SOF III - 1081 Southern Financial LLC items of Master Fund income, gain, loss, deduction and credit for the taxable year of the Master Fund ending within or with the taxable year of such Investor, regardless of whether such Investor has received or will receive corresponding distributions from the Onshore Feeder Fund. Thus, an Investor's income tax liability in a particular year may exceed the amount of cash actually received from the Onshore Feeder Fund by the Investor. Each Investor is required to report separately on its income tax return its distributive share of the Onshore Feeder Fund's net long-term capital gain or loss, net short-term capital gain or loss and all other items of ordinary income or loss. U.S. Tax-Exempt Investors (as defined herein) should be aware that certain investments of the Master Fund may cause them to have "unrelated business taxable income," as defined under sections 512 and 514 of the Code ("UBTI"), which is subject to U.S. federal income taxation and may be subject to state and local taxation as well. See discussion below under "Tax-Exempt Investors." Information Reporting. Because the Onshore Feeder Fund will derive its income from its investment in the Master Fund, which is a pass through entity for U.S. federal income tax purposes, the Onshore Feeder Fund's ability to report information regarding items of income, gain, loss, deduction and credit will depend upon the receipt of information regarding such items from the Master Fund, which will in turn depend on the Master Fund's receipt of underlying information from the investment funds in which the Master Fund invests (the "Investment Funds"). As a result, the Onshore Feeder Fund does not expect to be able to deliver Schedules K-1 to Limited Partners prior to April 15 of each year and expects to deliver Schedules K-1 to Limited Partners in respect of a particular year in September of the following year. Further, the Master Fund expects to deliver Schedules