**Key Information**

*   **Email From:** Jeffrey Epstein to Melanie Spinella
*   **Date:** Thursday, September 19, 2013, 10:54 PM
*   **Subject:** Fwd: Avioneta Holdings, LLC
*   **Forwarded Message From:** Thomas Turrin to Jeffrey Epstein, Sept 19, 2013 6:00 PM regarding Avioneta Holdings, LLC. Mentions "revenue" is no longer considered revenue after May 2013.
*   **Original Email From:** Jeffrey Epstein to Thomas Turrin, Sept 19, 2013 4:52 PM, asking "where is the 9 million in revenue". Subject: Re: Avioneta Holdings, LLC

On Thu, Sep 19, 2013 at 4:09 PM, Thomas Turrin <mailto: > wrote:

Jeffrey,

I revised the amount of Leon's "private use inco=e" in the attached tax treatment schedule. Using the flight hours for=2012, I calculated the average per-hour rate (dom/intI) to be $9,110. I applied that h=urly rate to the personal-use hours for 2012 (137.7). Business hours (per Apollo p=yment statements) were assumed the same.

Michael Volpe of Jet Aviation confirmed that the rep=rted hours and mileage shown on their monthly statements is all-inclusive.

The total amount paid by Leon to the LLC above the c=mputed flight revenue was considered capital contribution. The portion of the capit=l contribution related to operating, managing and maintaining the aircraft is shown at the bottom of t=e schedule. Until May 2013, amounts paid by the owner for management, mainten=nce, pilot costs (etc) to management company were considered to be taxable for excise =ax by IRS —this has been suspended (see below).

The excise tax computed is based on business flights=- assuming all domestic flights. However, international flights (over 200 miles from =S border) are not subject to excise tax. Since much of the flight time is international, the =xcise tax could be significantly less.

I'm available to discuss.

Tom

From NBAA....

On May 16, 2013, the IRS informally announced tha= it will suspend the assessment of Federal Transportation Excise Tax (FET) on owner flights on aircraft managed by aircraft management compa=ies. In a new article, NBAA Tax Committee Member John Hoover reviews t=e implications of this suspension on assessments, summarizes meetings and =fforts by NBAA leading up to this suspension on assessments, and discusses expected future guidance from the=lRS on this issue

IRS =uspends Federal Excise Tax Assessments on Aircraft Management Company Fees

Gary I. Horowitz <http://www.wileyrein.com/profession=ls.cfm?sp=bio&id=489>
May 21, 2013 | Airworthy Alert

The Internal Revenue Service (IRS) is suspendi=g Federal Excise Tax (FET) assessments of aircraft management companies un=er audit, while the IRS develops guidance on FET specific issues affecting private aircraft operations.

The Tax Code imposes a 7.5% FET on the amount =aid for domestic air transportation services provided by aircraft charter =perators and commercial airlines. FET can also be imposed by the IRS on non-commercial flight operations. Over the last several year=, the IRS has aggressively audited aircraft management companies, and has =laimed that the aircraft management fees paid by an owner to its aircraft =anagement company are subject to FET, even when the aircraft is operated by the owner under FAR Part 91.

In a 2012 Chief Counsel Advice memorandum, an =ircraft owner hired a management company to oversee aircraft operations, p=id the management company a monthly management fee and reimbursed pilot employment and training costs. The IRS determined that th= management company provided taxable transportation to the aircraft's ow=er and that FET was due on the monthly management fees and pilot reimburse=ents. However, this new IRS position is inconsistent with prior guidance and creates confusion.

In response, representatives of the National B=siness Aviation Association (NBAA) and National Air Transportation Associa=ion (NATA) met with IRS officials to request clear guidance on FET as applied to aircraft operated privately by owners using aircraft =anagement company services.

In consideration for the concerns of NBAA and =ATA, the IRS will suspend FET assessments on current audits until the IRS =evelops formal guidance and audit standards for both future FET liability and past activity. IRS guidance is expected to be pro=ided within several months.

In light of the IRS's FET activity, private =ircraft owners using aircraft management company services should review =heir arrangements to clearly establish that, for FET purposes, the aircraft owner has possession, command and control over its aircraft a=d the management company is merely acting as the owner's agent.

# For more information, please contact <http://www.wileyrein.com/professionals.cfm?sp=bio&id=489= target=>

THOMAS TURIN, CPA<=>>

Partner

Raich Ende Maker & Co. LLP

1375 Broadway

New York, New York =0018

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Website: www.rem-co.com <http://www.rem-co.com>

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# For more information, please contact <http://www.wileyrein.com/professionals.cfm?sp=bio&id=489= target=> (cont.)

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## CIRCULAR 230 DISCLOSURE:

To insure compliance with requirements imp=sed by the Internal Revenue Service, we inform you that any tax advice con=ained in this communication (including any and all attachments), unless expressly stated otherwise, was not intended or written to be used =nd cannot be used for the purpose of (i) avoiding tax-related penalties im=osed by the Internal Revenue Code or (ii) promoting, marketing, or recomme=ding to another party any transaction(s) or tax-related matter(s) addressed herein. This communication may not be f=rwarded (other than to the addressee(s) identified above) without our expr=ss written consent.

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