From: Jeffrey Epstein <[email protected]> Sent: Thursday, January 23, 2014 12:51 PM To: Melanie Spinella Subject: Fwd: Outline of Proposals Forwarded me=sage From: Alan S Halperin= ailto Date: Thu, Jan 23, 2014.1111 11 Subject: Outline of Proposals To: =effrey Epstein <jeevacation@gm=il.com <mailto:[email protected]» Cc: Ada Clapp «mailto: > >, Ada Clapp Jeffrey, as requested, Ada and I have dis=ussed the open issues you have identified to develop a joint proposal on how to proceed. Here are our recommendations. A. Art Currently Held in the LDB 2011 LLC (which is referred to as the 2011 LLC) 1. The goals are twofold: avoid paying rent which triggers current sales tax and raises current issues as to the fair market rent of such rent; and reduce the risk that the IRS might seek to include the art in the estate under a 2036 argument. 2. We recommend that, to achieve this result, the art should continue to be held in the 2011 LLC, the membership interests in which are to be sold to a trust where Deborah is a beneficiary. 3. Proposed action steps to achieve the desired result include: a. The 2011 LLC is to create a new LLC (NewCo). The 2011 LLC will contribute its interests in BFP to NewCo. b. The 2011 LLC then is to distribute NewCo to the members of the 2011 LLC (the four children's trusts). c. The four trusts, in turn, are to sell their interests in 2011 LLC to APO1 in exchange for a promissory note.=/font> d. The four trusts could contribute the assets they receive from the sale -- the promissory notes from APO1-- to NewCo (if trapping income on the note payments, to avoid mandatory payments to children, is desired). e. The 2011 LLC and Debra (a beneficiary of the APO1 Trust) will then enter into an art use agreement, without any rent. We should consider who is to pay insurance on such art. 4. The desired consequences include: a. With a sale of membership interests in the 2011 LLC, the sale will involve membership interests i