund V-A (Cayman) LP and 45% by Fund V LP. The aggregate FMV of Veridian is $1.12 billion, with an aggregate adjusted tax basis of $780 million and a total built-in gain of $340 million. Mr. Dalmqvist flagged that Draft v2.0 may have transposed the 55%/45% ownership split in one instance within the Step 4 recitation, potentially stating 45% for Fund V-A Cayman and 55% for Fund V LP. Mr. Dalmqvist confirmed that the correct split is 55% Fund V-A Cayman / 45% Fund V LP, and that the Fund V-A Cayman interest (55%) is the interest contributed to the Master Fund in Step 4.
Proposed Response: Calderwood & Harkness will correct any transposition error in the Step 4 narrative and conduct a global search of the Draft PLR to ensure that the 55/45 split is stated consistently across the PLR body text, the step transaction analysis, and Exhibit D. The pro rata FMV, adjusted tax basis, and built-in gain figures attributable to the 55% Fund V-A Cayman interest will be verified for accuracy.
Comment 3 — Crestline Cloud Solutions LLC Entity Description. Draft v2.0 Statement Under Review: The entity description of Crestline Cloud Solutions LLC in the factual recitation and Exhibit D.
Client Comment: Mr. Dalmqvist clarified that Crestline Cloud Solutions LLC is a Delaware limited liability company treated as a disregarded entity for U.S. federal income tax purposes and is wholly owned by Fund IV-B (Luxembourg) SCSp. The FMV of Crestline is €340 million ($367 million at the 1.08 EUR/USD exchange rate); the adjusted tax basis is €195 million ($211 million at 1.08 EUR/USD); and the built-in gain is €145 million ($156 million). Mr. Dalmqvist noted that Draft v2.0 described Crestline as a "SaaS platform," but this description is insufficiently specific. Crestline is more accurately described as an "enterprise SaaS platform specializing in cloud infrastructure management solutions." Mr. Dalmqvist emphasized that the precision of this description may be relevant to the § 721(b) investment company exception analysis, insofar as the description supports the characterization of Crestline as an active operating business rather than a passive investment asset.
Proposed Response: Calderwood & Harkness will update the entity description for Crestline to read "enterprise SaaS platform specializing in cloud infrastructure management solutions." The disregarded entity classification will be verified for accuracy, and the EUR/USD conversion will be confirmed at the uniform 1.08 rate. The description will be updated consistently in the PLR body text and in Exhibit D.
Comment 4 — Thorngate Fiber Networks LP Holding Percentage. Draft v2.0 Statement Under Review: The ownership percentage and entity description of Thorngate Fiber Networks LP.
Client Comment: Mr. Dalmqvist confirmed that Thorngate Fiber Networks LP, a Delaware limited partnership engaged in the ownership and operation of fiber-optic network infrastructure, is held 100% by Fund IV-A (Cayman) LP. The FMV of Thorngate is $670 million, the adjusted tax basis is $490 million, and the built-in gain is $180 million. Mr. Dalmqvist confirmed that no correction to the ownership percentage is needed, as Draft v2.0 correctly stated 100% ownership by Fund IV-A Cayman. However, Mr. Dalmqvist requested that the PLR confirm that Thorngate is an operating infrastructure business, as this characterization is relevant to the § 721(b) investment company exception analysis (which requires a determination that the contributions to the Master Fund do not result in diversification of the contributors' interests) and to the FIRPTA/§ 897 analysis of whether Thorngate's interests constitute U.S. real property interests ("USRPIs").
Proposed Response: Calderwood & Harkness will add language in the factual recitation emphasizing Thorngate's operating nature, including a description of its active fiber-optic network operations across multiple U.S. states. This language will be incorporated into the § 721(b) analysis section and the FIRPTA/§ 897 USRPI analysis to support the conclusion that Thorngate is an operating business and not a passive investment vehicle holding real property interests.
Comment 5 — Helix SaaS Holdings Ltd. Jurisdiction and Classification. Draft v2.0 Statement Under Review: The entity description, jurisdiction, and tax classification of Helix SaaS Holdings Ltd.
Client Comment: Mr. Dalmqvist confirmed that Helix SaaS Holdings Ltd. is a Cayman Islands exempted company held 100% by Fund V-A (Cayman) LP. The FMV of Helix is $445 million, the adjusted tax basis is $310 million, and the built-in gain is $135 million. Mr. Dalmqvist flagged that Helix has elected check-the-box classification as a corporation for U.S. federal income tax purposes pursuant to Treasury Regulations § 301.7701-3. This classification must be accurately stated in the PLR because it affects the § 721(b) investment company exception analysis. Specifically, because the stock of Helix is being contributed to the Master Fund, and such stock constitutes a "stock or security" within the meaning of § 721(b), the PLR must address the question of whether the contribution of Helix stock, together with other contributed assets, causes the Master Fund to be classified as an "investment company" under § 351(e)(1) (as incorporated by reference in § 721(b)). Mr. Dalmqvist noted that Helix is not a passive investment but rather an operating SaaS holding company with active subsidiaries, and the PLR should reflect this characterization to support the non-investment-company conclusion.
Proposed Response: Calderwood & Harkness will clarify Helix's entity classification election in the PLR's entity identification section and add detail regarding Helix's operating SaaS subsidiaries, including the nature and scope of their active business operations. This detail will be incorporated into the § 721(b) analysis section to support the conclusion that the contribution of Helix stock does not cause the Master Fund to be treated as an investment company, because Helix is an operating company and the Master Fund's portfolio consists predominantly of interests in active operating businesses rather than passive investment assets.
Comment 6 — Total Number of Portfolio Companies. Draft v2.0 Statement Under Review: References to the number of portfolio companies held across all fund vehicles.
Client Comment: Mr. Dalmqvist confirmed that there are 23 total portfolio companies across all fund vehicles: 11 held by Fund IV vehicles (Fund IV-A Cayman and Fund IV-B Luxembourg) and 12 held by Fund V vehicles (Fund V-A Cayman and Fund V-B Luxembourg). Mr. Dalmqvist noted that Draft v2.0 may have listed only representative portfolio companies in the body text rather than providing a complete enumeration. Mr. Dalmqvist provided a complete list of all 23 portfolio companies to be used in Exhibit D, which is attached to this memorandum as part of Attachment B.
Proposed Response: Calderwood & Harkness will ensure that the PLR body text references "23 portfolio companies" as the total number held across all contributing fund vehicles, with appropriate cross-references to the complete schedule in Exhibit D. The body text will continue to describe representative portfolio companies (including NovaBright, Veridian, Crestline, Thorngate, and Helix) as illustrative examples, while making clear that the complete list is set forth in Exhibit D.
Comment 7 — Fund IV-A Cayman Aggregate Asset Values. Draft v2.0 Statement Under Review: The aggregate FMV, adjusted tax basis, and built-in gain figures for Fund IV-A (Cayman) LP.
Client Comment: Mr. Dalmqvist confirmed the following aggregate portfolio figures for Fund IV-A (Cayman) LP: FMV of $2.31 billion; adjusted tax basis of $1.62 billion; and built-in gain of $690 million. Mr. Dalmqvist stated that these figures are accurate and should be checked against the Exhibit D schedule and the independent fair market value appraisals prepared by Redstone Advisory Group LLC ("Redstone").
Proposed Response: Calderwood & Harkness will cross-reference these figures with the data provided by Redstone (Marco DeLuca, Managing Director) and Caldwell Pierce (Helen Okamoto, Tax Partner) to confirm that the figures are internally consistent across the PLR body text, the § 704(c) analysis section, and Exhibit D.
Comment 8 — Fund V-A Cayman Aggregate Asset Values. Draft v2.0 Statement Under Review: The aggregate FMV, adjusted tax basis, and built-in gain figures for Fund V-A (Cayman) LP.
Client Comment: Mr. Dalmqvist confirmed the following aggregate portfolio figures for Fund V-A (Cayman) LP: FMV of $2.89 billion; adjusted tax basis of $2.34 billion; and built-in gain of $550 million. Mr. Dalmqvist confirmed these figures are accurate.
Proposed Response: Calderwood & Harkness will verify these figures against Exhibit D and the Redstone appraisals to ensure consistency. Any discrepancies identified during the verification process will be flagged and resolved before circulation of Draft v3.0.
Comment 9 — Fund IV-B Luxembourg Aggregate Asset Values and EUR/USD Conversion. Draft v2.0 Statement Under Review: The aggregate FMV, adjusted tax basis, and built-in gain figures for Fund IV-B (Luxembourg) SCSp, including EUR/USD conversion.
Client Comment: Mr. Dalmqvist confirmed the following aggregate portfolio figures for Fund IV-B (Luxembourg) SCSp: FMV of €1.07 billion ($1.16 billion at 1.08 EUR/USD); adjusted tax basis of €782 million ($844.6 million at 1.08 EUR/USD); and built-in gain of €288 million ($311 million at 1.08 EUR/USD). Mr. Dalmqvist confirmed that all EUR/USD conversions should be performed at the uniform rate of 1.08, which is the rate agreed upon by the Solara finance team for purposes of the PLR request. Mr. Dalmqvist directed attention to Douglas Wexford's related financial data comments regarding exchange rate uniformity.
Proposed Response: Calderwood & Harkness will verify all EUR/USD calculations throughout the draft for the Fund IV-B Luxembourg figures, confirm the application of the uniform 1.08 rate, and reconcile the aggregate figures against Exhibit D. See also the response to Comment 16 below regarding the comprehensive EUR/USD conversion audit.
Comment 10 — Fund V-B Luxembourg Aggregate Asset Values. Draft v2.0 Statement Under Review: The aggregate FMV, adjusted tax basis, and built-in gain figures for Fund V-B (Luxembourg) SCSp.
Client Comment: Mr. Dalmqvist confirmed the following aggregate portfolio figures for Fund V-B (Luxembourg) SCSp: FMV of €1.29 billion ($1.39 billion at 1.08 EUR/USD); adjusted tax basis of €1.14 billion ($1.23 billion at 1.08 EUR/USD); and built-in gain of €150 million ($162 million at 1.08 EUR/USD). Mr. Dalmqvist confirmed the 1.08 EUR/USD rate applies.
Proposed Response: Calderwood & Harkness will verify these figures and ensure consistency with Exhibit D and the aggregate totals discussed in Comment 11 below.
Comment 11 — Aggregate Totals Across All Contributing Vehicles. Draft v2.0 Statement Under Review: The aggregate FMV, adjusted tax basis, and built-in gain across all four contributing offshore vehicles.
Client Comment: Mr. Dalmqvist verified the aggregate figures across all four contributing vehicles (Fund IV-A Cayman, Fund IV-B Luxembourg, Fund V-A Cayman, and Fund V-B Luxembourg): total FMV of $7.75 billion; total adjusted tax basis of $6.03 billion; and total built-in gain of $1.72 billion. Mr. Dalmqvist confirmed the arithmetic: $7.75 billion minus $6.03 billion equals $1.72 billion. These figures represent the total assets being contributed to the Master Fund across all reorganization steps.
Proposed Response: Calderwood & Harkness will confirm that this aggregate calculation appears correctly and consistently in the PLR narrative, the § 704(c) analysis section (which addresses the allocation of $1.72 billion in built-in gain among the contributing partners), and Exhibit D. Any rounding discrepancies will be identified and resolved.
Comment 12 — CIMA and RCS Registration Numbers. Draft v2.0 Statement Under Review: The entity identification section of the PLR, including regulatory registration numbers for the offshore entities.
Client Comment: Mr. Dalmqvist provided confirmation of the following regulatory registration numbers for accurate citation in the PLR:
• Fund IV-A (Cayman) LP: Cayman Islands Monetary Authority ("CIMA") registration number MF-72491
• Fund V-A (Cayman) LP: CIMA registration number MF-89103
• Fund IV-B (Luxembourg) SCSp: Luxembourg Registre de Commerce et des Sociétés ("RCS") number B 248193
• Solara Luxembourg Management S.à r.l.: RCS number B 248194
• Fund V-B (Luxembourg) SCSp: RCS number B 271056
Mr. Dalmqvist noted that these numbers should be accurately cited in the entity identification section of the PLR and, where applicable, in the discussion of Step 5 (dissolution of offshore vehicles following the completion of the asset contributions).
Proposed Response: Calderwood & Harkness will insert and/or verify these registration numbers in the entity identification section of the PLR and in the Step 5 dissolution discussion. The numbers will also be cross-referenced against the formation documents on file to ensure accuracy.
B. Clarifications on Liability Amounts and § 752 Analysis Inputs (Stefan Dalmqvist and Douglas Wexford, Jointly)
The following three comments were submitted jointly by Mr. Dalmqvist and Mr. Wexford and relate to the accuracy and completeness of the liability data that is critical to the § 752 analysis.
Comment 13 — Aggregate Liabilities Assumed by Consolidated Master Fund. Draft v2.0 Statement Under Review: The $1.34 billion aggregate liability figure cited in the § 752 analysis section and in Exhibit E.
Client Comment: Both Mr. Dalmqvist and Mr. Wexford confirmed that the $1.34 billion aggregate liability figure is accurate. Mr. Wexford noted that this amount represents portfolio-level debt across all four offshore contributing vehicles (Fund IV-A Cayman, Fund IV-B Luxembourg, Fund V-A Cayman, and Fund V-B Luxembourg) and does not include the subscription credit facility liabilities, which remain at the Delaware LP level (i.e., at Fund IV LP and Fund V LP). The subscription credit facilities — specifically, the $1.1 billion Fund IV facility with Ashford National Bank, N.A. and the $1.5 billion Fund V facility with Ashford National Bank, N.A. and Sentinel Capital Markets LLC — are maintained at the Fund IV LP and Fund V LP level, respectively, and are not being transferred, assumed, or modified as part of the reorganization. Mr. Wexford emphasized that the PLR must clearly distinguish between portfolio-level liabilities being assumed by the Master Fund and subscription credit facility liabilities that remain with the Delaware LPs.
Proposed Response: Calderwood & Harkness will add clarifying language in both the PLR body text and Exhibit E to distinguish portfolio-level liabilities ($1.34 billion being assumed by the Master Fund) from the subscription credit facility liabilities ($1.1 billion Fund IV facility; $1.5 billion Fund V facility), which are not part of the reorganization asset transfers. A representation will be added confirming that the subscription credit facilities are not being transferred, assumed, or modified in connection with the reorganization steps described in the PLR. This distinction is critical to the § 752 analysis because only the $1.34 billion in portfolio-level liabilities is relevant to the deemed contribution/distribution calculations under § 752(a) and (b).
Comment 14 — Breakdown of $1.34 Billion in Liabilities by Contributing Vehicle. Draft v2.0 Statement Under Review: The § 752 analysis section and Exhibit E, which present the aggregate liability figure but do not include a vehicle-by-vehicle breakdown.
Client Comment: Mr. Wexford provided a preliminary breakdown of the $1.34 billion in aggregate portfolio-level liabilities by contributing vehicle, as follows:
• Fund IV-A (Cayman) LP portfolio liabilities: amount to be finalized based on Caldwell Pierce records
• Fund IV-B (Luxembourg) SCSp portfolio liabilities: amount to be finalized
• Fund V-A (Cayman) LP portfolio liabilities: amount to be finalized
• Fund V-B (Luxembourg) SCSp portfolio liabilities: amount to be finalized
• Total: $1.34 billion
Mr. Wexford indicated that the specific dollar amounts for each vehicle are being compiled and will be provided upon receipt of final data from Caldwell Pierce. Mr. Dalmqvist noted that this vehicle-by-vehicle breakdown is essential for the Treasury Regulation § 1.752-1(f) netting analysis and the tiered partnership liability allocation. The netting analysis requires a determination of each contributing partner's share of liabilities before and after the reorganization, and a vehicle-by-vehicle breakdown is necessary to perform this analysis accurately. Without the breakdown, it is not possible to determine whether any particular contributing vehicle will experience a net decrease in its share of liabilities sufficient to trigger a deemed distribution under § 752(b) in excess of its adjusted basis.
Proposed Response: Calderwood & Harkness will incorporate the vehicle-by-vehicle liability breakdown into Exhibit E once the final data is received from Caldwell Pierce. The § 752 analysis section of the PLR will be updated accordingly. Robert Jansen will follow up with Helen Okamoto at Caldwell Pierce to obtain the finalized breakdown as part of the outstanding data request.
Comment 15 — Recourse vs. Non-Recourse Characterization of Liabilities. Draft v2.0 Statement Under Review: The § 752 analysis section, which discusses the allocation of liabilities among partners but does not clearly distinguish between recourse and non-recourse liabilities.
Client Comment: Mr. Wexford flagged that Draft v2.0's treatment of the $1.34 billion in portfolio-level liabilities did not clearly distinguish between recourse and non-recourse liabilities under § 752(a) and § 752(b). This distinction is critical because recourse liabilities are allocated to the partner who bears the economic risk of loss under Treasury Regulation § 1.752-2, while non-recourse liabilities are allocated among partners based on their shares of partnership minimum gain, § 704(c) minimum gain, and profits interests under Treasury Regulation § 1.752-3. The allocation methodology directly affects whether liability shifts in connection with the reorganization create deemed distributions under § 752(b) that exceed any partner's adjusted basis.
Mr. Dalmqvist noted that most portfolio-level debt is non-recourse to the fund entities (i.e., the lenders look to the underlying portfolio company assets as collateral and do not have recourse to the fund-level entities or their partners). However, some portfolio-level debt may be recourse to specific portfolio companies, and the question of whether any such debt is treated as recourse at the fund level under the economic risk of loss analysis requires further review.
Proposed Response: Calderwood & Harkness will request a detailed recourse/non-recourse breakdown from Caldwell Pierce as part of the outstanding data request. Once received, Exhibit E and the § 752 analysis section will be updated to reflect the proper characterization and allocation of liabilities. This is identified as a critical open item, as the recourse/non-recourse characterization directly affects the determination of whether any contributing partner will experience a net decrease in liabilities sufficient to trigger gain recognition under § 752(b) and § 731(a).
C. Financial Data Accuracy Comments (Douglas Wexford)
The following six comments were submitted by Douglas Wexford, Chief Financial Officer, and relate to the accuracy and consistency of the financial data presented in Draft v2.0.
Comment 16 — EUR/USD Exchange Rate Uniformity. Draft v2.0 Statement Under Review: All EUR-denominated figures throughout the PLR body text and supporting exhibits.
Client Comment: Mr. Wexford confirmed that the 1.08 EUR/USD exchange rate should be applied uniformly throughout the PLR request and all exhibits, including the Excel schedules underlying Exhibits D and E. Mr. Wexford noted that Draft v2.0 appeared to use the correct 1.08 rate in the body text, but the rate should be verified in all Excel schedules to ensure consistency. Mr. Wexford identified the following specific verification points:
• Fund IV-B (Luxembourg) SCSp fund size: €1.15 billion × 1.08 = $1.242 billion
• Fund V-B (Luxembourg) SCSp fund size: €1.38 billion × 1.08 = $1.4904 billion
• Crestline Cloud Solutions LLC FMV: €340 million × 1.08 = $367.2 million (rounded to $367 million in the PLR)
• Crestline Cloud Solutions LLC adjusted tax basis: €195 million × 1.08 = $210.6 million (rounded to $211 million in the PLR)
• Kestrel Pacific Insurance Group capital commitments: €200 million (Fund IV) and €275 million (Fund V) — confirm conversion to USD if cited in the PLR
Proposed Response: Garrett Simmons will run a comprehensive global check on all EUR-denominated figures in the Draft PLR and supporting exhibits to confirm that the 1.08 EUR/USD rate is applied consistently. Each EUR-denominated figure will be verified against its USD equivalent, and any discrepancies will be corrected. The rounding conventions used in the PLR (rounding to the nearest million) will be applied uniformly. The results of this audit will be documented in a working paper for internal Calderwood & Harkness records.
Comment 17 — Fund Size vs. FMV Distinction. Draft v2.0 Statement Under Review: References to fund sizes and asset values in the PLR's introductory background section.
Client Comment: Mr. Wexford noted that Draft v2.0 should clearly distinguish between fund commitment size (the total capital committed by limited partners to each fund) and current fair market value of portfolio assets (which may differ from committed capital due to deployment levels, appreciation or depreciation of investments, and prior distributions to investors). The relevant figures are:
• Fund IV: $4.2 billion total committed capital, approximately 72% deployed
• Fund V: $5.6 billion total committed capital, approximately 38% deployed
The FMV figures in the PLR ($7.75 billion aggregate for the offshore contributing vehicles) represent the current market value of held portfolio assets as of the applicable valuation date, not the total committed capital. Mr. Wexford expressed concern that a reader of the PLR — including the IRS reviewing attorney — could confuse the two concepts, which could lead to questions about the accuracy of the factual recitation.
Proposed Response: Calderwood & Harkness will add a clarifying note in the PLR's factual recitation section distinguishing committed capital from current FMV of portfolio assets. The note will explain that committed capital reflects total investor commitments, while FMV reflects the current appraised value of the portfolio assets held by the offshore vehicles at the time of the reorganization. This distinction will prevent any confusion and ensure the IRS has a clear understanding of the financial metrics presented.
Comment 18 — Adjusted Tax Basis Records Source. Draft v2.0 Statement Under Review: All adjusted tax basis figures cited in the PLR body text and Exhibit D.
Client Comment: Mr. Wexford noted that all adjusted tax basis figures in the PLR should be sourced from and reconciled with the tax-basis balance sheets maintained by Caldwell Pierce & Co. LLP (Helen Okamoto, Tax Partner). Mr. Wexford flagged that Draft v2.0 used preliminary internal Solara estimates for the adjusted tax basis figures, as the final Caldwell Pierce figures were not yet available at the time of drafting. Mr. Wexford emphasized that the final PLR should use Caldwell Pierce audited or reviewed figures rather than Solara's internal estimates, as any discrepancy between the two could undermine the credibility of the PLR's factual representations.
Proposed Response: Calderwood & Harkness will incorporate the final Caldwell Pierce adjusted tax basis figures once they are received pursuant to the outstanding data request sent by Robert Jansen to Helen Okamoto. In the interim, the reconciliation working paper (cross-referenced to Exhibit D) will clearly flag which figures are preliminary Solara estimates and which have been finalized by Caldwell Pierce. Draft v3.0 will use the final Caldwell Pierce figures to the extent available; any remaining preliminary figures will be identified as such and will be updated in subsequent drafts.
Comment 19 — Solara AUM Figure. Draft v2.0 Statement Under Review: The reference to Solara's total assets under management in the PLR's introductory background section.
Client Comment: Mr. Wexford confirmed that Solara's total assets under management ("AUM") is $14.7 billion as of March 31, 2025. Mr. Wexford noted that this figure is cited in the PLR's introductory background section and should include the applicable reporting date to avoid any suggestion that the figure represents a different point in time.
Proposed Response: Calderwood & Harkness will ensure that the AUM figure includes the "as of March 31, 2025" date qualifier in the PLR. No other revision is needed; the $14.7 billion figure is confirmed as accurate.
Comment 20 — Annual Cost Savings Figure. Draft v2.0 Statement Under Review: The $3.8 million annual cost savings figure cited in the business purpose section.
Client Comment: Mr. Wexford confirmed that the $3.8 million annual duplicative administration, audit, and regulatory fee figure cited in the business purpose section of Draft v2.0 is accurate. This figure was derived from Solara's internal analysis and relates to the annual savings that would result from eliminating duplicative offshore administration costs (including Cayman Islands registered office fees, Luxembourg domiciliation agent fees, annual audit fees for the Cayman and Luxembourg entities, CIMA regulatory fees, CSSF reporting costs, and related compliance expenses) upon consolidation of the offshore vehicles into the Master Fund structure.
Proposed Response: No revision is needed. The $3.8 million figure is confirmed as accurate and will be retained in the business purpose section of Draft v3.0. This figure supports the anti-abuse and business purpose analysis by demonstrating that the reorganization produces meaningful, quantifiable cost savings independent of any tax benefits.
Comment 21 — EIN Accuracy. Draft v2.0 Statement Under Review: The employer identification numbers cited in the entity identification section of the PLR.
Client Comment: Mr. Wexford provided a comprehensive list of EINs to be verified against the entity identification section of the PLR:
Mr. Wexford further noted that the new entities to be formed as part of the reorganization — Solara Consolidated Master Fund LP (the "Master Fund"), Solara Master Fund GP LLC (the "Master Fund GP"), Solara International Feeder (Cayman) LP (the "International Feeder"), and Solara Tax-Exempt Feeder (Cayman) LP (the "Tax-Exempt Feeder") — will receive EINs upon formation. The PLR should note that EIN applications (Form SS-4) will be filed for these entities in connection with Step 1 of the reorganization, with a target formation date of September 15, 2025.
Proposed Response: Garrett Simmons will verify all EINs listed above against IRS correspondence on file and against the EINs reflected in prior tax returns and formation documents. Draft v3.0 will include placeholder notations for the new entity EINs, with a representation that EIN applications will be filed upon formation of the entities.
D. Drafting and Representation Suggestions
The following six comments involve drafting suggestions and proposed enhancements to the representational language in Draft v2.0. These comments were submitted by Mr. Dalmqvist, Mr. Wexford, or both.
Comment 22 — Business Purpose Representations. Draft v2.0 Statement Under Review: The business purpose representations in the PLR's "Business Purposes and Non-Tax Motivations" section.
Client Comment: Both Mr. Dalmqvist and Mr. Wexford suggested strengthening the business purpose representations to more prominently feature the impact of the OECD Pillar Two Global Anti-Base Erosion ("GloBE") rules on the Luxembourg SCSp structures. The Pillar Two GloBE rules, which became effective for Solara's Luxembourg entities beginning with fiscal year 2025, impose a 15% minimum effective tax rate on large multinational enterprise groups and have significantly diminished the tax efficiency benefits historically associated with the Luxembourg SCSp fund structures. Mr. Dalmqvist and Mr. Wexford noted that the Pillar Two impact should be given prominence equal to the operational cost savings rationale, as it represents a fundamental change in the regulatory environment that independently justifies the consolidation of the Luxembourg vehicles into the Master Fund structure.
Proposed Response: Calderwood & Harkness will expand the business purpose section of Draft v3.0 to give equal prominence to the following four non-tax motivations for the reorganization:
(i) The $3.8 million in annual cost savings resulting from the elimination of duplicative offshore administration, audit, and regulatory fees;
(ii) The impact of the OECD Pillar Two GloBE rules (effective for Solara's Luxembourg entities from FY 2025), which have diminished the historical tax efficiency advantages of the Luxembourg SCSp structures and rendered the maintenance of separate Luxembourg vehicles no longer cost-justified;
(iii) The simplification of FATCA and CRS reporting obligations through consolidation of the reporting entities; and
(iv) The LP-requested governance simplification, which will result in a streamlined fund structure with a single master fund vehicle, reducing the administrative burden on limited partners and their advisors.
This expanded presentation of business purposes will strengthen the anti-abuse and step transaction defense by demonstrating that the reorganization is motivated by multiple, independent, non-tax business reasons. Leonard Cross will review the revised business purpose representations before circulation of Draft v3.0.
Comment 23 — Investor Category Descriptions. Draft v2.0 Statement Under Review: The PLR's description of the investor base and LP tax profiles in the factual background section.
Client Comment: Mr. Dalmqvist suggested adding more specificity regarding representative investor categories and their tax profiles to support the § 1446 withholding analysis (which requires identification of foreign partner interests in partnerships engaged in U.S. trade or business) and the FIRPTA/§ 897 analysis (which addresses the taxation of foreign persons' dispositions of USRPIs). Mr. Dalmqvist identified the following representative investors and their characteristics:
• Pinnacle State Employees' Retirement System — U.S. public pension fund; capital commitments of $275 million (Fund IV) and $340 million (Fund V); tax-exempt under IRC § 501(a)
• Grandview University Endowment — U.S. tax-exempt educational endowment; capital commitments of $120 million (Fund IV) and $185 million (Fund V); tax-exempt under IRC § 501(c)(3)
• Nordhaven Sovereign Wealth Fund — Non-U.S. sovereign wealth fund; capital commitments of $380 million (Fund IV) and $500 million (Fund V); invested through Cayman vehicles
• Kestrel Pacific Insurance Group — Non-U.S. insurance company domiciled in Singapore; capital commitments of €200 million (Fund IV) and €275 million (Fund V); invested through Luxembourg vehicles
• Argyle Family Office Holdings LLC — U.S. taxable investor; capital commitments of $95 million (Fund IV) and $130 million (Fund V)
Proposed Response: Calderwood & Harkness will add a paragraph in the PLR's factual background section describing representative LP categories without identifying individual LPs by name, unless the IRS specifically requires such identification during the pre-submission conference or in response to the ruling request. The description will use generalized categories: (i) U.S. taxable investors, (ii) U.S. tax-exempt investors (public pension funds and educational endowments), (iii) non-U.S. sovereign wealth funds, and (iv) non-U.S. institutional investors (insurance companies). The capital commitment ranges and the vehicles through which each category invests will be described to provide the IRS with sufficient context for the § 1446 and FIRPTA analyses.
Comment 24 — Step 5 Dissolution Mechanics. Draft v2.0 Statement Under Review: The Step 5 description of the dissolution of the offshore contributing vehicles and the routing of limited partners into the post-reorganization fund structure.
Client Comment: Mr. Dalmqvist requested more precise language regarding the mechanics of Step 5, specifically addressing the routing of different categories of limited partners into the appropriate post-reorganization vehicles:
• Non-U.S. LPs (e.g., Nordhaven Sovereign Wealth Fund, Kestrel Pacific Insurance Group) will roll into Solara International Feeder (Cayman) LP, which will hold its interest in the Master Fund and serve as the investment vehicle for non-U.S. institutional and sovereign investors;
• U.S. tax-exempt LPs (e.g., Pinnacle State Employees' Retirement System, Grandview University Endowment) will roll into Solara Tax-Exempt Feeder (Cayman) LP, which will hold its interest in the Master Fund and serve as the investment vehicle for U.S. tax-exempt investors seeking to minimize unrelated business taxable income ("UBTI") exposure;
• U.S. taxable investors (e.g., Argyle Family Office Holdings LLC) remain directly in Fund IV LP and Fund V LP; these investors are not affected by the offshore vehicle reorganization, as Fund IV LP and Fund V LP will hold their interests in the Master Fund directly.
Mr. Dalmqvist emphasized that the investor-routing logic is essential to the PLR's analysis because the post-reorganization structure must accurately reflect how each category of investor accesses the Master Fund, which in turn affects the § 1446 withholding analysis, the FIRPTA/§ 897 analysis, and the UBTI analysis for tax-exempt investors.
Proposed Response: Calderwood & Harkness will revise the Step 5 description to add this level of investor-routing detail. The revised description will clearly delineate which categories of investors are routed to which post-reorganization vehicles and will explain the tax-policy rationale for each routing decision (i.e., the International Feeder facilitates efficient withholding administration for non-U.S. investors, while the Tax-Exempt Feeder facilitates UBTI management for tax-exempt investors).
Comment 25 — Reference to Subscription Credit Facilities. Draft v2.0 Statement Under Review: The PLR's discussion of assets and liabilities involved in the reorganization.
Client Comment: Mr. Dalmqvist noted that the PLR should expressly acknowledge the existence of the subscription credit facilities and confirm that these facilities are not being transferred, assumed, or modified as part of the reorganization steps described in the PLR. The relevant facilities are:
• Fund IV LP: $1.1 billion revolving subscription credit facility with Ashford National Bank, N.A., secured by uncalled capital commitments of Fund IV LP's limited partners
• Fund V LP: $1.5 billion revolving subscription credit facility with Ashford National Bank, N.A. and Sentinel Capital Markets LLC (as co-lenders), secured by uncalled capital commitments of Fund V LP's limited partners
Mr. Dalmqvist noted that the lender consent process for the reorganization (to the extent consent is required under the credit facility agreements) is a separate workstream being managed by the Solara in-house legal team and Whitfield, Carruthers & Doyle LLP, and should not be conflated with the PLR request.
Proposed Response: Calderwood & Harkness will add a brief clarifying representation in the PLR confirming that the subscription credit facilities are maintained at the Delaware LP level (Fund IV LP and Fund V LP), are secured by uncalled capital commitments of the limited partners of those funds, and are not part of the assets or liabilities being transferred to the Master Fund in connection with the reorganization. This representation will be included in both the factual recitation section and the § 752 analysis section to ensure complete clarity regarding the scope of liabilities addressed in the PLR.
Comment 26 — Formation Date Coordination. Draft v2.0 Statement Under Review: The Step 1 description of the formation of new entities.
Client Comment: Mr. Dalmqvist emphasized that the PLR should clearly state that all new entities — the Master Fund LP, the Master Fund GP LLC, the International Feeder, and the Tax-Exempt Feeder — will be formed and will have effective check-the-box elections (Form 8832) as partnerships for U.S. federal income tax purposes before the first contribution step (Step 2, with a target date of October 1, 2025). The target formation date for all new entities is September 15, 2025. Mr. Dalmqvist noted that this is relevant to the Memorandum on Timing of Check-the-box Elections analysis previously prepared by Calderwood & Harkness, which addressed the Form 8832 75-day retroactivity rule under Treasury Regulations § 301.7701-3(c)(1)(iii). The check-the-box elections must be effective on or before the formation date to ensure that the new entities are treated as partnerships from inception, so that the contributions in Steps 2 through 4 are properly characterized as contributions to a partnership under § 721(a).
Proposed Response: Calderwood & Harkness will ensure that the Step 1 description in Draft v3.0 includes a specific representation that all new entities will be formed and classified as partnerships for U.S. federal income tax purposes no later than September 15, 2025, and that check-the-box elections (Form 8832) will be effective on or before that date. The representation will reference the 75-day retroactivity rule and confirm that the elections will be filed timely to ensure partnership classification is effective before the first contribution in Step 2.
Comment 27 — Registered Agent and Registered Office References. Draft v2.0 Statement Under Review: The entity identification section, including registered agent and registered office designations.
Client Comment: Mr. Dalmqvist requested minor factual verification of the registered agent and registered office references for all entities referenced in the PLR:
• Delaware entities: Capitol Registered Agents Inc., 850 New Burton Road, Suite 201, Dover, Delaware 19904
• Cayman Islands entities: Harborstone Corporate Services Ltd. (registered office address to be confirmed)
Proposed Response: Calderwood & Harkness will verify all registered agent and registered office references in the entity identification section against the formation documents and annual reports on file. Garrett Simmons will confirm the Harborstone Corporate Services Ltd. registered office address for the Cayman entities and update the PLR accordingly.
IV. Comment Matrix — Tabular Summary
The following table provides a concise summary of all 27 substantive comments discussed in Part III of this memorandum, organized by comment number, commenter, PLR section affected, nature of comment, summary description, Calderwood & Harkness proposed response, and current status.
Note: The four typographical/formatting comments (inconsistent capitalization, missing cross-reference, duplicated footnote number, spacing error) are not individually listed in the matrix above but will be corrected in Draft v3.0.
V. Outstanding Items and Next Steps
A. Items Requiring Additional Data
The following items remain outstanding and require additional data from third-party advisors before the corresponding revisions can be finalized in Draft v3.0:
1. Caldwell Pierce & Co. LLP (Helen Okamoto, Tax Partner): Calderwood & Harkness has submitted a data request to Helen Okamoto for the following items:
(a) Finalized tax-basis balance sheets for Fund IV-B (Luxembourg) SCSp and Fund V-B (Luxembourg) SCSp, reflecting audited or reviewed adjusted tax basis figures for all portfolio company interests held by these vehicles;
(b) Schedule K-1 data for the most recent tax year for all four contributing vehicles (Fund IV-A Cayman, Fund IV-B Luxembourg, Fund V-A Cayman, and Fund V-B Luxembourg);
(c) Vehicle-by-vehicle breakdown of the $1.34 billion in aggregate portfolio-level liabilities assumed by the Master Fund, with specific dollar amounts for each contributing vehicle (Comment 14);
(d) Recourse versus non-recourse characterization of all portfolio-level liabilities under the § 752 economic risk of loss framework (Comment 15).
2. Redstone Advisory Group LLC (Marco DeLuca, Managing Director): Calderwood & Harkness is coordinating with Redstone to obtain the final fair market value appraisals for all 23 portfolio companies across the four contributing vehicles. These appraisals are necessary to finalize the FMV figures in the PLR body text and Exhibit D.
3. Stefan Dalmqvist (Solara Head of Tax): Mr. Dalmqvist has agreed to provide the complete list of all 23 portfolio companies, with entity names, jurisdictions of formation, entity classifications, and holding percentages, for incorporation into Exhibit D. This list was referenced in Comment 6 and is expected imminently.
B. Revision Timeline
The following revision timeline has been established for the completion of Draft v3.0 and the subsequent steps in the PLR submission process:
C. Action Items
The following action items have been assigned to members of the Calderwood & Harkness deal team:
Robert Jansen (Lead Associate, D.C.):
• Incorporate all accepted factual corrections (Comments 1–12) into Draft v3.0, including updated entity descriptions, ownership percentages, aggregate asset values, and regulatory registration numbers
• Update Exhibits D and E to reflect the Client's confirmed figures and any corrections
• Revise the Step 5 description to incorporate the investor-routing detail requested in Comment 24
• Expand the business purpose section per Comment 22 to give equal prominence to the four non-tax motivations
• Add the clarifying representations regarding subscription credit facilities (Comment 25) and formation date coordination (Comment 26)
• Follow up with Helen Okamoto at Caldwell Pierce on all outstanding financial data items (tax-basis balance sheets, K-1 data, liability breakdown, recourse/non-recourse characterization) — target receipt by July 11, 2025
• Prepare Draft v3.0 for Leonard Cross review by July 14, 2025
Garrett Simmons (Working Associate, New York):
• Run comprehensive EUR/USD conversion audit across all PLR exhibits and body text, confirming the uniform 1.08 rate is applied consistently (Comment 16)
• Verify all EINs listed in Comment 21 against IRS correspondence on file and prior tax returns; update the entity identification section of Draft v3.0 accordingly
• Update the § 752 liability analysis with the vehicle-by-vehicle breakdown and recourse/non-recourse characterization once the Caldwell Pierce data is received (Comments 14 and 15)
• Verify all registered agent and registered office references (Comment 27) against formation documents on file
• Coordinate with Redstone Advisory Group (Marco DeLuca) on the final appraisal timeline; confirm expected delivery date for final FMV appraisals for all 23 portfolio companies
• Add the investor category paragraph in the factual background section per Comment 23
Leonard Cross (Responsible Partner, D.C.):
• Review the revised business purpose representations in Draft v3.0 before circulation to LPAC counsel (Whitfield, Carruthers & Doyle LLP)
• Review the updated § 752 analysis once the liability breakdown and recourse/non-recourse data is incorporated
• Lead the pre-submission conference with IRS CC:INTL Branch 1 on July 22, 2025
VI. Attachments
The following attachments are enclosed with this memorandum:
Attachment A: Solara In-House Team's Marked-Up Draft PLR Request v2.0 (redline received from Priya Narasimhan, General Counsel, with Stefan Dalmqvist and Douglas Wexford comments tracked using Microsoft Word Track Changes)
Attachment B: Email from Stefan Dalmqvist, Head of Tax, dated July 7, 2025, transmitting detailed substantive and factual comments on Draft v2.0, including the preliminary list of all 23 portfolio companies
Attachment C: Email from Douglas Wexford, Chief Financial Officer, dated July 7, 2025, transmitting financial data corrections and EIN verification data