Exhibit 10.5

TAX ALLOCATION AGREEMENT

     Agreement as of January 16, 2003 by and among Starfire Holding Corporation
(“Parent”), a Delaware corporation, having offices at 767 Fifth Avenue, New York
and XO Communications, Inc., a Delaware corporation (“XO”), having offices at
11111 Sunset Hills Road, Reston Virginia, 20160 and the XO Subsidiaries (as
defined below).

     WHEREAS, Parent is the common parent of an affiliated group (as such term
is defined in the Internal Revenue Code of 1986, as amended, or any succeeding
law (the “Code”)) of corporations for federal income tax purposes which includes
the XO Group (as defined below):

     WHEREAS, Parent and its subsidiaries have been filing consolidated federal
income tax returns (“Consolidated Federal Returns”) and will continue to file
Consolidated Federal Returns for all periods in which Parent and XO are members
of an affiliated group (as defined in the Code);

     WHEREAS, it is contemplated that the XO Group will continue to file
separate state income or franchise tax returns unless Parent elects to file such
returns on a consolidated or combined basis with the XO Group (“Consolidated
State Returns”);

     WHEREAS, XO is undergoing a restructuring of its equity and debt pursuant
to a bankruptcy plan (the “Restructuring”);

     WHEREAS, upon completion of the Restructuring, XO will have minority
shareholders and third-party lenders; and

     WHEREAS, Parent and XO believe it is desirable to provide for the
allocation and payment of federal and state income tax liabilities and certain
related matters.

     NOW, THEREFORE, in consideration of the foregoing and of the covenants set
forth below, the parties hereto have agreed as follows:

1.   Definitions.

  (i)   “XO Group” means XO together with the XO Subsidiaries. “XO Subsidiaries”
means all direct and indirect subsidiaries of XO that are eligible to be
included in a Consolidated Return (as defined below) with XO.

 

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  (ii)   “Consolidated Returns” mean all Consolidated Federal Returns and
Consolidated State Returns.     (iii)   “Federal Income Taxes” means any income
tax imposed under the Code including, without limitation, the corporate income
tax, the minimum tax imposed on corporations, and the personal holding company
tax.     (iv)   “State Income Taxes” means any income or franchise tax imposed
under the tax law of any state (or political subdivision thereof) including,
without limitation, corporate income taxes and minimum taxes.     (v)   “Net
Operating Loss” means the amount of any net operating loss as defined in the
Code or under the tax law of any state.     (vi)   “Net Capital Loss” means the
amount of any net capital loss as defined in the Code or under the tax law of
any state.     (vii)   “Credit” means the amount of any tax credit allowed under
the Code or under the tax law of any state including, without limitation,
investment tax credits ad foreign tax credits.     (viii)   The “Regulations”
means the regulations and proposed regulations issued by the Secretary of the
Treasury interpreting the Code.     (ix)   The “Consolidated Group” means the
affiliated group (as defined in the Code) of which Parent (or its successor) is
the common parent, for so long as such affiliated group files a Consolidated
Return.     (x)   “Tax Benefits” as to any entity (or group of entities) means
the Net Operating Loss, Net Capital Loss, and Credits generated by or available
to such entity (or group of entities) and any carryforwards thereof.     (xi)  
“Final Determination” shall mean the final resolution of liability for any Tax
for a taxable period, (i) by IRS Form 870 or 870-AD (or any successor form
thereto), on the date of the final acceptance by or on behalf of a party
thereto, or by a comparable form under the laws of another jurisdiction; except
that a Form 870 or 870-AD or comparable form that reserves (whether by its terms
or by operation of law) the right of the

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      taxpayer to file a claim for refund and/or the right of taxing authority
to assert a further deficiency shall not constitute a Final Determination;
(ii) by a decision, judgment, decree, or other order by a court of competent
jurisdiction, which has become final and unappealable; (iii) by a closing
agreement or accepted offer in compromise under Section 7121 or 7122 of the
Code, or comparable agreement under the laws of another jurisdiction; (iv) by
any allowance of a refund or credit in respect of an overpayment of Tax, but
only after the expiration of all periods during which such refund may be
recovered (including by way of offset) by the Tax imposing jurisdiction; or
(v) by any other final disposition, including by reason of the expiration of the
applicable statute of limitations or by mutual agreement of the parties.

2.   Joinder in Consolidated Returns.

  (a)   XO hereby agrees and consents (i) to join with the Consolidated Group in
the filing of Consolidated Returns with respect to any fiscal year in which
Parent elects to file such returns, (ii) to use its best efforts to cause each
of the XO Subsidiaries to consent to the filing of Consolidated Returns for such
years, (iii) to furnish to Parent all information relating to members of the XO
Group as may be necessary or appropriate for the preparation of Consolidated
Returns, (iv) to execute and deliver to Parent, and use its best efforts to
cause the XO Subsidiaries to execute and deliver to Parent, all consents,
directors’ resolutions and other documentation which Parent may reasonably
require to evidence Parent’s authority to file Consolidated Returns, and (v) to
maintain the same fiscal year as Parent and use its best efforts to cause the XO
Subsidiaries to maintain the same fiscal year as Parent for all periods in which
Parent and XO are members of an affiliated group (as defined in the Code);
provided, however, the foregoing shall not be interpreted to prevent XO from
taking any action pursuant to the Restructuring, including, without limitation,
issuing additional stock pursuant to warrants, options or rights to subscribe to
its stock, which would cause the XO Group to not be a part of the Consolidated
Group.

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  (b)   Parent hereby consents to join with the Consolidated Group in the Filing
of Consolidated Returns; provided, however, that Parent is not precluded from
taking any action which would require Parent to discontinue the filing of
Consolidated Returns including, without limitation, a sale or other disposition
of all or a portion of its stock ownership in XO and/or the filing of an
application with the Commissioner of Internal Revenue, or other appropriate
authorities, including tax authorities of any state (or political subdivision
thereof) (“Taxing Authorities”) on behalf of the Consolidated Group, requesting
permission to discontinue the filing of Consolidated Returns.     (c)   Parent
shall prepare and file Consolidated Returns on behalf of the Consolidated Group
and may charge XO and the XO Subsidiaries an appropriate amount for XO’s share
of reasonable out-of-pocket expenses related to the preparation of such returns.
Parent shall make all decisions regarding any elections or other matters
relating to the preparation and filing of Consolidated Returns; provided,
however, that in making elections and other decisions with respect to members of
the XO Group, Parent shall consult with the XO Group and in good faith consider
their recommendations regarding the possibility of making such elections in a
manner as to maximize the Tax Benefits that would be available to the XO Group
upon a Deconsolidation Event (as defined below).     (d)   XO will promptly pay
to Parent an appropriate amount for all reasonable out-of-pocket expenses
(including legal and accounting expenses) incurred by Parent in connection with
any administrative or judicial proceedings with respect to such Consolidated
Returns to the extent that such proceedings are reasonably allocable to the XO
Group.

3.   Payment of Tax and Refunds.

     Subject to the provisions of this Agreement and compliance with the terms
hereof, Parent shall be obligated to and shall make all payments and be entitled
to all refunds of Federal Income Taxes and estimated Federal Income Taxes on
behalf of any and all members of the Consolidated Group, and shall indemnify and
hold the members of the XO Group harmless against all such Taxes (including
penalties and interest). Further, subject to the provisions of this

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Agreement and compliance with the terms hereof, whenever Parent elects to file
state or local income or franchise tax returns on a consolidated or combined
basis, Parent shall be obligated to and shall make all payments and be entitled
to all refunds of such State Income Taxes and estimated State Income Taxes (such
actual and estimated State Income Taxes are referred to herein as “Consolidated
State Income Taxes”) on behalf of all members of the Consolidated Group, and
shall indemnify and hold the members of the XO Group harmless against all such
Taxes (including penalties and interest). Subject to the provisions of
Section 5(a) of this Agreement, (and to the extent not indemnified pursuant to
the two immediately preceding sentences) for all periods on or after the date
hereof, including periods after a Deconsolidation Event, Parent shall indemnify
and hold XO and the other members of the XO Group harmless against all Federal
Income Taxes, Consolidated State Income Taxes, and State Income Taxes and local
income taxes payable by or with respect to any member of the Consolidated Group
other than the members of the XO Group, including any interest and penalties
with respect thereto and reasonable out-of-pocket expenses (including legal and
accounting expenses) incurred by the XO Group in connection with an
administrative or judicial proceeding initiated by a governmental authority
relating to any such tax.

4.   Payments by XO to Parent.

  (a)   XO shall pay to Parent, for the Consolidated Group’s 2003 taxable year
and subsequent fiscal years or periods during which XO is included in a
Consolidated Return with the Consolidated Group, an amount equal to the amount
of Federal Income Taxes and Consolidated State Income Taxes that the XO Group
would have been required to pay to the Taxing Authorities if it were not part of
the Consolidated Group and if the XO Group had filed separate Consolidated
Returns for federal state and/or local tax purposes, as the case may be, with
respect to the XO Group (the “XO Group Taxes”). The above calculation shall give
effect to any federal, state or local Net Operating Loss, Net Capital Loss and
Credit carryforwards which would have been available to the XO Group if it had
never been included in a Consolidated Return with the Consolidated Group, but
such calculation shall be subject to any audit adjustments and any limitations
on the utilization of tax attributes (including, without limitation, such
carryforwards and any limitations on the utilization of depreciation,
amortization or other similar

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      deductions) of the XO Group imposed by law (including, without limitation,
any such limitation imposed as a result of the Restructuring).     (b)   XO
shall pay to Parent any amount (including amounts in respect of estimated tax)
that would be due on the basis of the foregoing calculations within three
business days after Parent notifies XO of the calculated amount, but in no event
earlier than the times such payments are, or would be required, to be made to
the applicable Taxing Authorities. The excess of any amounts paid to Parent,
with respect to estimated tax payments under this Section 4(b) for a taxable
year, over the liability of the XO Group to Parent under this Section 4(b) for
such year, shall be refunded by Parent to XO within three business days after XO
notified Parent that it has made such an excess payment. At XO’s election, such
refund may be applied as a credit against any future estimated tax of the XO
Group.     (c)   XO shall indemnify and hold Parent harmless against any
liability for any interest and penalties with respect thereto imposed upon
Parent by reason of any false or fraudulent information supplied by any member
of the XO Group to Parent in connection with the determination of the federal,
state, or local income tax liability payable by any member of the Consolidated
Group.

5.   Adjustments During Consolidation.

  (a)   In the event of a Final Determination with respect to the tax liability
of the Consolidated Group, appropriate adjustments (including, without
limitation, adjustments to XO’s payment obligation under Section 4(a)) shall,
except as inconsistent with this Agreement, be made hereunder consistent with
such Final Determination. Further, XO shall pay to Parent any interest,
penalties and additions to tax imposed in connection with a Final Determination
to the extent that such amounts are attributable to items of XO or its
subsidiaries. Similarly, Parent shall pay XO any interest received from a
governmental authority in connection with a Final Determination that there has
been an overpayment, together with the amount of any refund received, to the
extent attributable to items of XO or its subsidiaries.

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  (b)   Payments under this Section 5 shall be made promptly after the amounts
thereof are determined. For purposes of this Agreement, any Net Operating Loss,
Net Capital Loss, or Credit shall be carried forward.

6.   Adjustments After Deconsolidation.

  (a)   If there is a change in the ownership of the stock of XO or other event
(a “Deconsolidation Event”) and XO ceases to join in the filing of Consolidated
Federal Returns and where applicable, Consolidated State Returns with Parent,
and any member of the XO Group would have been entitled, if XO had never joined
in the filing of such Consolidated Returns, to carry forward to a taxable year
(“Post-Consolidation Year”) which is not a taxable year for which XO joined in
the filing of such Consolidated Returns, a Tax Benefit which originated in a
taxable year prior to a Post-Consolidation Year (“Non-Available XO Carryforward
Items”), then no later than April 15 following each Post-Consolidation Year,
Parent shall be obligated to pay to XO an amount equal to the excess of (i) the
XO Group’s actual Federal Income Taxes and, where applicable, actual State
Income Taxes for such Post-Consolidation Year over (ii) such Federal Income
Taxes and, where applicable, State Income Taxes for such Post-Consolidation Year
computed as if such Non-Available XO Carryforward Items were available to the XO
Group. The calculation in Section 6(a)(ii) above shall be subject to any audit
adjustments and any limitations on the utilization of the Non-Available XO
Carryforward Items imposed by law (including, without limitation, any such
limitation imposed or which would have been imposed as a result of the
Restructuring or the Deconsolidation Event).     (b)   Parent shall not be
required to make payments to XO under Section 6(a) to the extent that such
payments would cause cumulative payments made by Parent to XO under Section 6(a)
to exceed the cumulative reductions in Federal Income Taxes and, where
applicable, Consolidated State Income Taxes, of the Consolidated Group which
resulted from the inclusion of the XO Group in the Consolidated Group. Such
cumulative reductions shall be determined (i) by deeming the reduction in State
Income Taxes (if any) to be reduced by any

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      corresponding increase in Federal Income Taxes; (ii) without any
adjustment for an increase or reduction in Federal Income Taxes (and, where
applicable, Consolidated State Income Taxes) resulting from the Deconsolidation
Event; and (iii) by apportioning the reduction in Federal Income Taxes and,
where applicable, Consolidated State Income Taxes, resulting from the use of Tax
Benefits of members of the XO Group and non-members in accordance with the
principles of the federal income tax consolidated return regulations (and
similar provisions of applicable state tax law) that determine the Tax Benefits
that would be attributed to a member in the event such member ceases to be a
member of the consolidated group.     (c)   If in a Post-Consolidation Year, any
member of the Consolidated Group (other than any member of the XO Group) would
have been entitled, if XO had never joined in the filing of Consolidated Returns
with the Consolidated Group, to carry forward a Tax Benefit which originated in
prior taxable year, then no later than April 15 following each such Post
Consolidation Year XO shall reimburse Parent for such Tax Benefit on an
equitable basis and consistent with the principles of this Section 6 (including
the limitations on such payment which correspond to the limitations set forth in
Section 6(b)).

7.   Certain Transactions

     Notwithstanding anything in this Agreement to the contrary, in the event of
the occurrence of any transaction the result of which is that there are no
longer any holders (other than Parent and its Affiliates or any other single
person or “group” as such term is used in Rule 13D under the Securities Exchange
Act of 1934) of equity securities of XO, all of Parent’s payment obligations
under this Agreement shall terminate immediately prior to the transaction and
for purposes of Section 4(a) of this Agreement, the computation of the XO Group
Taxes shall not give effect to any Net Operating Loss, Net Capital Loss or
Credits carryforwards referred to in the second sentence thereof. For the
purpose of determining holders of equity securities pursuant to this Section 7,
neither (x) warrantholders who have no right to receive equity securities of XO
on exercise thereof nor (y) the holders of equity securities of the acquiring
company, shall be considered holders of equity securities.

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8.   Late Filing.

     Notwithstanding any other provisions of this agreement, Parent shall
indemnify and hold harmless the XO Group against any interest or penalties
incurred by reason of late filing of any Consolidated Return for the
Consolidated Group, or by reason of late payment of any tax or estimated tax for
the Consolidated Group, unless such late filing or late payment is due to the
fault of XO or any other member of the XO Group.

9.   State Taxes.

     XO and each of the XO Subsidiaries shall continue to prepare and file all
applicable state tax returns, at their own expense, and to pay, or cause its
subsidiaries to so prepare, file and pay, all amounts shown to be due thereunder
unless Parent elects to have XO and/or members of the XO Group file state and/or
local tax returns on a consolidated or combined basis with Parent.

10.   Accounting.

  (a)   For the purpose of the computation of assumed tax liabilities herein,
all payments made (i) by Parent to XO and (ii) by XO to Parent, pursuant to the
provisions thereof shall not be considered income to the recipient of the
payment or an expense of the payor, but rather shall be considered the payment
of a tax. Any difference between a Consolidated Group member’s tax liability
under this Agreement and such member’s liability under Treasury Regulation
Sections 1.1502-33 and 1.1552-1 shall be treated as a distribution with respect
to its stock or as a contribution to its capital, as the case may be.     (b)  
The calculation of the amounts hereunder shall be determined by Parent;
provided, however, that if XO disputes such determination, KPMG LLP or another
mutually acceptable nationally recognized accounting firm shall determine such
amounts.

11.   Parties.

          Any corporation which is an XO Subsidiary on January 1, 2003 or which
becomes an XO Subsidiary at any time subsequent to such date shall automatically
be subject to the terms and conditions of this Agreement. If any entity other
than Parent shall become the common parent of the affiliated group of
corporations for federal income tax purposes

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  which includes members of the XO, Parent shall cause such entity to enter into
an agreement substantially identical to this Agreement with XO.

12.   Notices.

     All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been duly and properly given or sent
(a) on the date when such notice, request, consent or other communication is
personally delivered with receipt acknowledged, or (b) if mailed, three days
after the date on which the same is deposited in a post office box and sent by
certified or registered mail, return receipt requested, postage prepared and
addressed to the party for whom intended at its address set forth below or to
such other address or addresses as any of the parties hereto shall theretofore
designated by notice hereunder.

  If to Parent, at:

Starfire Holding Corporation 767 Fifth Avenue New York, New York 10153

If to XO or the XO Subsidiaries, at:

XO Industries, Incorporated 11111 Sunset Hills Road Reston, Virginia 20160

13.   Entire Agreement.

     This agreement (a) contains the entire understanding of the parties hereto
with respect to the subject matter hereof, (b) shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and performed therein, and (c) shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.

14.   Amendments.

     This Agreement may not be modified, changed or amended except by a writing
signed by all parties hereto.

15.   Further Assurances.

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     Each of the parties hereto agrees to execute, acknowledge, deliver, file,
record and publish such further certificates, instruments, agreements and other
documents, and to take all such further actions as may be required by law or
deemed necessary or useful in furtherance of the objectives and intentions
underlying this Agreement and not inconsistent with the terms hereof.

16.   Captions.

     Captions are inserted for convenience only and shall not be given any legal
effect.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of January
16, 2003.

  Starfire Holding Corporation

By:    /s/ Jordan Bleznick                                    Vice President &
Senior Tax Counsel

XO Communications, Inc.

By:    /s/ Gary D. Begeman                                    Senior Vice
President, General Counsel

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