EFTA00876319.pdf

From: Jeffrey Epstein <[email protected]> To: Richard Kahn Subject: Fwd: CHARITABLE CONTRIBUTION OF ART Date: Mon, 26 Nov 2012 15:34:22 +0000 Forwarded message From: Thomas Turrin czi Date: Mon, Nov 26, 2012 at 10:14 AM Subject: CHARITABLE CONTRIBUTION OF ART To: Jeffrey Epstein <[email protected]> Jeffrey, I summarized the tax effect of a contribution of $50,000,000 of art to a private operating foundation (that has as its mission the holding and loaning of art to museums, etc). By the way, Eileen clarified that there is art available that is not collateral for the Bank of America loan. The new private operating foundation needs to hold the art it receives in a special secure vault under the Foundation's name....Foundation-owned art cannot hang in a private residence of donor, even if public is allowed to view it in the private residence. The Foundation should loan the art to museums. In summary, the tax effect would be spread over two years, since the AGI limitation on charitable donations of appreciated capital gain property to a private operating foundation is 20% (that is 20% of adjusted gross income). I assumed Leon's income for 2012 would be approximately the same as 2011 - with similar proportion of ordinary income and long-term gain. (Actual 2012 income projections will be available from Apollo Mgt. in late December). Estimated tax savings in year 2012: (Of the $50 million art donation - $30 is deductible in 2012 (20% of AGI of 150 (assumed 150)) Federal tax savings - $ 8.5 million EFTA00876319 State and City tax savings - $981,000 (only 25% of charity allowed as a deduction for NYS and C — 2010-12) Estimated tax savings in year 2013 (from carryover of unused amount from 2012): (Carry-over of $20 million of art donation from 2012 - CAUTION — New tax law may impose new limits on itemized deductions as well as other changes not yet known)..assumed AMT rate would be the same as 2012 (28%)and assumed existing law would remain for itemized deductions): Federal tax savings - $5.5 million State and City tax savings - $1 million (state and city limit in 2013 is 50% unless 25% limit is reinstated). AMT is applicable to Leon given the level of capital gain income taxable at the 15% rate and itemized deductions for state and city income taxes. Basically, the AMT is a flat tax at 28% of AMT taxable income, excluding long- term gains and qualified dividends, which are taxed at a flat 15% in 2012 under both AMT and regular tax. The value of the charitable deductions for federal tax purposes is therefore 28% (again, I assumed same AMT rate for 2013, but who knows). I have detailed calculation worksheets (BNA Tax Planner) which I can email if needed. I am available to discuss on the phone on Monday. I'm not in my office on Monday. I will be back in the office on Tuesday...available anytime. Best, Tom THOMAS TURRIN, CPA Partner Raich Ende Malter & Co. LLP EFTA00876320 1375 Broadway New York, New York 10018 (Direct line) (Fax) (Cell) Email: Website: CONFIDENTIALITY STATEMENT: The information contained in this electronic communication, including any and all attachments and enclosures. may be privileged and is strictly confidential, intended solely for the use of the person(s) identified above to receive this communication. 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CIRCULAR 230 DISCLOSURE: To insure compliance with requirements imposed by the Internal Revenue Service, we inform you that any tax advice contained in this communication (including any and all attachments), unless expressly stated otherwise. was not intended or written to be used and cannot be used for the purpose of (i) avoiding tax-related penalties imposed by the Internal Revenue Code or (ii) promoting, marketing. or recommending to another party any transaction(s) or tax-related matter(s) addressed herein. This communication may not be forwarded (other than to the addressee(s) identified above) without our express written consent. The information contained in this communication is confidential, may be attorney-client privileged, may constitute inside information, and is intended only for the use of the addressee. It is the property of Jeffrey Epstein Unauthorized use, disclosure or copying of this communication or any part thereof is strictly prohibited and may be unlawful. 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