<table><tr><th>From:</th><th>McCaffrey, Carlyn &lt;</th></tr><tr><td>Sent:</td><td>Thursday, January 31, 2013 9:32 PM</td></tr><tr><td>To:</td><td>Jeffrey Epstein</td></tr><tr><td>Cc:</td><td>Heller, Amy; Yopp, Mark; Kirschner, Elyse</td></tr><tr><td>Subject:</td><td>FW: Re:</td></tr></table>

Here's a =hought from Amy Heller, one of my partners.

Carlyn S. McCaffreywww.mwe.com

<=pan style='font-size:10.0pt;font-family:"Tahoma","sans-serif"'>From: =eller, Amy
Sent: Thursday, January 31, 2013 4:29 PM To:</=> McCaffrey, Carlyn
Subject: RE: Re:

=/div>

<=span>

Amy E. Heller

McDermott Will & Emery LLP | 3=0 Madison Avenue, New York, NY 10173
(p) <=pan
+style='font-size:10.0pt;font-family:"Arial","sans-serif";color:blue'=
+
(f) | | =/span>www.mwe.com
+<http://www.mwe.com>

From: McCaffrey, Carlyn
Sent: Thursday, January 31, 2013 4=24 PM
To: Yopp, Mark
Cc: Rosen, Arthur; Heller, Amy; K=rschner, Elyse
Subject: FW: Re:

Can =ou find any authority under the NY sales tax law thats/=>

1. A sale between a grantor trust and its grantor is eithe= subject to or not subject to the sales tax. or

2. If a grantor retained annuity trust is funded with art a=d the annuity payments to the grantor are subsequently funded with interes=s in that same art that:

=o:p>

&=bsp; a.&=bsp; the transfer to the grantor annuity trust is either subject to or not=subject to the sales tax =o:p>

&=bsp; b. =he annuity payments made with interests in the art are either subject to o= not subject to the sales tax

I know there i= authority that grantor retained annuity payments funded with real estate =nterests will be subject to the real property transfer tax.

If you don't know what a grantor retained annuity trust is =ou can call either me, Elyse or Amy and we'll explain it.

Carlyn S. McCaffrey I P=rtner

McDermott Will & Emery LLP | 340 Madison Avenue, New =ork, NY 10173
<blackened out> | <blackened out> <mailto: <blackened out>> | www.mwe.com

From: J=ffrey Epstein [mailto:jeevacation=gmail.com <mailto:jeevacation@gmail.com> ]
Sent: Thursday, January 31, 2013 4:11 PM
T=: McCaffrey, Carlyn
Subject: Re: Re:

</=iv>

On Th=, Jan 31, 2013 at 5:05 PM, McCaffrey, Carlyn <blackened out><mailto:></mailto:></blackened out> wrote:=/p>

Yes - the trust pays and then leon would pay if=he took it back.

Remember when you're thinking about this issue that it'= not really a substitution power. We refer to it as that but if you =ook 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 pro=erty by substituting therefore other property of an equivalent value.

Carlyn S. McCaffrey I Partner

McDermott Will & Emery LLP | 340 Madison Avenue, New York, NY 10173
 | </=pan>  <mailto:  > | www.mwe.com
<http://www.mwe.com= target=>

&nbs=;

From: Jeffrey Epstein (mailto:jeevacation@gmail.com</=>J
Sent: Thursday, January 31, 2013 4:03 PM
To: McCaf=rey, Carlyn
Subject: Re:

=

so that the trust pays? then if leon 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 substruion=provision. but could not point to authority either<=p>

On Thu, Jan 31, 2013 at 4:56 PM, McCaffrey, Carlyn ███████████████████████████████g=; wrote:

the person who pays the sal=s 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 inve=tment purposes and make a section 1031 exchange, I pay sales tax. If=l make a second 1031exchange, I pay another sales tax, etc.</=:p>

<=>Carlyn S. McCaffrey I Partner

McDermott Will & =mery LLP 1340 Madison Avenue, New York, NY 10173 <te I From: Jeffrey Epstein (mailto:jeevacation@gmail.comj =b>Sent: Thursday, January 31, 2013 3:45 PM To: McCaffrey, Ca=lyn Subject:

my irs people , also now can't see substitution provision=causing sales tax , as it could happen multiple times over the life of the=trust, setllor could not be liable for sales tax , or is the trust t=e seller and the settlor the buyer?

The informa=ion contained in this communication is confidential, may be attorney-cl=ent privileged, may constitute inside information, and is intended only=for the use of the addressee. It is the property of Jeffrey Epstein =br>Unauthorized use, disclosure or copying of this communication or any=part thereof is strictly prohibited

and may be unlawful. If you have re=eived this communication in error, please notify us immediately by r=turn e-mail or by e-mail to jeevacation@gmail.com <mailto:jeevacation@gmail.com> , and destroy this communication a=d all copies thereof, including all attachments. copyright -all rights =eserved

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The information =ontained in this communication is confidential, may be attorney-client =rivileged, may constitute inside information, and is intended only for<=r>the use of the addressee. It is the property of Jeffrey Epstein U=authorized use, disclosure or copying of this communication or any part=thereof is strictly prohibited and may be unlawful. If you have receive= this communication in error, please notify us immediately by return=e-mail or by e-mail to jeevacation@gmail.com <mailto:jeevacation@gmail.com> , and destroy this communication and al= copies thereof, including all attachments. copyright -all rights reser=ed

confidential, may be=attorney-client privileged, may constitute inside information, and is i=tended only for the use of the addressee. It is the property of Jeff=ey Epstein

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Unauthorized use, disclosure or copying of this communic=tion or any part thereof is strictly prohibited and may be unlawful. If=you have received this communication in error, please notify us immedia=ely by return e-mail or by e-mail to jeevacation@gmail.com <mailto:jeevacation@gmai..com> , and destroy this com=unication and all copies thereof, including all attachments. copyright =all rights reserved

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