EFTA00669234.pdf

From: "Barry J. Cohen" To: Jeffre E stein [email protected]>, Tom Turrin CC: Leon Black Subject: RE: 2012--PRIVILEGED AND CONFIDENTIAL Date: Sun, 30 Apr 2017 17:31:57 +0000 Attachments: LDB_Tax_notice_RE_2012.pdf Here are my observations: 1. The first IRS letter references a "review" of BRH, but doesn't suggest that there will be changes to the BRH K-1 items. In fact, it implies the opposite. The letter points to the K-1it thinks we should have used (not reflecting any changes from the original). It asks what K-1 LDB used because it can't find the BRH K-1 or its exact numbers on LDB's return. 2. The second IRS letter almost suggests the opposite. It is in effect saying that the original K-1 is wrong. P. 9 of the pdf indicates an adjustment of $884,006, referencing 98-054199, which is BRH's TIN; not to mention the p. 10 footnote which mentions BRH. 3. I'm not sure how the IRS traces this number to the LDB return, as the BRH K-1was issued to BFP, and was not attached to LDB's return. LDB's 2012 return references a few items from BRH "via Black Family Partners," so maybe the IRS assumes that LDB pays taxes attributable to BRH. 4. The IRS seems to be pointing out 2 different problems in its respective letters: (a) How does BRH income/loss/expense flow to LDB's return, and (b) The original BRH numbers were wrong, and have been changed by the IRS. In other words, the first letter implicitly asks us to trace specifically mentioned BRH K-1 numbers to LDB's return, which the second letter is saying are wrong and have been changed. I want to say that the second letter obviates the need to respond to the first, because the second letter is says the first letter's numbers are wrong. However, the letters are simply inconsistent. It would have been very easy for the IRS to withdraw the initial request or issue a clarification, but it did not do that. Assuming the agent continues to refuse to return our calls, I defer to the tax experts re whether "under-responding" to the first letter creates undue risk of a 9-figure assessment vs. having them come back to us to request more info. I agree with Brad that it would be good to have Apollo acknowledge that the $884,006 corresponds to their new understanding of the implicitly revised BRH K-1. To do that, I have to tell them this number. Is that ok? ---Original Message---- From: [mailto Sent: Sunday, April 30, 201711:33 AM To: Jeffrey Epstein <[email protected]>; Tom Turrin BarryJ. Cohen •:: > Cc: Leon Black ‹ > Subject: Guys-can I just mention and confirm some things: 1. As an fyi, but as I believe you know, RJ is pulling together the back-up and presentation on the other items of BRH income highlighted in the original IRS notice this week end. Hopefully we will not have to submit. 2. As we all know I aint no tax guy but I read the assessment letter very carefully and my "uninformed" view is exactly tom and Jeffrey's first reaction (which may or may not have changed), ie, that the IRS found/acknowledges 378,805,695 of what they believe should be 379,707,381 or a delta of 884,006. (They also found a delta of 17,680 in itemized deductions.) Definitionally, these numbers have to include BRH numbers and as jeffrey said to me, they answered the question they posed in the initial notice. EFTA00669234 3. In that context, my personal view is that tom tries to reach out by phone monday (after he and jeffrey touch base today or tomorrow morn to coordinate) to confirm that the 360k assessment is the show stopper. 4. On a parallel basis, I'd have jeffrey and tom edit the "alternate response letter" which, again, would set out our belief that the "assessment" ends this process, at least for 2012. If we don't hear back from the agent then we should submit in writing our understanding of the notice and assessment. 5. As an aside, if leon's brh assessment is 884,006 it wld be nice to see if that foots with the overall assessment to the other BRH partners and cross-check to ownership 96's; although at the end of the day I'm not certain that's critical. Thgts? I'm reachable by email or cell phone. Best, b Sent from my Verizon Wireless BlackBerry EFTA00669235