From: Thomas Turrin

From: Thomas Turrin To: "Barry J. Cohen" < >, Brad Wechsler < jeffrey E. <[email protected]> CC: Richard Joslin -4 Subject: RE: 2012 Date: Mon, 01 May 2017 16:17:29 +0000 Please see my responses below in red.... From: Barry 3. Cohen [mailto: Sent: Monday, May 01, 2017 11:57 AM To: Brad Wechsler; Jeffrey E. Cc: Thomas Turrin; Richard Joslin subject: 2012 In a conference all this AM with Apollo Tax and Deloitte, I learned the following: I. Apollo understands that the IRS's review focused on the manager entity of an old Apollo Credit fund (VIF). This entity rolls up into BRH. Neither Apollo nor Deloitte was aware of any audit or review of this entity, or for that matter any other entity that rolls up into BRH. (There was a minor audit matter of another vehicle that was opened and then quickly closed by the IRS in 2016.) 2. It is Apollo's procedure to notify BRH owners if there is an audit of a downstream entity. 3. Other Apollo people received related assessment notices. They were not all consistent in content, but the idea was the same: an assessment related to BRH. 4. The tax matter partner for BRH is a Cayman entity. Deloitte prepares the K-1. Deloitte has always prepared the BRH tax returns which include the K-1's. Apollo tax group also involved. 5. Who is the BRH K-1 sent to? We think BFP, but people on the phone were unsure. Leon's K-1 is issued to Black Family Partners, LP (since the beginning). Leon's ownership was deliberately structured through the family partnership for estate planning purposes. Wendy Dulman, who was at Akin Gump at the time, was involved in setting up this structure. 6. If the BRH K-1 was sent to BFP, why did the IRS assume that all of its items flow through to LDB? Unclear, but the IRS seems to figure such things out, and other Apollo taxpayers were similarly treated. I am not surprised that they figured this out....because use of disregarded entities and grantor trusts in tax and estate planning among PE execs is widespread...with K-1's issued to family LP's and/or grantor trusts typically reported on tax returns of grantor. 7. Who are the owners of BRH on BRH's books and records? Unclear whether it is LDB or BFP. Black Family Partners, LP -since all K-1's have always been issued to Black Family Partners, LP. I don't know how Marc and Josh's interests in BRH are structured. 8. Who keeps the books and records of BRH? A bit unclear. Apollo Treasury makes payments to BRH, and keeps records of payments. It is unclear whether there are books and records independent of the tax partner's records. Deloitte (with help of Apollo tax group) has always prepared the tax returns of BRH Holdings, LP. Someone in the accounting department of Apollo Management must be keeping EFTA01047438 books and records of BRH Holdings, otherwise they would not be able to prepare partnership tax returns. I am on a plane, but will dig in on a few of these points over the next few days. Barry J. Cohen I Elysium Management, LLC I 445 Park Avenue Suite 1401 New York, NY 10022 Tel. 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. If you are not the person(s) identified above to receive this communication, you are hereby notified that you may not disclose print, copy, disseminate, or otherwise use the information contained herein. If you are an employee or agent of the person(s) identified above to receive this communication and, as such, you have been authorized to deliver this communication to such person(s), you may disclose, print, copy, disseminate, or otherwise use the information contained in this communication solely for the purpose of such delivery. Unauthorized interception and/or use of this communication are/is strictly prohibited and may be punishable by law. If you have received this communication in error, please reply and notify the sender (only) of that fact and delete the communication, including any and all attachments and enclosures, from your computer or other electronic device on which you may have received this communication. EFTA01047439