From: Eileen Alexanderson

From: Eileen Alexanderson To: 'Jeffrey Epstein' [email protected]> Subject: FW: Section 734 Date: Mon, 13 May 2013 19:01:53 +0000 Attachments: From: Fenn, Patrick [mallto: Sent: Saturday, April 06, 2013 1:03 PM To: Eileen Alexanderson; 'Clapp, Ada'; 'Thomas Turrin' Subject: FW: Section 734 Hi All. Recall that the prior summaries of outcomes was based on the fact that the section TRA benefit attributable to the Tufts gain in the deferral scenarios would be zero under the current TRA. The attached deck has been modified to reflect the payment of 55% of the TRA benefits on the Tufts gain in each relevant scenario (as well as changing the assumption on page 4) as though Josh (or Marc) were the first partner out, based on a new assumption that the TRA can be amended to include the section 734(b) basis step up. As we expected, this had the greatest effect on the 5-year deferral scenarios (it's still not a good trade at 5 years, but not as bad as it was) with a bit of a pick up at 20 years (NPV of $9M for Leon and $6M for Marc and Josh using a 7.5% discount rate). The break even discount rate for the 20 year scenario is now 5%. Of course, the TRA benefit for the Tufts gain step up will be progressively larger for the later exchanging partners as a result of the transfers progressively increasing APO Corp's interest in AMH. That would increase the NPV of the TRA benefit attributable to the section 734(b) step up, but the later in time that step up occurs (beyond the 20th year assumed in the model) the smaller the NPV of the additional TRA benefit relative to the base case. We are running one more scenario: one that assumes an amendment to the TRA to cover basis step up in the deferral scenario, a 20-year guarantee by each partner (more likely an SPV that owns an interest in BRH) and retention by each partner of at least a 1 percent interest for the 20 years, with all the guarantees expiring in the 20th year. The idea is to see if in that situation the full Tufts gain benefit can be delivered to each partner for its pro rata share of the full Tufts gain (albeit beginning in the 20th year). Hope to have that sometime this afternoon. One additional issue that impacts the TRA benefit in the deferral scenario - the so-called anti-churning rules, which we are still analyzing. These rules prevent refreshing depreciable basis in property that the transferor owned or had a prior interest in, if that interest falls within the description of various hyper-technical rules. We do not believe that those rules would prevent a basis step up on an exchange of the units, but the manner in which they apply to the step up at the end of the deferral scenario is different than in the exchange context. EFTA01135796 Regards IRS Circular 230 Notice Requirement: This communication is not given in the form of a covered opinion, within the meaning of Circular 230 issued by the United States Secretary of the Treasury. Thus, we are required to inform you that you cannot rely upon any tax advice contained in this communication for the purpose of avoiding United States federal tax penalties. In addition, any tax advice contained in this communication may not be used to promote, market or recommend a transaction to another party. The information contained in this e-mail message is intended only for the personal and confidential use of the recipient(s) named above. If you have received this communication in error, please notify us immediately by e-mail, and delete the original message. This email and any files transmitted with it are confidential and intended solely for the person or entity to whom they are addressed and may contain confidential and/or privileged material. Any review, retransmission, dissemination or other use of, or taking of any action in reliance upon this information by persons or entities other than the intended recipient is prohibited. If you have received this email in error please contact the sender and delete the material from any computer. Apollo Global Management, LLC EFTA01135797