<table><tr><th>From:</th><th>Barry J. Cohen &lt; &gt; </th></tr><tr><td>Sent:</td><td>Wednesday, August 23, 2017 12:24 AM</td></tr><tr><td>To:</td><td>Jeff Epstein</td></tr><tr><td>Subject:</td><td>Fwd: Advisor fee deductions--PRIVILEGED AND CONFIDENTIAL</td></tr></table>

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- Date: August 22, 2017 at 7:17:22 PM EDT
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- Subject: Advisor fee deductions--PRIVILEGED AND CONFIDENTIAL
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Subject: Advisor fee deductions--PRIVILEGED AND CONFIDENTIAL<=r>

On a call today, David Kirk at EY made a case for th= following approach to deducting advisor fees that involved setting up and=structuring (construed fairly broadly) a new disregarded entity, like AP N=rrows, and others.

	1. Find entities which were set up

		a. within the last 2 years, and

		b. the advisor expense= were incurred prior to an entity's starting its operations.

	2. If the entity is a DRE, stand it up (make it a K-1issuer) by ad=ing a partner (like a sub 5).

	3. Whoever paid the adviso= should also be made a partner of the entity.

	4. The ent=ty should reimburse the partner(s) who paid the advisor.

		a. If the entity lacks sufficient cash, a someone should infuse cash int= it.

	5. The entity can then capitalize this as a formation expense.=/o:p>

	6. The expense should not be amortized.

7. =f the entity liquidates and distributes its assets (e.g., art) in kind, th= capitalized expense will be incorporated in the basis of each piece of ar=.

a. Allocation among the individual pieces of art can probably be any rea=onable method, like pro rata according to value or embedded gain.

8. It is possible that other assets could be distributed from the e=tity prior to liquidation, and that would concentrate the advisor expense =upon liquidation) in the remaining pieces.

9. When and i= the assets distributed in liquidation are sold, gain or loss would be red=ced by the amount of the capitalized amount in each asset.

=li class="MsoListParagraph" style="margin-left:0in;mso-list:I0 levell =fol">The IRS may scrutinize this transaction given the size of the advisor=expense, and this is even more likely if the liquidation happens too soon =fter formation. (Maybe would have to be 2020 or later....)

I've left out the complex reasoning behind thi=, as well as the rejected scenarios that EY decided won't work for c=mplex reasons. Joe, John and Rich should feel free to supplement my =utline.

Barry J. Cohen =|
President and Speci=l Counsel |
Elysium Management,=LLC |
445 Park Avenue Suite 1401
New York, NY 10022&=bsp;|
Tel. (646) 589-0322 | Cell █████████████████<=o:p>
█████████████████<mailto:███████████████████████> &n=sp;