To: Jeffrey Epsteinueevacation©gmail.com] From: McCaffrey, Carlyn Sent: Thur 1/31/2013 9:05:25 PM Subject: RE: Re: Yes - the trust pays and then leon would pay if he took it back. Remember when you're thinking about this issue that it's not really a substitution power. We refer to it as that but if you look at the trust language, you will see that that's not what it says. It says that the settlor has the power to reacquire and acquire trust property by substituting therefore other property of an equivalent value. Carlyn S. McCaffrey I Partner McDermott Will & Emery LLP 1340 Madison Avenue, New York, NY 10173 www.mwe.com From: Jeffrey Epstein [mailto:[email protected]] Sent: Thursday, January 31, 2013 4:03 PM To: McCaffrey, Carlyn Subject: Re: so that the trust pays? then if Icon wantss to substitutiie cash he pays. i am aware of 1031 but I spoke to a calif sales tax person and she said not under substniion provision. but could not point to authority either On Thu, Jan 31, 2013 at 4:56 PM, McCaffrey, Carlyn > wrote: the person who pays the sales tax is the person who is acquiring the tangible personal property, i.e., the paintings. yes - it could happen multiple times just like it can happen with individuals. If, for example, I hold a painting for investment purposes and make a section 1031 exchange, I pay sales tax. If I make a second 1031 exchange, I pay another sales tax, etc. Carlyn S. McCaffrey I Partner McDermott Will & Eme LLP 340 Madison Avenue, New York, NY 10173 www.mwe.com From: Jeffrey Epstein [mailto:[email protected]] Sent: Thursday, January 31, 2013 3:45 PM EFTA_R1_00336352 EFTA01904431