1041-00005 · Client 1041 · PLR Request Drafting

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PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT — ATTORNEY-CLIENT COMMUNICATION

CALDERWOOD & HARKNESS LLP Attorneys at Law

1900 K Street NW, Suite 1100 Washington, DC 20006 Telephone: (202) 555-7400 Facsimile: (202) 555-7401 www.calderwoodharkness.com

DRAFT — Version 4.0 — Final Circulated Draft — For Internal Sign-Off

August 1, 2025

Engagement Number: 20250527-SDILP-PLR

Internal Revenue Service

Attn: Office of the Associate Chief Counsel (International)

CC:INTL 1111 Constitution Avenue NW Washington, DC 20224

Copies to: Office of the Associate Chief Counsel (Passthroughs & Special Industries) CC:PSI 1111 Constitution Avenue NW Washington, DC 20224

Re: Request for Private Letter Ruling on behalf of Solara Digital Infrastructure LP (EIN: 82-4917366) and Related Entities

Dear Sir or Madam:

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I. INTRODUCTORY SECTION

A. Identification of Requesting Taxpayer and Representatives

On behalf of Solara Digital Infrastructure LP, a Delaware limited partnership (Employer Identification Number: 82-4917366), with its principal place of business at 1200 Market Street, Suite 3400, Wilmington, Delaware 19801 (the "Taxpayer" or "Solara"), and the related entities identified herein, we respectfully submit this request for a private letter ruling (this "Ruling Request") from the Internal Revenue Service (the "Service" or "IRS"). Solara Digital Infrastructure LP is a registered private equity sponsor that operates through multiple fund vehicles in the United States, the Cayman Islands, and the Grand Duchy of Luxembourg, as more fully described below.

The general partner of Solara Digital Infrastructure LP is Solara Digital Infrastructure GP LLC, a Delaware limited liability company (Employer Identification Number: 82-4917365), with its principal office at the same address. Viktor Raines serves as the Managing Partner and Founder of Solara Digital Infrastructure GP LLC and exercises day-to-day management authority over the Taxpayer and its affiliated entities.

This Ruling Request is submitted pursuant to Revenue Procedure 2025-1 (and any applicable successor or supplemental guidance), which sets forth the procedures for obtaining letter rulings and determination letters from the Service. The Taxpayer hereby requests rulings with respect to the United States federal income tax consequences of a proposed multi-step cross-border reorganization of the Solara fund platform, as described in detail in this Ruling Request.

The Taxpayer's authorized representatives in connection with this Ruling Request, designated pursuant to Form 2848 (Power of Attorney and Declaration of Representative), which has been previously filed with the Service and a copy of which is enclosed herewith, are:

Leonard Cross Responsible Partner, Tax Calderwood & Harkness LLP 1900 K Street NW, Suite 1100 Washington, DC 20006 Telephone: (202) 555-7418 Facsimile: (202) 555-7401

Email: lcross@calderwoodharkness.com

CAF Number: 4827-39152-R

Sylvia Hartwell Billing Partner, Tax Calderwood & Harkness LLP 600 Lexington Avenue, 38th Floor New York, NY 10022 Telephone: (212) 555-3200 Facsimile: (212) 555-3201

Email: shartwell@calderwoodharkness.com

CAF Number: 4827-41873-R

All correspondence and communications regarding this Ruling Request should be directed to Leonard Cross at the address set forth above, with a copy to Sylvia Hartwell.

Enclosed with this Ruling Request is a user fee payment in the amount of $38,000.00, submitted in accordance with the Schedule of User Fees set forth in Appendix A of Revenue Procedure 2025-1. This fee corresponds to the category applicable to ruling requests involving multiple entities with combined assets exceeding $50,000,000. Wire transfer confirmation for this payment is attached hereto.

The Taxpayer and its representatives participated in a pre-submission conference with the Office of the Associate Chief Counsel (International), CC:INTL Branch 1, held on July 22, 2025 (the "Pre-Submission Conference"). This Ruling Request reflects and incorporates the feedback and guidance received during that conference, including the identification of CC:PSI as a secondary jurisdiction for Subchapter K issues arising from the proposed reorganization.

B. Summary of Rulings Requested

The Taxpayer respectfully requests that the Service issue eight specific private letter rulings (collectively, the "Requested Rulings") addressing the United States federal income tax consequences of the proposed multi-step reorganization described herein. The Requested Rulings are set forth in full in Section VI of this Ruling Request and are briefly summarized as follows:

Ruling 1: The contributions of portfolio company interests by four offshore fund vehicles to a newly formed Delaware master fund partnership qualify for nonrecognition treatment under Internal Revenue Code ("IRC" or "Code") § 721(a).

Ruling 2: The newly formed master fund partnership does not constitute an "investment company" within the meaning of IRC § 721(b) and Treasury Regulations ("Treas. Reg.") § 1.351-1(c)(1)(ii).

Ruling 3: IRC § 367(a) and § 367(b) do not apply to the contributions because those provisions apply only to transfers to or from corporations, and the receiving entity is classified as a partnership for U.S. federal income tax purposes.

Ruling 4: The distributions by the dissolving offshore fund vehicles of partnership interests in the master fund to their respective limited partners qualify for nonrecognition treatment under IRC § 731(a), and IRC § 731(c) does not apply because the distributed interests are not "marketable securities."

Ruling 5: The shifts in partner-level shares of liabilities resulting from the reorganization do not trigger gain recognition under IRC §§ 752(a), 752(b), and 731, taking into account the netting rule of Treas. Reg. § 1.752-1(f) and the tiered partnership rules.

Ruling 6: The built-in gain and loss accounts tracked under IRC § 704(c) by the contributing offshore vehicles carry over to the master fund, and the master fund may continue to use the remedial allocation method under Treas. Reg. § 1.704-3(d).

Ruling 7: No withholding is required under IRC § 1446(a) in connection with the contributions or distributions comprising the reorganization.

Ruling 8: The newly formed master fund and two newly formed Cayman feeder vehicles are each properly classified as partnerships for U.S. federal income tax purposes under Treas. Reg. § 301.7701-3.

The Requested Rulings relate to a proposed multi-step cross-border reorganization of Solara's fund platform (the "Reorganization"), which involves the domestication and consolidation of Cayman Islands and Luxembourg fund vehicles into a newly established Delaware-domiciled master fund structure. The Reorganization is described in detail in Section II.F of this Ruling Request and is depicted visually in the organizational charts and step transaction diagrams attached hereto as Exhibits A, B, and C.

C. Identification of All Entities Involved

The following table identifies each entity involved in or affected by the Reorganization, including the entity's full legal name, short name used herein, entity type, jurisdiction of organization, Employer Identification Number (where applicable), and role in the Reorganization:

For purposes of this Ruling Request, Fund IV-A Cayman, Fund IV-B Lux, Fund V-A Cayman, and Fund V-B Lux are collectively referred to as the "Legacy Offshore Vehicles" or the "Contributing Entities." Fund IV LP and Fund V LP are collectively referred to as the "Delaware Main Funds." The Master Fund, the International Feeder, and the Tax-Exempt Feeder are collectively referred to as the "New Entities."

The registered agent for all Delaware entities is Capitol Registered Agents Inc., located at 850 New Burton Road, Suite 201, Dover, Delaware 19904. The registered office for all Cayman Islands entities is Harborstone Corporate Services Ltd., P.O. Box 2714, 94 Solaris Avenue, George Town, Grand Cayman KY1-1111, Cayman Islands. The registered office for all Luxembourg entities is 14, rue Jean-Pierre Brasseur, L-1258 Luxembourg, Grand Duchy of Luxembourg.

II. STATEMENT OF FACTS

A. Background of Solara Digital Infrastructure LP

Solara Digital Infrastructure LP was founded on March 17, 2014 as a Delaware limited partnership. Since its founding, Solara has established itself as a leading private equity sponsor focused on investments in digital infrastructure — including data centers, fiber-optic networks, and edge computing facilities — as well as enterprise software-as-a-service ("SaaS") platforms. Solara's investment thesis centers on the rapidly growing demand for digital infrastructure driven by cloud computing, artificial intelligence workloads, and the proliferation of data-intensive applications across industries.

As of March 31, 2025, Solara manages approximately $14.7 billion in assets under management ("AUM") across its fund platform, which currently encompasses six parallel fund vehicles spanning three jurisdictions: the State of Delaware, the Cayman Islands, and the Grand Duchy of Luxembourg. Solara's fund platform is supported by a team of approximately 85 investment professionals and 45 operational and administrative staff based in offices in Wilmington, Delaware; New York, New York; and London, England.

The key personnel of Solara relevant to this Ruling Request are as follows:

• Viktor Raines, Managing Partner & Founder, age 52. Mr. Raines founded Solara in 2014 after serving for twelve years as a Senior Managing Director at Havensgate Capital Partners, where he led Havensgate's technology and infrastructure investment practice. Mr. Raines holds a B.S. in Electrical Engineering from the Massachusetts Institute of Technology and an M.B.A. from the Wharton School of the University of Pennsylvania.

• Meredith Tsao, Chief Operating Officer, age 47. Ms. Tsao oversees Solara's operations, investor relations, and fund administration functions. Prior to joining Solara in 2016, Ms. Tsao served as a Managing Director at BlackRidge Advisors LLC.

• Douglas Wexford, Chief Financial Officer, age 50. Mr. Wexford is responsible for Solara's financial reporting, treasury operations, and tax compliance functions. Mr. Wexford previously served as a partner in the Financial Services Tax practice of Caldwell Pierce & Co. LLP.

• Priya Narasimhan, General Counsel, age 44. Ms. Narasimhan leads Solara's legal and regulatory compliance functions and serves as secretary to the boards of Solara's general partner entities. Ms. Narasimhan previously practiced law at Whitfield, Carruthers & Doyle LLP.

• Stefan Dalmqvist, Head of Tax, age 46. Mr. Dalmqvist directs Solara's tax planning, structuring, and compliance across all fund vehicles and portfolio companies. Mr. Dalmqvist previously served as a Vice President in the Tax Department at Ashford National Bank, N.A.

B. Existing Fund Platform Structure

Solara currently operates its investment activities through a parallel fund structure consisting of six fund vehicles organized across three jurisdictions. This multi-vehicle parallel structure was originally established to accommodate the diverse tax, regulatory, and reporting needs of Solara's investor base, which includes United States taxable investors, United States tax-exempt investors (including pension funds and university endowments), and non-U.S. investors (including sovereign wealth funds and insurance companies).

The rationale for the parallel structure is as follows:

• U.S. Taxable Investors invest through the Delaware Main Funds (Fund IV LP and Fund V LP), which are organized as Delaware limited partnerships and are classified as partnerships for U.S. federal income tax purposes. U.S. taxable investors receive pass-through treatment of income, gain, loss, deduction, and credit items.

• U.S. Tax-Exempt Investors invest through the Cayman parallel vehicles (Fund IV-A Cayman and Fund V-A Cayman), which provide a blocker structure through offshore corporate subsidiary holding companies. This structure is designed to mitigate concerns regarding unrelated business taxable income ("UBTI") that could otherwise arise under IRC §§ 511–514 if tax-exempt investors held direct interests in leveraged operating businesses through a pass-through partnership vehicle.

• Non-U.S. Investors invest through either the Cayman parallel vehicles or the Luxembourg parallel vehicles, depending on tax treaty access requirements, regulatory considerations in the investor's home jurisdiction, and investor preference. The Luxembourg SCSp (société en commandite spéciale) structure was selected for certain European and Asian investors based on Luxembourg's extensive network of bilateral tax treaties and the favorable regulatory framework under Luxembourg law.

Each set of parallel fund vehicles invests on a pro rata, side-by-side basis alongside the corresponding Delaware Main Fund in the same portfolio companies, subject to minor variations for regulatory, tax, or contractual reasons. The parallel structure ensures that all investors in a given fund vintage participate proportionally in the same investment opportunities.

Fund IV Complex

The Fund IV complex consists of three parallel fund vehicles with a 2021 vintage:

Solara Digital Partners Fund IV LP ("Fund IV LP"): A Delaware limited partnership with $4.2 billion in total capital commitments. The general partner of Fund IV LP is Solara Digital Infrastructure GP LLC. As of March 31, 2025, approximately 72% of Fund IV LP's committed capital has been deployed across its portfolio company investments. Fund IV LP holds interests in eleven portfolio companies (collectively with the parallel vehicles) in the digital infrastructure and enterprise SaaS sectors.

Solara Digital Partners Fund IV-A (Cayman) LP ("Fund IV-A Cayman"): A Cayman Islands exempted limited partnership with $1.85 billion in total capital commitments. Fund IV-A Cayman is registered with the Cayman Islands Monetary Authority under registration number CIMA MF-72491. Its general partner is Solara Offshore GP Ltd., a Cayman Islands exempted company. Fund IV-A Cayman invests alongside Fund IV LP on a parallel basis.

Solara Digital Partners Fund IV-B (Luxembourg) SCSp ("Fund IV-B Lux"): A Luxembourg special limited partnership (société en commandite spéciale) with €1.15 billion in total capital commitments (approximately $1.24 billion at an exchange rate of 1.08 EUR/USD). Fund IV-B Lux is registered with the Luxembourg Trade and Companies Register under number RCS B 248193. Its general partner (associé commandité) is Solara Luxembourg Management S.à r.l. (RCS B 248194). Fund IV-B Lux invests alongside Fund IV LP and Fund IV-A Cayman on a parallel basis.

Fund V Complex

The Fund V complex consists of three parallel fund vehicles with a 2023 vintage:

Solara Digital Partners Fund V LP ("Fund V LP"): A Delaware limited partnership with $5.6 billion in total capital commitments. The general partner of Fund V LP is Solara Digital Infrastructure GP LLC. As of March 31, 2025, approximately 38% of Fund V LP's committed capital has been deployed across its portfolio company investments. Fund V LP holds interests in twelve portfolio companies (collectively with the parallel vehicles) in the digital infrastructure and enterprise SaaS sectors.

Solara Digital Partners Fund V-A (Cayman) LP ("Fund V-A Cayman"): A Cayman Islands exempted limited partnership with $2.45 billion in total capital commitments. Fund V-A Cayman is registered with the Cayman Islands Monetary Authority under registration number CIMA MF-89103. Its general partner is Solara Offshore GP Ltd.

Solara Digital Partners Fund V-B (Luxembourg) SCSp ("Fund V-B Lux"): A Luxembourg SCSp with €1.38 billion in total capital commitments (approximately $1.49 billion at an exchange rate of 1.08 EUR/USD). Fund V-B Lux is registered with the Luxembourg Trade and Companies Register under number RCS B 271056. Its general partner is Solara Luxembourg Management S.à r.l.

C. Representative Investors / Limited Partners

The following table sets forth representative investors across Solara's fund platform, organized by investor category, to illustrate the diversity of the Taxpayer's limited partner base and the relevance of the various Requested Rulings to different investor categories:

The foregoing is a representative sample and is not exhaustive. As of the date of this Ruling Request, the Fund IV complex has approximately 63 limited partners, and the Fund V complex has approximately 71 limited partners. No single investor holds more than 9.5% of the capital commitments to any individual fund vehicle.

D. Representative Portfolio Company Interests

The Legacy Offshore Vehicles collectively hold interests in 23 portfolio companies (eleven in the Fund IV complex and twelve in the Fund V complex). A complete schedule of all portfolio company interests is set forth in Exhibit D attached hereto. For purposes of illustrating the nature, value, and tax attributes of the assets involved in the Reorganization, the following representative portfolio company interests are described in detail:

1. NovaBright Data Systems Inc. A Delaware corporation engaged in the ownership and operation of hyperscale data center facilities located across seven metropolitan markets in the United States and two international locations (London and Singapore). NovaBright currently operates approximately 340 megawatts of data center capacity and employs over 2,800 individuals. As of the most recent independent valuation (prepared by Redstone Advisory Group LLC as of March 31, 2025), NovaBright has a fair market value of approximately $890 million, an aggregate adjusted tax basis of $520 million, and a corresponding built-in gain of $370 million. Ownership is split 60% by Fund IV-A Cayman and 40% by Fund IV LP.

2. Crestline Cloud Solutions LLC. A Delaware limited liability company that is a disregarded entity for U.S. federal income tax purposes, wholly owned by Fund IV-B Lux. Crestline operates a cloud-based SaaS platform serving enterprise customers in the financial services, healthcare, and logistics sectors. Crestline has a fair market value of €340 million (approximately $367 million at 1.08 EUR/USD), an adjusted tax basis of €195 million (approximately $211 million), and a built-in gain of €145 million (approximately $156 million). Crestline employs approximately 630 individuals across offices in Austin, Texas; Dublin, Ireland; and Bangalore, India.

3. Veridian Edge Computing Corp. A Delaware corporation engaged in the development and operation of edge computing infrastructure, including micro data centers and edge nodes positioned at the network periphery. Veridian's network encompasses over 1,200 edge nodes across North America and Western Europe. Veridian has a fair market value of approximately $1.12 billion, an adjusted tax basis of $780 million, and a built-in gain of $340 million. Ownership is split 55% by Fund V-A Cayman and 45% by Fund V LP. Veridian employs approximately 1,400 individuals.

4. Thorngate Fiber Networks LP. A Delaware limited partnership engaged in the ownership and operation of approximately 47,000 route miles of fiber-optic network infrastructure across the southeastern and midwestern United States. Thorngate has a fair market value of approximately $670 million, an adjusted tax basis of $490 million, and a built-in gain of $180 million. Thorngate is held 100% by Fund IV-A Cayman. Thorngate employs approximately 950 individuals.

5. Helix SaaS Holdings Ltd. A Cayman Islands exempted company that serves as a holding company for a portfolio of enterprise SaaS businesses primarily serving the healthcare technology and fintech verticals. Helix's subsidiaries collectively generate approximately $280 million in annual recurring revenue and employ approximately 1,100 individuals. Helix has a fair market value of approximately $445 million, an adjusted tax basis of $310 million, and a built-in gain of $135 million. Helix is held 100% by Fund V-A Cayman.

Each of the foregoing portfolio companies is an operating business with substantial revenues, employees, physical or digital infrastructure, and ongoing business operations. None of the portfolio company interests constitutes a passive investment in stocks, securities, or other financial instruments. A complete schedule of all 23 portfolio companies, including fair market values, adjusted tax bases, built-in gains, and ownership percentages, is set forth in Exhibit D.

E. Business Rationale for the Reorganization

The Reorganization is motivated by several compelling and bona fide business purposes, which are described below. The Reorganization is not motivated by tax avoidance considerations; rather, it is designed to simplify and rationalize the Taxpayer's existing fund platform in response to evolving regulatory, economic, and governance considerations.

(i) Operational Cost Reduction. Solara currently incurs approximately $3.8 million per annum in duplicative administrative, audit, regulatory, and fund administration costs attributable to the parallel vehicle structure across three jurisdictions. These costs include annual CIMA regulatory fees and filings for each Cayman vehicle, Luxembourg CSSF regulatory compliance costs, duplicative annual audit fees (separate auditors and audit reports are required for each Cayman and Luxembourg vehicle), fund administration fees payable to Clarendon Fund Services Ltd. for each offshore vehicle, and legal fees for ongoing corporate maintenance and regulatory compliance in each jurisdiction. The consolidation of the Legacy Offshore Vehicles into a single master fund structure is expected to eliminate the substantial majority of these duplicative costs, yielding annual savings estimated at approximately $3.2 million to $3.8 million.

(ii) OECD Pillar Two GloBE Rules. The Organisation for Economic Co-operation and Development's ("OECD") Pillar Two Global Anti-Base Erosion ("GloBE") rules, which establish a global minimum effective tax rate of 15% for large multinational enterprise groups, are expected to become effective for Solara's Luxembourg entities beginning with the fiscal year ending December 31, 2025. The GloBE rules, as transposed into Luxembourg domestic law pursuant to the EU Minimum Tax Directive (Council Directive (EU) 2022/2523), substantially diminish the historical tax benefits associated with the Luxembourg SCSp structure for Solara's fund platform. Specifically, the Income Inclusion Rule ("IIR") and the Undertaxed Profits Rule ("UTPR") may impose top-up tax obligations on certain constituent entities within Solara's organizational structure, thereby negating the principal tax-planning rationale for maintaining the Luxembourg parallel vehicles. The consolidation of the Luxembourg vehicles into the Delaware master fund structure is expected to simplify Solara's Pillar Two analysis and reduce the compliance burden associated with the GloBE rules.

(iii) Simplified Compliance under FATCA and CRS. The current parallel vehicle structure requires duplicative reporting under the Foreign Account Tax Compliance Act ("FATCA") (IRC §§ 1471–1474) and the Common Reporting Standard ("CRS") promulgated by the OECD and adopted by the Cayman Islands and Luxembourg. Each offshore vehicle is independently subject to FATCA and CRS registration, due diligence, and reporting obligations, which impose significant administrative burden and cost. The consolidation into a single master fund structure will reduce the number of reporting entities and streamline the Taxpayer's compliance processes.

(iv) LP-Requested Governance Simplification. The Limited Partner Advisory Committee ("LPAC") of Solara's fund platform has repeatedly expressed a preference for simplified governance and reduced structural complexity. At the LPAC meeting held on April 22, 2025, the LPAC endorsed the exploration of the platform reorganization by a vote representing 78% of committed capital across all fund vehicles. Limited partners have cited the complexity of the parallel structure — including the difficulty of tracking co-investment allocations across multiple vehicles and the administrative burden of receiving multiple Schedule K-1s and other tax reporting documents from different vehicles — as a significant concern that the Reorganization would address.

In addition to the foregoing business purposes, the Board of Managers of Solara Digital Infrastructure GP LLC unanimously approved the exploration and pursuit of the platform reorganization at its meeting held on March 14, 2025, following an extensive presentation by management and outside advisors.

F. The Proposed Reorganization — Multi-Step Transaction Description

The Reorganization consists of five integrated steps, to be executed in the order and on the approximate dates set forth below. Each step has independent legal significance and is separately documented under the applicable laws of Delaware, the Cayman Islands, and Luxembourg, as appropriate. The steps are as follows:

Step 1 — Formation of New Entities (Target: September 15, 2025)

The first step of the Reorganization involves the formation of four new entities that will constitute the post-reorganization master-feeder platform:

(a) Formation of Solara Consolidated Master Fund GP LLC as a Delaware limited liability company, which will serve as the general partner of the new master fund. Solara Consolidated Master Fund GP LLC will be wholly owned by Solara Digital Infrastructure GP LLC and will be managed by the same individuals who currently manage Solara's fund platform.

(b) Formation of Solara Consolidated Master Fund LP as a Delaware limited partnership, with Solara Consolidated Master Fund GP LLC serving as its sole general partner. The Master Fund will serve as the central pooled investment vehicle for all former offshore vehicle portfolio company interests following the Reorganization.

(c) Formation of Solara International Feeder (Cayman) LP as a Cayman Islands exempted limited partnership. The International Feeder will serve as the investment vehicle through which non-U.S. investors (including Nordhaven Sovereign Wealth Fund and Kestrel Pacific Insurance Group) will invest in the Master Fund following the Reorganization.

(d) Formation of Solara Tax-Exempt Feeder (Cayman) LP as a Cayman Islands exempted limited partnership. The Tax-Exempt Feeder will serve as the investment vehicle through which U.S. tax-exempt investors (including Pinnacle State Employees' Retirement System and Grandview University Endowment) will invest in the Master Fund following the Reorganization. The Tax-Exempt Feeder will continue to provide UBTI mitigation through its offshore corporate subsidiary holding structure.

Upon formation of each New Entity, the Taxpayer will file IRS Form 8832 (Entity Classification Election) to elect that each New Entity be classified as a partnership for U.S. federal income tax purposes under Treas. Reg. § 301.7701-3. For the Master Fund and Master Fund GP (as domestic eligible entities with at least two members), partnership classification is the default classification under the check-the-box regulations, but a protective Form 8832 election will be filed to confirm such classification. For the International Feeder and the Tax-Exempt Feeder (as foreign eligible entities), an affirmative Form 8832 election is required and will be timely filed with effective dates coordinated with the formation of each entity on or about September 15, 2025 — in each case, prior to the commencement of Step 2 on October 1, 2025.

Step 2 — Contribution of Fund IV-A Cayman Assets (Target: October 1, 2025)

In the second step of the Reorganization, Fund IV-A (Cayman) LP will contribute all of its portfolio company interests to Solara Consolidated Master Fund LP. These portfolio company interests consist of direct and indirect ownership interests in the portfolio companies held by Fund IV-A Cayman, including without limitation its 60% interest in NovaBright Data Systems Inc. and its 100% interest in Thorngate Fiber Networks LP.

The aggregate fair market value of the portfolio company interests to be contributed by Fund IV-A Cayman is approximately $2.31 billion. The aggregate adjusted tax basis of these interests is approximately $1.62 billion. The aggregate built-in gain with respect to these interests is approximately $690 million.

In exchange for the contribution of these portfolio company interests, Fund IV-A Cayman will receive a limited partnership interest in the Consolidated Master Fund LP. No other consideration — whether cash, debt, or other property — will be paid or transferred in connection with this exchange.

The Taxpayer intends that this contribution will be treated as a tax-free contribution of property to a partnership in exchange for a partnership interest under IRC § 721(a). Accordingly, no gain or loss will be recognized by Fund IV-A Cayman, by the Master Fund, or by any of Fund IV-A Cayman's limited partners on this contribution. The Master Fund's basis in the contributed portfolio company interests will equal Fund IV-A Cayman's adjusted basis in those interests immediately prior to the contribution, as provided under IRC § 723 (carryover basis). The Master Fund's holding period in the contributed interests will include Fund IV-A Cayman's holding period under IRC § 1223(2) (holding period tacking).

Step 3 — Contribution of Fund IV-B Luxembourg Assets (Target: October 15, 2025)

In the third step of the Reorganization, Fund IV-B (Luxembourg) SCSp will contribute all of its portfolio company interests to Solara Consolidated Master Fund LP. These interests include, among others, Fund IV-B Lux's 100% ownership of Crestline Cloud Solutions LLC (a disregarded entity).

The aggregate fair market value of the portfolio company interests to be contributed by Fund IV-B Lux is approximately €1.07 billion (approximately $1.16 billion at an exchange rate of 1.08 EUR/USD). The aggregate adjusted tax basis of these interests is approximately €782 million (approximately $844.6 million). The aggregate built-in gain with respect to these interests is approximately €288 million (approximately $311 million).

In exchange for the contribution of these portfolio company interests, Fund IV-B Lux will receive a limited partnership interest in the Consolidated Master Fund LP. No other consideration will be paid or transferred.

The Taxpayer intends that this contribution will be treated as a tax-free contribution under IRC § 721(a), with the same consequences as described above with respect to Step 2 (no gain or loss recognition, carryover basis under § 723, and holding period tacking under § 1223(2)).

In connection with Step 3, the Taxpayer notes that additional analysis is required regarding the potential application of IRC § 367 to the transfer of assets by a foreign partnership (Fund IV-B Lux, a Luxembourg SCSp classified as a partnership for U.S. tax purposes) to a domestic partnership (the Master Fund). As discussed in Section IV.C of this Ruling Request, the Taxpayer concludes that IRC § 367 does not apply because that provision, by its terms, governs only transfers to or from "corporations," and neither Fund IV-B Lux nor the Master Fund is classified as a corporation.

From a Luxembourg tax perspective, no Luxembourg capital gains tax is expected to be triggered at the SCSp level on the transfer of portfolio company interests to the Master Fund, pursuant to Article 3(2) of the Luxembourg law of July 12, 2013, on alternative investment fund managers, and the general Luxembourg tax rules applicable to SCSps, which are fiscally transparent entities for Luxembourg tax purposes.

The Taxpayer also notes that a § 1446 withholding analysis is required in connection with any deemed disposition occurring as part of this step; however, as discussed in Section IV.H of this Ruling Request, no withholding is required because the contribution is a nonrecognition transaction under § 721(a).

Step 4 — Contribution of Fund V Offshore Assets (Target: November 1, 2025)

In the fourth step of the Reorganization, the Fund V offshore vehicles will contribute all of their respective portfolio company interests to Solara Consolidated Master Fund LP:

(a) Fund V-A (Cayman) LP will contribute all of its portfolio company interests, including its 55% interest in Veridian Edge Computing Corp. and its 100% interest in Helix SaaS Holdings Ltd. The aggregate fair market value of these interests is approximately $2.89 billion. The aggregate adjusted tax basis is approximately $2.34 billion. The aggregate built-in gain is approximately $550 million.

(b) Fund V-B (Luxembourg) SCSp will contribute all of its portfolio company interests. The aggregate fair market value of these interests is approximately €1.29 billion (approximately $1.39 billion at 1.08 EUR/USD). The aggregate adjusted tax basis is approximately €1.14 billion (approximately $1.23 billion). The aggregate built-in gain is approximately €150 million (approximately $162 million).

Each contributing entity will receive a limited partnership interest in the Consolidated Master Fund LP in exchange for its contributed portfolio company interests. No other consideration will be paid or transferred.

The same IRC § 721(a) nonrecognition treatment described above with respect to Steps 2 and 3 is intended to apply to each contribution in Step 4.

Step 5 — Dissolution of Legacy Offshore Vehicles and LP Migration (Target: December 1, 2025)

In the fifth and final step of the Reorganization, 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 — will dissolve in accordance with the applicable laws of their respective jurisdictions and distribute their sole remaining asset (i.e., their respective partnership interests in the Consolidated Master Fund LP) to their existing limited partners.

Following the dissolution of the Legacy Offshore Vehicles, the limited partners of those vehicles will be allocated to the appropriate successor investment vehicle as follows:

(a) Non-U.S. Limited Partners (including Nordhaven Sovereign Wealth Fund and Kestrel Pacific Insurance Group) will subscribe for limited partnership interests in Solara International Feeder (Cayman) LP, contributing the Master Fund interests they received in the dissolution distribution. The International Feeder will thereafter hold limited partnership interests in the Master Fund on behalf of its limited partners.

(b) U.S. Tax-Exempt Limited Partners (including Pinnacle State Employees' Retirement System and Grandview University Endowment) will subscribe for limited partnership interests in Solara Tax-Exempt Feeder (Cayman) LP, contributing the Master Fund interests they received in the dissolution distribution. The Tax-Exempt Feeder will thereafter hold limited partnership interests in the Master Fund on behalf of its limited partners.

The Taxpayer intends that the distributions of partnership interests in the Master Fund by the dissolving Legacy Offshore Vehicles to their limited partners will be treated as tax-free distributions of property under IRC § 731(a). No gain is recognized under § 731(a)(1) because the distributed property consists solely of partnership interests in the Master Fund, which are not "money" and are not "marketable securities" treated as money under § 731(c). No loss is recognized under § 731(b) on the in-kind distribution.

An analysis of whether the distributed Master Fund interests constitute "marketable securities" under § 731(c) is set forth in Section IV.E of this Ruling Request. The Taxpayer concludes that the distributed interests do not constitute marketable securities because they are not actively traded on an established securities market or readily tradable on a secondary market.

Resulting Post-Reorganization Structure

Upon completion of all five steps of the Reorganization on or about December 1, 2025, the Solara fund platform will be organized as follows:

• Solara Consolidated Master Fund LP will be the central investment vehicle, directly holding all portfolio company interests formerly held by the Legacy Offshore Vehicles. The Master Fund will be a Delaware limited partnership classified as a partnership for U.S. federal income tax purposes.

• Solara International Feeder (Cayman) LP will invest as a limited partner in the Master Fund on behalf of non-U.S. investors. It will be a Cayman Islands exempted limited partnership classified as a partnership for U.S. federal income tax purposes.

• Solara Tax-Exempt Feeder (Cayman) LP will invest as a limited partner in the Master Fund on behalf of U.S. tax-exempt investors. It will be a Cayman Islands exempted limited partnership classified as a partnership for U.S. federal income tax purposes. The Tax-Exempt Feeder will maintain a UBTI blocker structure through its subsidiary holding companies.

• Fund IV LP and Fund V LP (the Delaware Main Funds) will continue to hold their existing direct portfolio company interests and will co-invest alongside the Master Fund on a going-forward basis. U.S. taxable investors (such as Argyle Family Office Holdings LLC) will remain directly invested in the Delaware Main Funds.

Visual depictions of the pre-reorganization structure, the post-reorganization structure, and the step-by-step transaction flow are set forth in Exhibits A (Organizational Charts — Pre-Reorganization), B (Organizational Charts — Post-Reorganization), and C (Step Transaction Diagrams), respectively, each of which is attached hereto and incorporated herein by reference.

G. Aggregate Financial Summary of the Reorganization

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

All conversions from euros to U.S. dollars in this Ruling Request are based on a uniform exchange rate of 1.08 EUR/USD, which approximates the average exchange rate for the six-month period ending June 30, 2025. To the extent that actual exchange rates at the time of each step of the Reorganization differ from 1.08 EUR/USD, the Taxpayer will adjust the relevant calculations accordingly and will provide updated figures to the Service upon request.

H. Entity Classification

Each of the Legacy Offshore Vehicles (Fund IV-A Cayman, Fund IV-B Lux, Fund V-A Cayman, and Fund V-B Lux) is currently classified as a partnership for U.S. federal income tax purposes. Each Legacy Offshore Vehicle has two or more partners and is an "eligible entity" under Treas. Reg. § 301.7701-3(a). The Cayman exempted limited partnerships filed Form 8832 elections to be classified as partnerships, and the Luxembourg SCSps are classified as partnerships by default under the check-the-box regulations (as foreign eligible entities with two or more members that have not elected corporate classification).

As discussed in Step 1, each of the New 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 under Treas. Reg. § 301.7701-3. Each New Entity will have at least two members or partners and will satisfy the requirements for classification as an "eligible entity" under Treas. Reg. § 301.7701-3(a).

I. Existing Liabilities and Credit Facilities

The following liabilities and credit facilities are relevant to the Reorganization:

Fund IV Subscription Revolving Credit Facility. Fund IV LP maintains a $1.1 billion subscription revolving credit facility with Ashford National Bank, N.A. This facility is secured by the uncalled capital commitments of Fund IV LP's limited partners and is used to fund portfolio company investments on an interim basis pending capital calls. The Fund IV subscription facility is not being transferred, assumed, or otherwise directly affected by the Reorganization, although the fund's portfolio co-investment arrangements will be modified to reflect the Master Fund structure.

Fund V Subscription Revolving Credit Facility. Fund V LP maintains a $1.5 billion subscription revolving credit facility with Ashford National Bank, N.A. (as co-lender) and Sentinel Capital Markets LLC (as administrative agent). This facility is similarly secured by uncalled capital commitments and is used for interim investment financing. The Fund V subscription facility is likewise not being directly transferred or assumed as part of the Reorganization.

Portfolio-Level Liabilities. The Legacy Offshore Vehicles have aggregate portfolio-level liabilities of approximately $1.34 billion. These liabilities consist of indebtedness incurred at the portfolio company level that is allocable to the Legacy Offshore Vehicles under the partnership agreements and the applicable IRC § 752 regulations. In connection with the Reorganization, these liabilities will be assumed by (or will become allocable to) the Consolidated Master Fund LP as a result of the contributions in Steps 2–4. The § 752 implications of this liability assumption are analyzed in detail in Section IV.F of this Ruling Request and in the schedules set forth in Exhibit E.

The Taxpayer notes that lender consents under the existing subscription credit agreements are being separately sought from Ashford National Bank, N.A. and Sentinel Capital Markets LLC in connection with the Reorganization. The status of those consent processes is separate from and not the subject of this Ruling Request.

J. Existing § 704(c) Method

Each of the Legacy Offshore Vehicles currently employs the remedial allocation method under Treas. Reg. § 1.704-3(d) for tracking built-in gain and loss with respect to contributed properties. This method was elected by the general partner of each Legacy Offshore Vehicle in accordance with the partnership agreement and has been consistently applied since the formation of each vehicle.

The remedial allocation method was selected because it eliminates the ceiling rule distortions that can arise under the traditional method (Treas. Reg. § 1.704-3(b)) and provides the most equitable allocation of built-in gain among the partners of the Legacy Offshore Vehicles, particularly in the context of a diverse investor base that includes U.S. taxable investors, U.S. tax-exempt investors, and non-U.S. investors.

The Taxpayer intends for the Consolidated Master Fund LP to continue using the remedial allocation method under Treas. Reg. § 1.704-3(d) for each contributed property, consistent with the method elected by the Legacy Offshore Vehicles. This continuation is appropriate in the context of a nonrecognition contribution under § 721(a), where the Master Fund succeeds to the existing § 704(c) obligations of the contributing partnerships.

K. Additional Relevant Facts

The following additional facts are relevant to the Reorganization and are provided for the Service's consideration:

(a) Independent Valuations. Independent valuations of all portfolio company interests being transferred in the Reorganization are currently being prepared by Redstone Advisory Group LLC, an independent valuation firm with offices in New York, New York and Chicago, Illinois. Redstone has been engaged by Solara's General Counsel to provide fair market value determinations as of the effective dates of each step of the Reorganization. Preliminary valuation reports have been completed and form the basis for the fair market value figures set forth in this Ruling Request. Final valuation reports will be completed prior to the commencement of Step 2 and will be made available to the Service upon request.

(b) Historical Financial and Tax-Basis Records. Historical financial data and tax-basis records for all portfolio company interests are maintained by Caldwell Pierce & Co. LLP, an independent accounting firm that serves as the Taxpayer's auditor and tax return preparer. Caldwell Pierce has provided the adjusted tax basis figures set forth in this Ruling Request based on its review of the historical capital accounts, depreciation schedules, and tax return workpapers for each Legacy Offshore Vehicle.

(c) Fund Administration. Fund administration services for all offshore vehicles are currently provided by Clarendon Fund Services Ltd., a Cayman Islands-based fund administrator with offices in George Town, Grand Cayman and Dublin, Ireland. Clarendon manages net asset value calculations, investor reporting, capital call and distribution processing, and regulatory compliance filings for each Legacy Offshore Vehicle. Following the Reorganization, Clarendon's mandate will be restructured to reflect the simplified master-feeder architecture.

(d) No Pending Dispositions. No portfolio company interests have been disposed of or are expected to be disposed of between the date of this Ruling Request and the target completion of the Reorganization on December 1, 2025. The Taxpayer is not currently in discussions with potential acquirers for any portfolio company, and no letter of intent, memorandum of understanding, or term sheet has been executed or is under negotiation with respect to the sale of any portfolio company interest.

(e) Insurance Coverage. Solara maintains directors' and officers' ("D&O") and errors and omissions ("E&O") insurance coverage with an aggregate limit of $50 million, underwritten by Hawkstone Specialty Insurance Co. This coverage extends to the officers, directors, and managers of Solara Digital Infrastructure GP LLC and each of the fund-level general partner entities.

III. APPLICABLE LAW

A. IRC § 721(a) — Nonrecognition of Gain or Loss on Contribution to Partnership

Section 721(a) of the Internal Revenue Code provides 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 provision establishes a broad nonrecognition rule that reflects the foundational principle of Subchapter K: a contribution of property to a partnership in exchange for a partnership interest is merely a change in the form in which the contributing partner holds its investment, not a realization event warranting taxation. The contributing partner's economic interest in the contributed property continues through the partnership interest received, and the partnership holds the contributed property with a carryover basis and tacked holding period.

The policy underlying § 721 is analogous to that underlying IRC § 351 in the corporate context. Both provisions rest on the premise that a mere change in the form of ownership — from direct ownership to ownership through an entity — should not be treated as a taxable event where the taxpayer retains a continuing interest in the contributed property. Congress enacted § 721 to facilitate the formation and capitalization of partnerships without imposing tax friction that would discourage efficient combination of property and services.

Section 721(a) applies to contributions by any "partner," including an entity that is itself a partnership. When a partnership contributes property to another partnership in exchange for a partnership interest, the contributing partnership acts in its capacity as a partner of the receiving partnership. There is no requirement in § 721(a) that the contributing partner be an individual or a particular type of entity; the statute applies broadly to any partner contributing property in exchange for a partnership interest.

Section 723 of the Code provides the basis rules that complement § 721. Under § 723, the basis of property contributed to a partnership by a partner is the adjusted basis of such property to the contributing partner at the time of the contribution. This "carryover basis" rule ensures that the built-in gain or loss inherent in contributed property is preserved and will be recognized when the partnership ultimately disposes of the property.

Section 1223(2) of the Code provides that a partnership's holding period in contributed property includes the contributing partner's holding period. This "holding period tacking" rule is a natural corollary of the carryover basis rule and ensures that the character of gain or loss (long-term or short-term) is determined by reference to the contributing partner's total period of ownership.

B. IRC § 721(b) — Investment Company Exception

Section 721(b) provides an important exception to the general nonrecognition rule of § 721(a). Under § 721(b), the nonrecognition rule of § 721(a) "shall not apply to gain realized on a transfer of property to a partnership which would be treated as an investment company (within the meaning of section 351) if the partnership were incorporated." This exception is designed to prevent taxpayers from using partnership formations to achieve tax-free diversification of investment portfolios — a result that Congress determined should not be available without gain recognition.

The "investment company" concept referenced in § 721(b) is defined by cross-reference to IRC § 351 and, specifically, to Treasury Regulations § 1.351-1(c)(1)(ii). Under those regulations, a transfer to a controlled corporation constitutes a transfer to 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 from consideration) are held for investment and are readily marketable stocks or securities, or interests in regulated investment companies or real estate investment trusts.

The regulations further define "stocks and securities" to include stocks, securities, money, and certain other investment assets, but they draw a clear distinction between passive investment assets (such as publicly traded stocks and bonds) and interests in operating businesses. The critical inquiry is whether the assets held by the transferee partnership, viewed in the aggregate, consist predominantly of passive investment assets or, alternatively, of interests in operating businesses with employees, revenues, and ongoing business activities.

C. IRC § 367(a) and § 367(b) — Transfers Involving Foreign Corporations

Section 367 of the Code addresses the U.S. tax consequences of certain transfers of property involving foreign corporations. Section 367(a)(1) provides that, in the case of any exchange described in sections 332, 351, 354, 356, or 361, if the transfer is by a United States person of property to a foreign corporation, the foreign corporation shall not be considered a corporation for purposes of determining the extent to which gain shall be recognized on such transfer. In effect, § 367(a) denies the benefit of the corporate nonrecognition provisions (such as § 351) when a U.S. person transfers appreciated property to a foreign corporation, unless certain exceptions apply.

Section 367(b) provides a complementary rule for exchanges described in sections 332, 351, 354, 355, 356, or 361 "in connection with which there is no transfer of property described in section 367(a)(1)." Under § 367(b), the Secretary is authorized to prescribe regulations that are necessary or appropriate to prevent the avoidance of federal income taxes in such exchanges.

Both sections 367(a) and 367(b) apply, by their express statutory terms, only to transfers to or from "corporations." The term "corporation" for purposes of § 367 is defined by reference to the general entity classification rules of IRC § 7701 and Treas. Reg. § 301.7701-2 and -3. An entity that is classified as a partnership for U.S. federal income tax purposes is not a "corporation" within the meaning of § 367.

The legislative history of § 367 confirms that the provision was designed to address the specific concerns arising from corporate-level transactions — principally, the risk that U.S. persons would transfer appreciated property to foreign corporations in tax-free exchanges under § 351 or the reorganization provisions, thereby moving the built-in gain outside the U.S. taxing jurisdiction. These concerns do not arise in the same manner in the partnership context, where the pass-through nature of partnership taxation generally ensures that U.S. partners remain subject to U.S. tax on their allocable shares of partnership income.

The Service has previously confirmed in published guidance and private letter rulings that § 367 does not apply to partnership-to-partnership transfers. See, e.g., Rev. Rul. 87-85, 1987-2 C.B. 395 (addressing transfers involving partnerships and confirming that § 367 applies to transfers to or from "corporations"). The Taxpayer relies on these authorities in concluding that § 367 is inapplicable to the Reorganization.

D. IRC § 731(a) — Distribution of Property by Partnership

Section 731(a) of the Code governs the tax treatment of distributions of property by a partnership to a partner. Under § 731(a)(1), gain is recognized by a distributee partner only to the extent that money distributed exceeds the adjusted basis of the partner's interest in the partnership immediately before the distribution. Under § 731(a)(2), loss is recognized only in certain circumstances involving liquidating distributions consisting solely of money, unrealized receivables, and inventory items, and only to the extent that the adjusted basis of the partner's interest exceeds the amount of money and the basis of unrealized receivables and inventory received.

Section 731(b) provides the corresponding rule for the distributing partnership: "[n]o gain or loss shall be recognized to a partnership on a distribution to a partner of property, including money."

The term "money" in § 731(a)(1) includes cash and, pursuant to § 731(c) (discussed below), may include marketable securities in certain circumstances. However, § 731(a)(1) does not treat in-kind distributions of property other than money as triggering gain recognition (except to the extent that deemed distributions of money under § 752(b) are also implicated, as discussed below).

When a partnership distributes in-kind property (such as a partnership interest in another partnership) to a partner in liquidation of the partner's partnership interest, the general rule of § 731(a) applies: gain is recognized only to the extent that money distributed exceeds the adjusted basis of the partner's interest, and no gain is recognized on the receipt of non-money property. The distributee partner takes a basis in the distributed property determined under § 732 (substituted basis), and the partnership recognizes no gain or loss under § 731(b).

E. IRC § 731(c) — Marketable Securities Treated as Money

Section 731(c)(1) provides that, for purposes of § 731(a)(1) and (b), "the term 'money' includes marketable securities," and that such securities "shall be taken into account at their fair market value as of the date of the distribution." This provision was enacted by Congress to prevent taxpayers from using partnerships as vehicles for the tax-free distribution of readily tradable financial instruments, which can function as the economic equivalent of cash.

Section 731(c)(2)(A) defines "marketable securities" as "financial instruments and foreign currencies which are, as of the date of the distribution, actively traded (within the meaning of section 1092(d)(1))." Section 1092(d)(1), in turn, defines "actively traded" personal property as property for which there is an established financial market.

The term "financial instruments" is broadly defined in § 731(c)(2)(B) to include stocks, other equity interests, evidences of indebtedness, options, forward or futures contracts, notional principal contracts, and derivatives, among other items. However, regardless of how broadly the term "financial instruments" is defined, an instrument can constitute a "marketable security" under § 731(c) only if it is "actively traded" as of the date of distribution.

Section 731(c)(3) sets forth several exceptions to the general rule that marketable securities are treated as money. These exceptions include, among others:

(i) The "investment partnership" exception under § 731(c)(3)(A)(iii), which provides that § 731(c) does not apply to the distribution of a marketable security by an investment partnership to an eligible partner. For purposes of this exception, an "investment partnership" is a partnership that has never been engaged in a trade or business and substantially all of whose assets (by value) have always consisted of certain enumerated types of investment assets.

(ii) The "contributed-securities" exception under § 731(c)(3)(B), which provides that § 731(c) does not apply to the distribution of a marketable security if the security was contributed to the partnership by the distributee partner.

F. IRC § 752 — Treatment of Certain Liabilities

Section 752 of the Code governs the treatment of partnership liabilities for purposes of determining the partners' bases in their partnership interests. Section 752(a) provides that any increase in a partner's share of the liabilities of a partnership, or any increase in a partner's individual liabilities by reason of the assumption by such partner of partnership liabilities, shall be considered as a contribution of money by such partner to the partnership. Section 752(b) provides the converse rule: any decrease in a partner's share of the liabilities of a partnership, or any decrease in a partner's individual liabilities by reason of the assumption by the partnership of such individual liabilities, shall be considered as a distribution of money by the partnership to such partner.

The deemed contributions and deemed distributions arising under § 752(a) and § 752(b) interact with the nonrecognition rules of § 721 and § 731, respectively. A deemed distribution of money under § 752(b) can trigger gain recognition under § 731(a)(1) if the amount of the deemed distribution exceeds the adjusted basis of the partner's partnership interest.

Treasury Regulations § 1.752-1(f) provides a critical netting rule that applies when increases and decreases in a partner's share of partnership liabilities occur as part of a single transaction. Under the netting rule, if, as part of the same transaction, a partner's share of partnership liabilities increases and decreases (or a partner's individual liabilities increase by reason of the assumption of partnership liabilities and the partner's share of other partnership liabilities decreases), the increases and decreases are netted to determine a net deemed contribution under § 752(a) or a net deemed distribution under § 752(b). This netting rule prevents the mechanical application of §§ 752(a) and 752(b) from producing gain recognition in transactional contexts where the overall economic result for the partner is neutral or involves a net increase in liability share.

The regulations under §§ 1.752-1 through 1.752-4 also contain detailed rules governing the allocation of partnership liabilities among the partners, including rules for recourse liabilities (allocated based on the economic risk of loss borne by each partner under Treas. Reg. § 1.752-2) and nonrecourse liabilities (allocated based on a three-tier system under Treas. Reg. § 1.752-3). In the context of tiered partnerships — where a partnership holds an interest in another partnership — the regulations provide look-through rules for determining each partner's indirect share of the lower-tier partnership's liabilities.

G. IRC § 704(c) — Allocations with Respect to Contributed Property

Section 704(c)(1)(A) of the Code provides that, in the case of property contributed to a partnership, "income, gain, loss, and deduction with respect to such property shall be shared among the partners so as to take account of t

PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT — ATTORNEY-CLIENT COMMUNICATION
CALDERWOOD & HARKNESS LLP Attorneys at Law
1900 K Street NW, Suite 1100 Washington, DC 20006 Telephone: (202) 555-7400 Facsimile: (202) 555-7401 www.calderwoodharkness.com
DRAFT — Version 4.0 — Final Circulated Draft — For Internal Sign-Off
August 1, 2025
Engagement Number: 20250527-SDILP-PLR
Internal Revenue Service
Attn: Office of the Associate Chief Counsel (International)
CC:INTL 1111 Constitution Avenue NW Washington, DC 20224
Copies to: Office of the Associate Chief Counsel (Passthroughs & Special Industries) CC:PSI 1111 Constitution Avenue NW Washington, DC 20224
Re: Request for Private Letter Ruling on behalf of Solara Digital Infrastructure LP (EIN: 82-4917366) and Related Entities
Dear Sir or Madam:
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I. INTRODUCTORY SECTION
A. Identification of Requesting Taxpayer and Representatives
On behalf of Solara Digital Infrastructure LP, a Delaware limited partnership (Employer Identification Number: 82-4917366), with its principal place of business at 1200 Market Street, Suite 3400, Wilmington, Delaware 19801 (the "Taxpayer" or "Solara"), and the related entities identified herein, we respectfully submit this request for a private letter ruling (this "Ruling Request") from the Internal Revenue Service (the "Service" or "IRS"). Solara Digital Infrastructure LP is a registered private equity sponsor that operates through multiple fund vehicles in the United States, the Cayman Islands, and the Grand Duchy of Luxembourg, as more fully described below.
The general partner of Solara Digital Infrastructure LP is Solara Digital Infrastructure GP LLC, a Delaware limited liability company (Employer Identification Number: 82-4917365), with its principal office at the same address. Viktor Raines serves as the Managing Partner and Founder of Solara Digital Infrastructure GP LLC and exercises day-to-day management authority over the Taxpayer and its affiliated entities.
This Ruling Request is submitted pursuant to Revenue Procedure 2025-1 (and any applicable successor or supplemental guidance), which sets forth the procedures for obtaining letter rulings and determination letters from the Service. The Taxpayer hereby requests rulings with respect to the United States federal income tax consequences of a proposed multi-step cross-border reorganization of the Solara fund platform, as described in detail in this Ruling Request.
The Taxpayer's authorized representatives in connection with this Ruling Request, designated pursuant to Form 2848 (Power of Attorney and Declaration of Representative), which has been previously filed with the Service and a copy of which is enclosed herewith, are:
Leonard Cross Responsible Partner, Tax Calderwood & Harkness LLP 1900 K Street NW, Suite 1100 Washington, DC 20006 Telephone: (202) 555-7418 Facsimile: (202) 555-7401
Email: lcross@calderwoodharkness.com
CAF Number: 4827-39152-R
Sylvia Hartwell Billing Partner, Tax Calderwood & Harkness LLP 600 Lexington Avenue, 38th Floor New York, NY 10022 Telephone: (212) 555-3200 Facsimile: (212) 555-3201
Email: shartwell@calderwoodharkness.com
CAF Number: 4827-41873-R
All correspondence and communications regarding this Ruling Request should be directed to Leonard Cross at the address set forth above, with a copy to Sylvia Hartwell.
Enclosed with this Ruling Request is a user fee payment in the amount of $38,000.00, submitted in accordance with the Schedule of User Fees set forth in Appendix A of Revenue Procedure 2025-1. This fee corresponds to the category applicable to ruling requests involving multiple entities with combined assets exceeding $50,000,000. Wire transfer confirmation for this payment is attached hereto.
The Taxpayer and its representatives participated in a pre-submission conference with the Office of the Associate Chief Counsel (International), CC:INTL Branch 1, held on July 22, 2025 (the "Pre-Submission Conference"). This Ruling Request reflects and incorporates the feedback and guidance received during that conference, including the identification of CC:PSI as a secondary jurisdiction for Subchapter K issues arising from the proposed reorganization.
B. Summary of Rulings Requested
The Taxpayer respectfully requests that the Service issue eight specific private letter rulings (collectively, the "Requested Rulings") addressing the United States federal income tax consequences of the proposed multi-step reorganization described herein. The Requested Rulings are set forth in full in Section VI of this Ruling Request and are briefly summarized as follows:
Ruling 1: The contributions of portfolio company interests by four offshore fund vehicles to a newly formed Delaware master fund partnership qualify for nonrecognition treatment under Internal Revenue Code ("IRC" or "Code") § 721(a).
Ruling 2: The newly formed master fund partnership does not constitute an "investment company" within the meaning of IRC § 721(b) and Treasury Regulations ("Treas. Reg.") § 1.351-1(c)(1)(ii).
Ruling 3: IRC § 367(a) and § 367(b) do not apply to the contributions because those provisions apply only to transfers to or from corporations, and the receiving entity is classified as a partnership for U.S. federal income tax purposes.
Ruling 4: The distributions by the dissolving offshore fund vehicles of partnership interests in the master fund to their respective limited partners qualify for nonrecognition treatment under IRC § 731(a), and IRC § 731(c) does not apply because the distributed interests are not "marketable securities."
Ruling 5: The shifts in partner-level shares of liabilities resulting from the reorganization do not trigger gain recognition under IRC §§ 752(a), 752(b), and 731, taking into account the netting rule of Treas. Reg. § 1.752-1(f) and the tiered partnership rules.
Ruling 6: The built-in gain and loss accounts tracked under IRC § 704(c) by the contributing offshore vehicles carry over to the master fund, and the master fund may continue to use the remedial allocation method under Treas. Reg. § 1.704-3(d).
Ruling 7: No withholding is required under IRC § 1446(a) in connection with the contributions or distributions comprising the reorganization.
Ruling 8: The newly formed master fund and two newly formed Cayman feeder vehicles are each properly classified as partnerships for U.S. federal income tax purposes under Treas. Reg. § 301.7701-3.
The Requested Rulings relate to a proposed multi-step cross-border reorganization of Solara's fund platform (the "Reorganization"), which involves the domestication and consolidation of Cayman Islands and Luxembourg fund vehicles into a newly established Delaware-domiciled master fund structure. The Reorganization is described in detail in Section II.F of this Ruling Request and is depicted visually in the organizational charts and step transaction diagrams attached hereto as Exhibits A, B, and C.
C. Identification of All Entities Involved
The following table identifies each entity involved in or affected by the Reorganization, including the entity's full legal name, short name used herein, entity type, jurisdiction of organization, Employer Identification Number (where applicable), and role in the Reorganization:
For purposes of this Ruling Request, Fund IV-A Cayman, Fund IV-B Lux, Fund V-A Cayman, and Fund V-B Lux are collectively referred to as the "Legacy Offshore Vehicles" or the "Contributing Entities." Fund IV LP and Fund V LP are collectively referred to as the "Delaware Main Funds." The Master Fund, the International Feeder, and the Tax-Exempt Feeder are collectively referred to as the "New Entities."
The registered agent for all Delaware entities is Capitol Registered Agents Inc., located at 850 New Burton Road, Suite 201, Dover, Delaware 19904. The registered office for all Cayman Islands entities is Harborstone Corporate Services Ltd., P.O. Box 2714, 94 Solaris Avenue, George Town, Grand Cayman KY1-1111, Cayman Islands. The registered office for all Luxembourg entities is 14, rue Jean-Pierre Brasseur, L-1258 Luxembourg, Grand Duchy of Luxembourg.
II. STATEMENT OF FACTS
A. Background of Solara Digital Infrastructure LP
Solara Digital Infrastructure LP was founded on March 17, 2014 as a Delaware limited partnership. Since its founding, Solara has established itself as a leading private equity sponsor focused on investments in digital infrastructure — including data centers, fiber-optic networks, and edge computing facilities — as well as enterprise software-as-a-service ("SaaS") platforms. Solara's investment thesis centers on the rapidly growing demand for digital infrastructure driven by cloud computing, artificial intelligence workloads, and the proliferation of data-intensive applications across industries.
As of March 31, 2025, Solara manages approximately $14.7 billion in assets under management ("AUM") across its fund platform, which currently encompasses six parallel fund vehicles spanning three jurisdictions: the State of Delaware, the Cayman Islands, and the Grand Duchy of Luxembourg. Solara's fund platform is supported by a team of approximately 85 investment professionals and 45 operational and administrative staff based in offices in Wilmington, Delaware; New York, New York; and London, England.
The key personnel of Solara relevant to this Ruling Request are as follows:
• Viktor Raines, Managing Partner & Founder, age 52. Mr. Raines founded Solara in 2014 after serving for twelve years as a Senior Managing Director at Havensgate Capital Partners, where he led Havensgate's technology and infrastructure investment practice. Mr. Raines holds a B.S. in Electrical Engineering from the Massachusetts Institute of Technology and an M.B.A. from the Wharton School of the University of Pennsylvania.
• Meredith Tsao, Chief Operating Officer, age 47. Ms. Tsao oversees Solara's operations, investor relations, and fund administration functions. Prior to joining Solara in 2016, Ms. Tsao served as a Managing Director at BlackRidge Advisors LLC.
• Douglas Wexford, Chief Financial Officer, age 50. Mr. Wexford is responsible for Solara's financial reporting, treasury operations, and tax compliance functions. Mr. Wexford previously served as a partner in the Financial Services Tax practice of Caldwell Pierce & Co. LLP.
• Priya Narasimhan, General Counsel, age 44. Ms. Narasimhan leads Solara's legal and regulatory compliance functions and serves as secretary to the boards of Solara's general partner entities. Ms. Narasimhan previously practiced law at Whitfield, Carruthers & Doyle LLP.
• Stefan Dalmqvist, Head of Tax, age 46. Mr. Dalmqvist directs Solara's tax planning, structuring, and compliance across all fund vehicles and portfolio companies. Mr. Dalmqvist previously served as a Vice President in the Tax Department at Ashford National Bank, N.A.
B. Existing Fund Platform Structure
Solara currently operates its investment activities through a parallel fund structure consisting of six fund vehicles organized across three jurisdictions. This multi-vehicle parallel structure was originally established to accommodate the diverse tax, regulatory, and reporting needs of Solara's investor base, which includes United States taxable investors, United States tax-exempt investors (including pension funds and university endowments), and non-U.S. investors (including sovereign wealth funds and insurance companies).
The rationale for the parallel structure is as follows:
• U.S. Taxable Investors invest through the Delaware Main Funds (Fund IV LP and Fund V LP), which are organized as Delaware limited partnerships and are classified as partnerships for U.S. federal income tax purposes. U.S. taxable investors receive pass-through treatment of income, gain, loss, deduction, and credit items.
• U.S. Tax-Exempt Investors invest through the Cayman parallel vehicles (Fund IV-A Cayman and Fund V-A Cayman), which provide a blocker structure through offshore corporate subsidiary holding companies. This structure is designed to mitigate concerns regarding unrelated business taxable income ("UBTI") that could otherwise arise under IRC §§ 511–514 if tax-exempt investors held direct interests in leveraged operating businesses through a pass-through partnership vehicle.
• Non-U.S. Investors invest through either the Cayman parallel vehicles or the Luxembourg parallel vehicles, depending on tax treaty access requirements, regulatory considerations in the investor's home jurisdiction, and investor preference. The Luxembourg SCSp (société en commandite spéciale) structure was selected for certain European and Asian investors based on Luxembourg's extensive network of bilateral tax treaties and the favorable regulatory framework under Luxembourg law.
Each set of parallel fund vehicles invests on a pro rata, side-by-side basis alongside the corresponding Delaware Main Fund in the same portfolio companies, subject to minor variations for regulatory, tax, or contractual reasons. The parallel structure ensures that all investors in a given fund vintage participate proportionally in the same investment opportunities.
Fund IV Complex
The Fund IV complex consists of three parallel fund vehicles with a 2021 vintage:
Solara Digital Partners Fund IV LP ("Fund IV LP"): A Delaware limited partnership with $4.2 billion in total capital commitments. The general partner of Fund IV LP is Solara Digital Infrastructure GP LLC. As of March 31, 2025, approximately 72% of Fund IV LP's committed capital has been deployed across its portfolio company investments. Fund IV LP holds interests in eleven portfolio companies (collectively with the parallel vehicles) in the digital infrastructure and enterprise SaaS sectors.
Solara Digital Partners Fund IV-A (Cayman) LP ("Fund IV-A Cayman"): A Cayman Islands exempted limited partnership with $1.85 billion in total capital commitments. Fund IV-A Cayman is registered with the Cayman Islands Monetary Authority under registration number CIMA MF-72491. Its general partner is Solara Offshore GP Ltd., a Cayman Islands exempted company. Fund IV-A Cayman invests alongside Fund IV LP on a parallel basis.
Solara Digital Partners Fund IV-B (Luxembourg) SCSp ("Fund IV-B Lux"): A Luxembourg special limited partnership (société en commandite spéciale) with €1.15 billion in total capital commitments (approximately $1.24 billion at an exchange rate of 1.08 EUR/USD). Fund IV-B Lux is registered with the Luxembourg Trade and Companies Register under number RCS B 248193. Its general partner (associé commandité) is Solara Luxembourg Management S.à r.l. (RCS B 248194). Fund IV-B Lux invests alongside Fund IV LP and Fund IV-A Cayman on a parallel basis.
Fund V Complex
The Fund V complex consists of three parallel fund vehicles with a 2023 vintage:
Solara Digital Partners Fund V LP ("Fund V LP"): A Delaware limited partnership with $5.6 billion in total capital commitments. The general partner of Fund V LP is Solara Digital Infrastructure GP LLC. As of March 31, 2025, approximately 38% of Fund V LP's committed capital has been deployed across its portfolio company investments. Fund V LP holds interests in twelve portfolio companies (collectively with the parallel vehicles) in the digital infrastructure and enterprise SaaS sectors.
Solara Digital Partners Fund V-A (Cayman) LP ("Fund V-A Cayman"): A Cayman Islands exempted limited partnership with $2.45 billion in total capital commitments. Fund V-A Cayman is registered with the Cayman Islands Monetary Authority under registration number CIMA MF-89103. Its general partner is Solara Offshore GP Ltd.
Solara Digital Partners Fund V-B (Luxembourg) SCSp ("Fund V-B Lux"): A Luxembourg SCSp with €1.38 billion in total capital commitments (approximately $1.49 billion at an exchange rate of 1.08 EUR/USD). Fund V-B Lux is registered with the Luxembourg Trade and Companies Register under number RCS B 271056. Its general partner is Solara Luxembourg Management S.à r.l.
C. Representative Investors / Limited Partners
The following table sets forth representative investors across Solara's fund platform, organized by investor category, to illustrate the diversity of the Taxpayer's limited partner base and the relevance of the various Requested Rulings to different investor categories:
The foregoing is a representative sample and is not exhaustive. As of the date of this Ruling Request, the Fund IV complex has approximately 63 limited partners, and the Fund V complex has approximately 71 limited partners. No single investor holds more than 9.5% of the capital commitments to any individual fund vehicle.
D. Representative Portfolio Company Interests
The Legacy Offshore Vehicles collectively hold interests in 23 portfolio companies (eleven in the Fund IV complex and twelve in the Fund V complex). A complete schedule of all portfolio company interests is set forth in Exhibit D attached hereto. For purposes of illustrating the nature, value, and tax attributes of the assets involved in the Reorganization, the following representative portfolio company interests are described in detail:
1. NovaBright Data Systems Inc. A Delaware corporation engaged in the ownership and operation of hyperscale data center facilities located across seven metropolitan markets in the United States and two international locations (London and Singapore). NovaBright currently operates approximately 340 megawatts of data center capacity and employs over 2,800 individuals. As of the most recent independent valuation (prepared by Redstone Advisory Group LLC as of March 31, 2025), NovaBright has a fair market value of approximately $890 million, an aggregate adjusted tax basis of $520 million, and a corresponding built-in gain of $370 million. Ownership is split 60% by Fund IV-A Cayman and 40% by Fund IV LP.
2. Crestline Cloud Solutions LLC. A Delaware limited liability company that is a disregarded entity for U.S. federal income tax purposes, wholly owned by Fund IV-B Lux. Crestline operates a cloud-based SaaS platform serving enterprise customers in the financial services, healthcare, and logistics sectors. Crestline has a fair market value of €340 million (approximately $367 million at 1.08 EUR/USD), an adjusted tax basis of €195 million (approximately $211 million), and a built-in gain of €145 million (approximately $156 million). Crestline employs approximately 630 individuals across offices in Austin, Texas; Dublin, Ireland; and Bangalore, India.
3. Veridian Edge Computing Corp. A Delaware corporation engaged in the development and operation of edge computing infrastructure, including micro data centers and edge nodes positioned at the network periphery. Veridian's network encompasses over 1,200 edge nodes across North America and Western Europe. Veridian has a fair market value of approximately $1.12 billion, an adjusted tax basis of $780 million, and a built-in gain of $340 million. Ownership is split 55% by Fund V-A Cayman and 45% by Fund V LP. Veridian employs approximately 1,400 individuals.
4. Thorngate Fiber Networks LP. A Delaware limited partnership engaged in the ownership and operation of approximately 47,000 route miles of fiber-optic network infrastructure across the southeastern and midwestern United States. Thorngate has a fair market value of approximately $670 million, an adjusted tax basis of $490 million, and a built-in gain of $180 million. Thorngate is held 100% by Fund IV-A Cayman. Thorngate employs approximately 950 individuals.
5. Helix SaaS Holdings Ltd. A Cayman Islands exempted company that serves as a holding company for a portfolio of enterprise SaaS businesses primarily serving the healthcare technology and fintech verticals. Helix's subsidiaries collectively generate approximately $280 million in annual recurring revenue and employ approximately 1,100 individuals. Helix has a fair market value of approximately $445 million, an adjusted tax basis of $310 million, and a built-in gain of $135 million. Helix is held 100% by Fund V-A Cayman.
Each of the foregoing portfolio companies is an operating business with substantial revenues, employees, physical or digital infrastructure, and ongoing business operations. None of the portfolio company interests constitutes a passive investment in stocks, securities, or other financial instruments. A complete schedule of all 23 portfolio companies, including fair market values, adjusted tax bases, built-in gains, and ownership percentages, is set forth in Exhibit D.
E. Business Rationale for the Reorganization
The Reorganization is motivated by several compelling and bona fide business purposes, which are described below. The Reorganization is not motivated by tax avoidance considerations; rather, it is designed to simplify and rationalize the Taxpayer's existing fund platform in response to evolving regulatory, economic, and governance considerations.
(i) Operational Cost Reduction. Solara currently incurs approximately $3.8 million per annum in duplicative administrative, audit, regulatory, and fund administration costs attributable to the parallel vehicle structure across three jurisdictions. These costs include annual CIMA regulatory fees and filings for each Cayman vehicle, Luxembourg CSSF regulatory compliance costs, duplicative annual audit fees (separate auditors and audit reports are required for each Cayman and Luxembourg vehicle), fund administration fees payable to Clarendon Fund Services Ltd. for each offshore vehicle, and legal fees for ongoing corporate maintenance and regulatory compliance in each jurisdiction. The consolidation of the Legacy Offshore Vehicles into a single master fund structure is expected to eliminate the substantial majority of these duplicative costs, yielding annual savings estimated at approximately $3.2 million to $3.8 million.
(ii) OECD Pillar Two GloBE Rules. The Organisation for Economic Co-operation and Development's ("OECD") Pillar Two Global Anti-Base Erosion ("GloBE") rules, which establish a global minimum effective tax rate of 15% for large multinational enterprise groups, are expected to become effective for Solara's Luxembourg entities beginning with the fiscal year ending December 31, 2025. The GloBE rules, as transposed into Luxembourg domestic law pursuant to the EU Minimum Tax Directive (Council Directive (EU) 2022/2523), substantially diminish the historical tax benefits associated with the Luxembourg SCSp structure for Solara's fund platform. Specifically, the Income Inclusion Rule ("IIR") and the Undertaxed Profits Rule ("UTPR") may impose top-up tax obligations on certain constituent entities within Solara's organizational structure, thereby negating the principal tax-planning rationale for maintaining the Luxembourg parallel vehicles. The consolidation of the Luxembourg vehicles into the Delaware master fund structure is expected to simplify Solara's Pillar Two analysis and reduce the compliance burden associated with the GloBE rules.
(iii) Simplified Compliance under FATCA and CRS. The current parallel vehicle structure requires duplicative reporting under the Foreign Account Tax Compliance Act ("FATCA") (IRC §§ 1471–1474) and the Common Reporting Standard ("CRS") promulgated by the OECD and adopted by the Cayman Islands and Luxembourg. Each offshore vehicle is independently subject to FATCA and CRS registration, due diligence, and reporting obligations, which impose significant administrative burden and cost. The consolidation into a single master fund structure will reduce the number of reporting entities and streamline the Taxpayer's compliance processes.
(iv) LP-Requested Governance Simplification. The Limited Partner Advisory Committee ("LPAC") of Solara's fund platform has repeatedly expressed a preference for simplified governance and reduced structural complexity. At the LPAC meeting held on April 22, 2025, the LPAC endorsed the exploration of the platform reorganization by a vote representing 78% of committed capital across all fund vehicles. Limited partners have cited the complexity of the parallel structure — including the difficulty of tracking co-investment allocations across multiple vehicles and the administrative burden of receiving multiple Schedule K-1s and other tax reporting documents from different vehicles — as a significant concern that the Reorganization would address.
In addition to the foregoing business purposes, the Board of Managers of Solara Digital Infrastructure GP LLC unanimously approved the exploration and pursuit of the platform reorganization at its meeting held on March 14, 2025, following an extensive presentation by management and outside advisors.
F. The Proposed Reorganization — Multi-Step Transaction Description
The Reorganization consists of five integrated steps, to be executed in the order and on the approximate dates set forth below. Each step has independent legal significance and is separately documented under the applicable laws of Delaware, the Cayman Islands, and Luxembourg, as appropriate. The steps are as follows:
Step 1 — Formation of New Entities (Target: September 15, 2025)
The first step of the Reorganization involves the formation of four new entities that will constitute the post-reorganization master-feeder platform:
(a) Formation of Solara Consolidated Master Fund GP LLC as a Delaware limited liability company, which will serve as the general partner of the new master fund. Solara Consolidated Master Fund GP LLC will be wholly owned by Solara Digital Infrastructure GP LLC and will be managed by the same individuals who currently manage Solara's fund platform.
(b) Formation of Solara Consolidated Master Fund LP as a Delaware limited partnership, with Solara Consolidated Master Fund GP LLC serving as its sole general partner. The Master Fund will serve as the central pooled investment vehicle for all former offshore vehicle portfolio company interests following the Reorganization.
(c) Formation of Solara International Feeder (Cayman) LP as a Cayman Islands exempted limited partnership. The International Feeder will serve as the investment vehicle through which non-U.S. investors (including Nordhaven Sovereign Wealth Fund and Kestrel Pacific Insurance Group) will invest in the Master Fund following the Reorganization.
(d) Formation of Solara Tax-Exempt Feeder (Cayman) LP as a Cayman Islands exempted limited partnership. The Tax-Exempt Feeder will serve as the investment vehicle through which U.S. tax-exempt investors (including Pinnacle State Employees' Retirement System and Grandview University Endowment) will invest in the Master Fund following the Reorganization. The Tax-Exempt Feeder will continue to provide UBTI mitigation through its offshore corporate subsidiary holding structure.
Upon formation of each New Entity, the Taxpayer will file IRS Form 8832 (Entity Classification Election) to elect that each New Entity be classified as a partnership for U.S. federal income tax purposes under Treas. Reg. § 301.7701-3. For the Master Fund and Master Fund GP (as domestic eligible entities with at least two members), partnership classification is the default classification under the check-the-box regulations, but a protective Form 8832 election will be filed to confirm such classification. For the International Feeder and the Tax-Exempt Feeder (as foreign eligible entities), an affirmative Form 8832 election is required and will be timely filed with effective dates coordinated with the formation of each entity on or about September 15, 2025 — in each case, prior to the commencement of Step 2 on October 1, 2025.
Step 2 — Contribution of Fund IV-A Cayman Assets (Target: October 1, 2025)
In the second step of the Reorganization, Fund IV-A (Cayman) LP will contribute all of its portfolio company interests to Solara Consolidated Master Fund LP. These portfolio company interests consist of direct and indirect ownership interests in the portfolio companies held by Fund IV-A Cayman, including without limitation its 60% interest in NovaBright Data Systems Inc. and its 100% interest in Thorngate Fiber Networks LP.
The aggregate fair market value of the portfolio company interests to be contributed by Fund IV-A Cayman is approximately $2.31 billion. The aggregate adjusted tax basis of these interests is approximately $1.62 billion. The aggregate built-in gain with respect to these interests is approximately $690 million.
In exchange for the contribution of these portfolio company interests, Fund IV-A Cayman will receive a limited partnership interest in the Consolidated Master Fund LP. No other consideration — whether cash, debt, or other property — will be paid or transferred in connection with this exchange.
The Taxpayer intends that this contribution will be treated as a tax-free contribution of property to a partnership in exchange for a partnership interest under IRC § 721(a). Accordingly, no gain or loss will be recognized by Fund IV-A Cayman, by the Master Fund, or by any of Fund IV-A Cayman's limited partners on this contribution. The Master Fund's basis in the contributed portfolio company interests will equal Fund IV-A Cayman's adjusted basis in those interests immediately prior to the contribution, as provided under IRC § 723 (carryover basis). The Master Fund's holding period in the contributed interests will include Fund IV-A Cayman's holding period under IRC § 1223(2) (holding period tacking).
Step 3 — Contribution of Fund IV-B Luxembourg Assets (Target: October 15, 2025)
In the third step of the Reorganization, Fund IV-B (Luxembourg) SCSp will contribute all of its portfolio company interests to Solara Consolidated Master Fund LP. These interests include, among others, Fund IV-B Lux's 100% ownership of Crestline Cloud Solutions LLC (a disregarded entity).
The aggregate fair market value of the portfolio company interests to be contributed by Fund IV-B Lux is approximately €1.07 billion (approximately $1.16 billion at an exchange rate of 1.08 EUR/USD). The aggregate adjusted tax basis of these interests is approximately €782 million (approximately $844.6 million). The aggregate built-in gain with respect to these interests is approximately €288 million (approximately $311 million).
In exchange for the contribution of these portfolio company interests, Fund IV-B Lux will receive a limited partnership interest in the Consolidated Master Fund LP. No other consideration will be paid or transferred.
The Taxpayer intends that this contribution will be treated as a tax-free contribution under IRC § 721(a), with the same consequences as described above with respect to Step 2 (no gain or loss recognition, carryover basis under § 723, and holding period tacking under § 1223(2)).
In connection with Step 3, the Taxpayer notes that additional analysis is required regarding the potential application of IRC § 367 to the transfer of assets by a foreign partnership (Fund IV-B Lux, a Luxembourg SCSp classified as a partnership for U.S. tax purposes) to a domestic partnership (the Master Fund). As discussed in Section IV.C of this Ruling Request, the Taxpayer concludes that IRC § 367 does not apply because that provision, by its terms, governs only transfers to or from "corporations," and neither Fund IV-B Lux nor the Master Fund is classified as a corporation.
From a Luxembourg tax perspective, no Luxembourg capital gains tax is expected to be triggered at the SCSp level on the transfer of portfolio company interests to the Master Fund, pursuant to Article 3(2) of the Luxembourg law of July 12, 2013, on alternative investment fund managers, and the general Luxembourg tax rules applicable to SCSps, which are fiscally transparent entities for Luxembourg tax purposes.
The Taxpayer also notes that a § 1446 withholding analysis is required in connection with any deemed disposition occurring as part of this step; however, as discussed in Section IV.H of this Ruling Request, no withholding is required because the contribution is a nonrecognition transaction under § 721(a).
Step 4 — Contribution of Fund V Offshore Assets (Target: November 1, 2025)
In the fourth step of the Reorganization, the Fund V offshore vehicles will contribute all of their respective portfolio company interests to Solara Consolidated Master Fund LP:
(a) Fund V-A (Cayman) LP will contribute all of its portfolio company interests, including its 55% interest in Veridian Edge Computing Corp. and its 100% interest in Helix SaaS Holdings Ltd. The aggregate fair market value of these interests is approximately $2.89 billion. The aggregate adjusted tax basis is approximately $2.34 billion. The aggregate built-in gain is approximately $550 million.
(b) Fund V-B (Luxembourg) SCSp will contribute all of its portfolio company interests. The aggregate fair market value of these interests is approximately €1.29 billion (approximately $1.39 billion at 1.08 EUR/USD). The aggregate adjusted tax basis is approximately €1.14 billion (approximately $1.23 billion). The aggregate built-in gain is approximately €150 million (approximately $162 million).
Each contributing entity will receive a limited partnership interest in the Consolidated Master Fund LP in exchange for its contributed portfolio company interests. No other consideration will be paid or transferred.
The same IRC § 721(a) nonrecognition treatment described above with respect to Steps 2 and 3 is intended to apply to each contribution in Step 4.
Step 5 — Dissolution of Legacy Offshore Vehicles and LP Migration (Target: December 1, 2025)
In the fifth and final step of the Reorganization, 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 — will dissolve in accordance with the applicable laws of their respective jurisdictions and distribute their sole remaining asset (i.e., their respective partnership interests in the Consolidated Master Fund LP) to their existing limited partners.
Following the dissolution of the Legacy Offshore Vehicles, the limited partners of those vehicles will be allocated to the appropriate successor investment vehicle as follows:
(a) Non-U.S. Limited Partners (including Nordhaven Sovereign Wealth Fund and Kestrel Pacific Insurance Group) will subscribe for limited partnership interests in Solara International Feeder (Cayman) LP, contributing the Master Fund interests they received in the dissolution distribution. The International Feeder will thereafter hold limited partnership interests in the Master Fund on behalf of its limited partners.
(b) U.S. Tax-Exempt Limited Partners (including Pinnacle State Employees' Retirement System and Grandview University Endowment) will subscribe for limited partnership interests in Solara Tax-Exempt Feeder (Cayman) LP, contributing the Master Fund interests they received in the dissolution distribution. The Tax-Exempt Feeder will thereafter hold limited partnership interests in the Master Fund on behalf of its limited partners.
The Taxpayer intends that the distributions of partnership interests in the Master Fund by the dissolving Legacy Offshore Vehicles to their limited partners will be treated as tax-free distributions of property under IRC § 731(a). No gain is recognized under § 731(a)(1) because the distributed property consists solely of partnership interests in the Master Fund, which are not "money" and are not "marketable securities" treated as money under § 731(c). No loss is recognized under § 731(b) on the in-kind distribution.
An analysis of whether the distributed Master Fund interests constitute "marketable securities" under § 731(c) is set forth in Section IV.E of this Ruling Request. The Taxpayer concludes that the distributed interests do not constitute marketable securities because they are not actively traded on an established securities market or readily tradable on a secondary market.
Resulting Post-Reorganization Structure
Upon completion of all five steps of the Reorganization on or about December 1, 2025, the Solara fund platform will be organized as follows:
• Solara Consolidated Master Fund LP will be the central investment vehicle, directly holding all portfolio company interests formerly held by the Legacy Offshore Vehicles. The Master Fund will be a Delaware limited partnership classified as a partnership for U.S. federal income tax purposes.
• Solara International Feeder (Cayman) LP will invest as a limited partner in the Master Fund on behalf of non-U.S. investors. It will be a Cayman Islands exempted limited partnership classified as a partnership for U.S. federal income tax purposes.
• Solara Tax-Exempt Feeder (Cayman) LP will invest as a limited partner in the Master Fund on behalf of U.S. tax-exempt investors. It will be a Cayman Islands exempted limited partnership classified as a partnership for U.S. federal income tax purposes. The Tax-Exempt Feeder will maintain a UBTI blocker structure through its subsidiary holding companies.
• Fund IV LP and Fund V LP (the Delaware Main Funds) will continue to hold their existing direct portfolio company interests and will co-invest alongside the Master Fund on a going-forward basis. U.S. taxable investors (such as Argyle Family Office Holdings LLC) will remain directly invested in the Delaware Main Funds.
Visual depictions of the pre-reorganization structure, the post-reorganization structure, and the step-by-step transaction flow are set forth in Exhibits A (Organizational Charts — Pre-Reorganization), B (Organizational Charts — Post-Reorganization), and C (Step Transaction Diagrams), respectively, each of which is attached hereto and incorporated herein by reference.
G. Aggregate Financial Summary of the Reorganization
The following table summarizes the aggregate financial parameters of the Reorganization:
All conversions from euros to U.S. dollars in this Ruling Request are based on a uniform exchange rate of 1.08 EUR/USD, which approximates the average exchange rate for the six-month period ending June 30, 2025. To the extent that actual exchange rates at the time of each step of the Reorganization differ from 1.08 EUR/USD, the Taxpayer will adjust the relevant calculations accordingly and will provide updated figures to the Service upon request.
H. Entity Classification
Each of the Legacy Offshore Vehicles (Fund IV-A Cayman, Fund IV-B Lux, Fund V-A Cayman, and Fund V-B Lux) is currently classified as a partnership for U.S. federal income tax purposes. Each Legacy Offshore Vehicle has two or more partners and is an "eligible entity" under Treas. Reg. § 301.7701-3(a). The Cayman exempted limited partnerships filed Form 8832 elections to be classified as partnerships, and the Luxembourg SCSps are classified as partnerships by default under the check-the-box regulations (as foreign eligible entities with two or more members that have not elected corporate classification).
As discussed in Step 1, each of the New 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 under Treas. Reg. § 301.7701-3. Each New Entity will have at least two members or partners and will satisfy the requirements for classification as an "eligible entity" under Treas. Reg. § 301.7701-3(a).
I. Existing Liabilities and Credit Facilities
The following liabilities and credit facilities are relevant to the Reorganization:
Fund IV Subscription Revolving Credit Facility. Fund IV LP maintains a $1.1 billion subscription revolving credit facility with Ashford National Bank, N.A. This facility is secured by the uncalled capital commitments of Fund IV LP's limited partners and is used to fund portfolio company investments on an interim basis pending capital calls. The Fund IV subscription facility is not being transferred, assumed, or otherwise directly affected by the Reorganization, although the fund's portfolio co-investment arrangements will be modified to reflect the Master Fund structure.
Fund V Subscription Revolving Credit Facility. Fund V LP maintains a $1.5 billion subscription revolving credit facility with Ashford National Bank, N.A. (as co-lender) and Sentinel Capital Markets LLC (as administrative agent). This facility is similarly secured by uncalled capital commitments and is used for interim investment financing. The Fund V subscription facility is likewise not being directly transferred or assumed as part of the Reorganization.
Portfolio-Level Liabilities. The Legacy Offshore Vehicles have aggregate portfolio-level liabilities of approximately $1.34 billion. These liabilities consist of indebtedness incurred at the portfolio company level that is allocable to the Legacy Offshore Vehicles under the partnership agreements and the applicable IRC § 752 regulations. In connection with the Reorganization, these liabilities will be assumed by (or will become allocable to) the Consolidated Master Fund LP as a result of the contributions in Steps 2–4. The § 752 implications of this liability assumption are analyzed in detail in Section IV.F of this Ruling Request and in the schedules set forth in Exhibit E.
The Taxpayer notes that lender consents under the existing subscription credit agreements are being separately sought from Ashford National Bank, N.A. and Sentinel Capital Markets LLC in connection with the Reorganization. The status of those consent processes is separate from and not the subject of this Ruling Request.
J. Existing § 704(c) Method
Each of the Legacy Offshore Vehicles currently employs the remedial allocation method under Treas. Reg. § 1.704-3(d) for tracking built-in gain and loss with respect to contributed properties. This method was elected by the general partner of each Legacy Offshore Vehicle in accordance with the partnership agreement and has been consistently applied since the formation of each vehicle.
The remedial allocation method was selected because it eliminates the ceiling rule distortions that can arise under the traditional method (Treas. Reg. § 1.704-3(b)) and provides the most equitable allocation of built-in gain among the partners of the Legacy Offshore Vehicles, particularly in the context of a diverse investor base that includes U.S. taxable investors, U.S. tax-exempt investors, and non-U.S. investors.
The Taxpayer intends for the Consolidated Master Fund LP to continue using the remedial allocation method under Treas. Reg. § 1.704-3(d) for each contributed property, consistent with the method elected by the Legacy Offshore Vehicles. This continuation is appropriate in the context of a nonrecognition contribution under § 721(a), where the Master Fund succeeds to the existing § 704(c) obligations of the contributing partnerships.
K. Additional Relevant Facts
The following additional facts are relevant to the Reorganization and are provided for the Service's consideration:
(a) Independent Valuations. Independent valuations of all portfolio company interests being transferred in the Reorganization are currently being prepared by Redstone Advisory Group LLC, an independent valuation firm with offices in New York, New York and Chicago, Illinois. Redstone has been engaged by Solara's General Counsel to provide fair market value determinations as of the effective dates of each step of the Reorganization. Preliminary valuation reports have been completed and form the basis for the fair market value figures set forth in this Ruling Request. Final valuation reports will be completed prior to the commencement of Step 2 and will be made available to the Service upon request.
(b) Historical Financial and Tax-Basis Records. Historical financial data and tax-basis records for all portfolio company interests are maintained by Caldwell Pierce & Co. LLP, an independent accounting firm that serves as the Taxpayer's auditor and tax return preparer. Caldwell Pierce has provided the adjusted tax basis figures set forth in this Ruling Request based on its review of the historical capital accounts, depreciation schedules, and tax return workpapers for each Legacy Offshore Vehicle.
(c) Fund Administration. Fund administration services for all offshore vehicles are currently provided by Clarendon Fund Services Ltd., a Cayman Islands-based fund administrator with offices in George Town, Grand Cayman and Dublin, Ireland. Clarendon manages net asset value calculations, investor reporting, capital call and distribution processing, and regulatory compliance filings for each Legacy Offshore Vehicle. Following the Reorganization, Clarendon's mandate will be restructured to reflect the simplified master-feeder architecture.
(d) No Pending Dispositions. No portfolio company interests have been disposed of or are expected to be disposed of between the date of this Ruling Request and the target completion of the Reorganization on December 1, 2025. The Taxpayer is not currently in discussions with potential acquirers for any portfolio company, and no letter of intent, memorandum of understanding, or term sheet has been executed or is under negotiation with respect to the sale of any portfolio company interest.
(e) Insurance Coverage. Solara maintains directors' and officers' ("D&O") and errors and omissions ("E&O") insurance coverage with an aggregate limit of $50 million, underwritten by Hawkstone Specialty Insurance Co. This coverage extends to the officers, directors, and managers of Solara Digital Infrastructure GP LLC and each of the fund-level general partner entities.
III. APPLICABLE LAW
A. IRC § 721(a) — Nonrecognition of Gain or Loss on Contribution to Partnership
Section 721(a) of the Internal Revenue Code provides 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 provision establishes a broad nonrecognition rule that reflects the foundational principle of Subchapter K: a contribution of property to a partnership in exchange for a partnership interest is merely a change in the form in which the contributing partner holds its investment, not a realization event warranting taxation. The contributing partner's economic interest in the contributed property continues through the partnership interest received, and the partnership holds the contributed property with a carryover basis and tacked holding period.
The policy underlying § 721 is analogous to that underlying IRC § 351 in the corporate context. Both provisions rest on the premise that a mere change in the form of ownership — from direct ownership to ownership through an entity — should not be treated as a taxable event where the taxpayer retains a continuing interest in the contributed property. Congress enacted § 721 to facilitate the formation and capitalization of partnerships without imposing tax friction that would discourage efficient combination of property and services.
Section 721(a) applies to contributions by any "partner," including an entity that is itself a partnership. When a partnership contributes property to another partnership in exchange for a partnership interest, the contributing partnership acts in its capacity as a partner of the receiving partnership. There is no requirement in § 721(a) that the contributing partner be an individual or a particular type of entity; the statute applies broadly to any partner contributing property in exchange for a partnership interest.
Section 723 of the Code provides the basis rules that complement § 721. Under § 723, the basis of property contributed to a partnership by a partner is the adjusted basis of such property to the contributing partner at the time of the contribution. This "carryover basis" rule ensures that the built-in gain or loss inherent in contributed property is preserved and will be recognized when the partnership ultimately disposes of the property.
Section 1223(2) of the Code provides that a partnership's holding period in contributed property includes the contributing partner's holding period. This "holding period tacking" rule is a natural corollary of the carryover basis rule and ensures that the character of gain or loss (long-term or short-term) is determined by reference to the contributing partner's total period of ownership.
B. IRC § 721(b) — Investment Company Exception
Section 721(b) provides an important exception to the general nonrecognition rule of § 721(a). Under § 721(b), the nonrecognition rule of § 721(a) "shall not apply to gain realized on a transfer of property to a partnership which would be treated as an investment company (within the meaning of section 351) if the partnership were incorporated." This exception is designed to prevent taxpayers from using partnership formations to achieve tax-free diversification of investment portfolios — a result that Congress determined should not be available without gain recognition.
The "investment company" concept referenced in § 721(b) is defined by cross-reference to IRC § 351 and, specifically, to Treasury Regulations § 1.351-1(c)(1)(ii). Under those regulations, a transfer to a controlled corporation constitutes a transfer to 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 from consideration) are held for investment and are readily marketable stocks or securities, or interests in regulated investment companies or real estate investment trusts.
The regulations further define "stocks and securities" to include stocks, securities, money, and certain other investment assets, but they draw a clear distinction between passive investment assets (such as publicly traded stocks and bonds) and interests in operating businesses. The critical inquiry is whether the assets held by the transferee partnership, viewed in the aggregate, consist predominantly of passive investment assets or, alternatively, of interests in operating businesses with employees, revenues, and ongoing business activities.
C. IRC § 367(a) and § 367(b) — Transfers Involving Foreign Corporations
Section 367 of the Code addresses the U.S. tax consequences of certain transfers of property involving foreign corporations. Section 367(a)(1) provides that, in the case of any exchange described in sections 332, 351, 354, 356, or 361, if the transfer is by a United States person of property to a foreign corporation, the foreign corporation shall not be considered a corporation for purposes of determining the extent to which gain shall be recognized on such transfer. In effect, § 367(a) denies the benefit of the corporate nonrecognition provisions (such as § 351) when a U.S. person transfers appreciated property to a foreign corporation, unless certain exceptions apply.
Section 367(b) provides a complementary rule for exchanges described in sections 332, 351, 354, 355, 356, or 361 "in connection with which there is no transfer of property described in section 367(a)(1)." Under § 367(b), the Secretary is authorized to prescribe regulations that are necessary or appropriate to prevent the avoidance of federal income taxes in such exchanges.
Both sections 367(a) and 367(b) apply, by their express statutory terms, only to transfers to or from "corporations." The term "corporation" for purposes of § 367 is defined by reference to the general entity classification rules of IRC § 7701 and Treas. Reg. § 301.7701-2 and -3. An entity that is classified as a partnership for U.S. federal income tax purposes is not a "corporation" within the meaning of § 367.
The legislative history of § 367 confirms that the provision was designed to address the specific concerns arising from corporate-level transactions — principally, the risk that U.S. persons would transfer appreciated property to foreign corporations in tax-free exchanges under § 351 or the reorganization provisions, thereby moving the built-in gain outside the U.S. taxing jurisdiction. These concerns do not arise in the same manner in the partnership context, where the pass-through nature of partnership taxation generally ensures that U.S. partners remain subject to U.S. tax on their allocable shares of partnership income.
The Service has previously confirmed in published guidance and private letter rulings that § 367 does not apply to partnership-to-partnership transfers. See, e.g., Rev. Rul. 87-85, 1987-2 C.B. 395 (addressing transfers involving partnerships and confirming that § 367 applies to transfers to or from "corporations"). The Taxpayer relies on these authorities in concluding that § 367 is inapplicable to the Reorganization.
D. IRC § 731(a) — Distribution of Property by Partnership
Section 731(a) of the Code governs the tax treatment of distributions of property by a partnership to a partner. Under § 731(a)(1), gain is recognized by a distributee partner only to the extent that money distributed exceeds the adjusted basis of the partner's interest in the partnership immediately before the distribution. Under § 731(a)(2), loss is recognized only in certain circumstances involving liquidating distributions consisting solely of money, unrealized receivables, and inventory items, and only to the extent that the adjusted basis of the partner's interest exceeds the amount of money and the basis of unrealized receivables and inventory received.
Section 731(b) provides the corresponding rule for the distributing partnership: "[n]o gain or loss shall be recognized to a partnership on a distribution to a partner of property, including money."
The term "money" in § 731(a)(1) includes cash and, pursuant to § 731(c) (discussed below), may include marketable securities in certain circumstances. However, § 731(a)(1) does not treat in-kind distributions of property other than money as triggering gain recognition (except to the extent that deemed distributions of money under § 752(b) are also implicated, as discussed below).
When a partnership distributes in-kind property (such as a partnership interest in another partnership) to a partner in liquidation of the partner's partnership interest, the general rule of § 731(a) applies: gain is recognized only to the extent that money distributed exceeds the adjusted basis of the partner's interest, and no gain is recognized on the receipt of non-money property. The distributee partner takes a basis in the distributed property determined under § 732 (substituted basis), and the partnership recognizes no gain or loss under § 731(b).
E. IRC § 731(c) — Marketable Securities Treated as Money
Section 731(c)(1) provides that, for purposes of § 731(a)(1) and (b), "the term 'money' includes marketable securities," and that such securities "shall be taken into account at their fair market value as of the date of the distribution." This provision was enacted by Congress to prevent taxpayers from using partnerships as vehicles for the tax-free distribution of readily tradable financial instruments, which can function as the economic equivalent of cash.
Section 731(c)(2)(A) defines "marketable securities" as "financial instruments and foreign currencies which are, as of the date of the distribution, actively traded (within the meaning of section 1092(d)(1))." Section 1092(d)(1), in turn, defines "actively traded" personal property as property for which there is an established financial market.
The term "financial instruments" is broadly defined in § 731(c)(2)(B) to include stocks, other equity interests, evidences of indebtedness, options, forward or futures contracts, notional principal contracts, and derivatives, among other items. However, regardless of how broadly the term "financial instruments" is defined, an instrument can constitute a "marketable security" under § 731(c) only if it is "actively traded" as of the date of distribution.
Section 731(c)(3) sets forth several exceptions to the general rule that marketable securities are treated as money. These exceptions include, among others:
(i) The "investment partnership" exception under § 731(c)(3)(A)(iii), which provides that § 731(c) does not apply to the distribution of a marketable security by an investment partnership to an eligible partner. For purposes of this exception, an "investment partnership" is a partnership that has never been engaged in a trade or business and substantially all of whose assets (by value) have always consisted of certain enumerated types of investment assets.
(ii) The "contributed-securities" exception under § 731(c)(3)(B), which provides that § 731(c) does not apply to the distribution of a marketable security if the security was contributed to the partnership by the distributee partner.
F. IRC § 752 — Treatment of Certain Liabilities
Section 752 of the Code governs the treatment of partnership liabilities for purposes of determining the partners' bases in their partnership interests. Section 752(a) provides that any increase in a partner's share of the liabilities of a partnership, or any increase in a partner's individual liabilities by reason of the assumption by such partner of partnership liabilities, shall be considered as a contribution of money by such partner to the partnership. Section 752(b) provides the converse rule: any decrease in a partner's share of the liabilities of a partnership, or any decrease in a partner's individual liabilities by reason of the assumption by the partnership of such individual liabilities, shall be considered as a distribution of money by the partnership to such partner.
The deemed contributions and deemed distributions arising under § 752(a) and § 752(b) interact with the nonrecognition rules of § 721 and § 731, respectively. A deemed distribution of money under § 752(b) can trigger gain recognition under § 731(a)(1) if the amount of the deemed distribution exceeds the adjusted basis of the partner's partnership interest.
Treasury Regulations § 1.752-1(f) provides a critical netting rule that applies when increases and decreases in a partner's share of partnership liabilities occur as part of a single transaction. Under the netting rule, if, as part of the same transaction, a partner's share of partnership liabilities increases and decreases (or a partner's individual liabilities increase by reason of the assumption of partnership liabilities and the partner's share of other partnership liabilities decreases), the increases and decreases are netted to determine a net deemed contribution under § 752(a) or a net deemed distribution under § 752(b). This netting rule prevents the mechanical application of §§ 752(a) and 752(b) from producing gain recognition in transactional contexts where the overall economic result for the partner is neutral or involves a net increase in liability share.
The regulations under §§ 1.752-1 through 1.752-4 also contain detailed rules governing the allocation of partnership liabilities among the partners, including rules for recourse liabilities (allocated based on the economic risk of loss borne by each partner under Treas. Reg. § 1.752-2) and nonrecourse liabilities (allocated based on a three-tier system under Treas. Reg. § 1.752-3). In the context of tiered partnerships — where a partnership holds an interest in another partnership — the regulations provide look-through rules for determining each partner's indirect share of the lower-tier partnership's liabilities.
G. IRC § 704(c) — Allocations with Respect to Contributed Property
Section 704(c)(1)(A) of the Code provides that, in the case of property contributed to a partnership, "income, gain, loss, and deduction with respect to such property shall be shared among the partners so as to take account of t

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