SOF III - 1081 Southern Financial LLC Tax Considerations Certain U.S. Federal Income Tax Considerations The following is a summary of certain U.S. federal income tax consequences of acquiring, holding and disposing of Interests in the Onshore Feeder Fund by U.S. Holders (as defined herein) and of Interests in the Offshore Feeder Fund by U.S. Tax-Exempt Investors (as defined herein) and Non-U.S. Holders (as defined herein) who purchase their respective interests in the offering. This summary is based upon the Code, U.S. Department of the Treasury ("U.S. Treasury Department") regulations promulgated thereunder, published rulings of the Internal Revenue Service (the "IRS"), court decisions and other applicable authority, all as in effect on the date of this Memorandum and all of which are subject to change or different interpretations (possibly on a retroactive basis). This summary does not purport to address all U.S. federal income tax matters that may be relevant to a particular investor and, except where clearly indicated otherwise, does not address Investors with special circumstances, such as a controlled foreign corporation, a passive foreign investment company, or an individual who is a U.S. expatriate and, therefore, subject to special treatment under the Code. This discussion and the discussion of tax considerations under "ERISA Considerations" have been written to support the marketing of investments in the Onshore Feeder Fund and the Offshore Feeder Fund. It was not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding U.S. federal income tax penalties. Prospective investors are urged to consult their tax advisors to determine the U.S. federal, state, local, foreign income and other tax consequences to them of acquiring, holding and disposing of Interests. For purposes of this summary, a "U.S. Holder" is a beneficial owner of an interest in the Onshore Feeder Fund or Offshore Feeder Fund that