DEPARTMENT OF THE TREASURY INTERNAL REVENUE SERVICE 290 Broadway New York, N.Y. 10007-1867 S:E:SE:E2G:TNE-G1-LF.. SMALL BUSINESS/SELF-EMPLOYED DIVISION Date: March 31, 2016 Estate & Gift Tax Attorney — Lawrence Falk Badge # - 13. Te Fax # e-mai| Leon D. Black 760 Park Avenue New York, N.Y. 10021 Gift Tax Return — 2013 Tax Period Donor — Leon D. Black Dear Mr. Black, The 2013 gift tax return has been selected for examination. If you would prefer to be represented by an attorney or accountant, please have the enclosed power of attorney form completed and forwarded to the address listed above. Please provide the following items and information: 1) Schedule A, Part 3, #7 — The gift amount related to the economic benefit of split dollar life insurance of the Leon D. Black 1999 Life Insurance Trust #1, was listed at $91,380. Please provide a detailed account as to how this amount was arrived at; and 2) Schedule A, Part 3, #8— The gift amount related to the economic benefit of split dollar life insurance of the Leon D. Black 1999 Life Insurance Trust #2, was listed at $19,879 . Please provide a detailed account as to how this amount was arrived at; and 3) Schedule A, Part 3, #9 - The Empire Valuation Consultants, LLC, appraisal, on page 64, analyzed the lack of control discount regarding the transfer of the donor's 37.75% Limited Partnership Interest in Black Family Partners, L.P. The appraisal cited Mergerstat Review 2013 and stated that the controi premiums in Mergerstat corresponded to a discount for lack of control of 27%. The appraisal then cited Mergerstat’s Third Quarter 2013 Control Premium Study and stated that the contro! premiums corresponded to lack of control discounts of between 25% and 32.4%. The appraisal also cited Closed End Investment Funds and stated the average discounts to be 11.3%. Based on the above, it appears that the minority/lack of control discount would be between 11.3% and 32.4%. Regarding an appropriate marketability discount, the appraisal, on page 70 EFTA00592519

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stated that as a result of its analysis of restricted stock studies, a reasonable restricted stock equivalent discount for Black Family Partners, LP, would be 13.9%. The appraisal then applied a range of private equity discount increments to the selected restricted stock equivalent discount of 13.9% and concluded that a reasonable discount for lack of marketability would range from 21% to 27% with a mid-point of 24%. However, the appraisal, on page 70, concluded that the combined minority/marketability discount should be a total of 15%. Please have Empire provide a detailed explanation as to how a total 15% discount was arrived at as their appraisal leads to the conclusion that a much higher total discount was warranted; and 4) Schedule A, Part 3, #10 —- The Empire Valuation Consultants, LLC, appraisal, on page 64, analyzed the lack of control discount regarding the transfer of the donor’s 34.53% Limited Partnership Interest in Black Family Partners, L.P. The appraisal cited Mergerstat Review 2013 and stated that the control premiums in Mergerstat corresponded to a discount for lack of control of 27%. The appraisal then cited Mergerstat’s Third Quarter 2013 Control Premium Study and stated that the control premiums corresponded to lack of contro! discounts of between 25% and 32.4%. The appraisal also cited Closed End Investment Funds and stated that the average discounts to be 11.5%. Based on the above, it appears that the minorityfack of control discount would be between 11.5% and 32.4%. Regarding an appropriate marketability discount, the appraisal, on page 70 stated that as a result of its analysis of restricted stock studies a reasonable restricted stock equivalent discount for Black Family Partners, LP, would be 13.9%. The appraisal then applied a range of private equity discounts increments to the selected restricted stock equivalent discount of 13.9% and concluded that a reasonable discount for lack of marketability would range from 21% to 27% with a mid-point of 24%, However, the appraisal, on page 70, concluded that the combined minority/marketability discount should be a total of 15%. Please have Empire provide a detailed explanation as to how a total 15% discount was arrived at as their appraisal leads to the conclusion that a much higher total discount was warranted; and 5) Please provide documentation for the above GRATS that payment was made for each of the two years. if payment was made in closely held stock, please provide a copy of the appraisal(s) at the distribution date(s). . Please forward the items and information requested above by May 12, 2016. Please do not hesitate to contact me if you have any questions regarding this matter. ~— 4 (contents Folk Estate & Gift Tax Attorney Enclosures: Publication 1 and Notice 609 Form 2848 — Power of Attorney Form EFTA00592520

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Power of Attorney and Deciaration of Representative Received by Caution: A separate Form 2848 must be completed for each taxpayer. Form 2848 will not be honored Srey pepene er San epreoaiaten bet Oe FS. (Mote: IRS sends notices and communications to only two rep to represent the taxpayer before the Internal Revenue Service and perform the following acts: 3 ‘Acts authorized (you are required to complete this fine 3). With the exception of the acts described in line 5b, | authorize my representative(s) to receive end inspect my confidential tax information and to perform acts that | can perform with respect to the tax matters described below. For example, my representative(s) Shall have the authority to sign any agreements, consents, or similar documents (see instructions for line Sa for authorizing a representative to sign a return). “Desc‘ption of Matter fncome, Employment, Payrol, Excise, Estate, Git, Whistleblower, Tax Form Number (1040, 941, 720, etc.) (if applicable) Practitioner Discipline, PLR, FOIA, Civil Penalty, Sec. 5000A Shared Payment, Sec. 4980H Shared Responsibility Payment, etc.) (see instructions} 4 — Specific use not recorded on Centralized Authorization File (CAF). If the power of attorney is for a specific use not recorded on CAF, ______check this box. See the instructions for Line 4. Specific Use Not Recorded on CAF . . +O 6a ‘Additional acta authorized. n adction tothe acts lated on ine 3 above, | authorize my representative) to porform the folowing acts eee Instructions for line Se for more information): C Authorize disclosure to third parties; + () Substitute or add representative(s); [7] Sign a retum: Ore — —exweeeeeee—ee eS ee (other acts authorized: -_ For Privacy Act and Paperwork Reduction Act Notice, see the instructions. Cat. No. 11980) Form (Rev.12-2015) EFTA00592521

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Form 2848 (Flav. 12-2015) Page 2 b Specific acts not authorized. My representative(s) is (are) not authorized to endorse or otherwise negotiate any check {including directing or accepting payment by any means, electronic or otherwise, into an account owned or controlled by the representative(s) or any firm or other entity with whom the representative(s) is (are) associated) issued by the government in respect of a federal tax liability. List any other specific deletions to the acts otherwise authorized in this power of attorney (see instructions for line 5b): 6 Retention/revocation of prior power(s) of attorney. The filing of this power of attorney automatically revokes all earlier power(s) of attorney on file with the internal Revenue Service for the same matters and years or periods covered by this document. aeetena“s to revoke a prior power of attorney, check here. . YOU MUST ATTACH A COPY OF ANY POWER OF ATTORNEY YOU WANT TO REMAIN IN EFFECT. 7 — Signature of taxpayer. If a tax matter concerns a year in which a joint retum was filed, each spouse must file a separate power of attorney even if they are appointing the same representative(s). if signed by a corporate officer, partner, guardian, tax matters partner, executor, receiver, administrator, or trustee on behalf of the taxpayer, | certify that | have the legal authority to execute this form on behalf of the taxpayer. > IF NOT COMPLETED, SIGNED, AND DATED, THE IRS WILL RETURN THIS POWER OF ATTORNEY TO THE TAXPAYER. Date Title (if applicable) Print Name “Print name of taxpayer from line 1 i other than individual Declaration of Under penalties of perjury, by my signature below | deciare that: * | am not currently suspended or disbarred from practice, or ineligible for practice, before the intemal Revenue Service; © | am subject to regulations contained in Circular 230 (31 CFR, Subtitle A, Part 10), as amended, governing practice before the intemal Revenue Service: * | am authorized to represent the taxpayer identified in Part | for the matter(s) specified there; and © | am one of the following: @ Attorney—a member in good standing of the bar of the highest court of the jurisdiction shown below. b Certified Public Accountant —licensed to practice as a certified public accountant is active in the jurisdiction shown below. ¢ Enrolled Agent—enrolied as an agent by the internal Revenue Service per the requirements of Circular 230. ¢ Officer—a bona fide officer of the taxpayer organization. @ Full-Time Employee —a full-time employee of the taxpayer. f Cr Oe mene eel Go tnpayere tnmedisto tndly Gpowe, parent, chit, rundearess, GunGHRM, tap pues, ap-ae, brother, or sister). 9 Sretod Actany —envated ot on cotuany ty tha dcist Bonn for tao Raatinant of Acteasten under 89 USC, 1242 (the authority to practice before the intemal Revenue Service is limited by section 10.3(d) of Circular 230). h Unenrolied Retum Preparer— Authority to practice before the IRS Is limited. An unenrolied return preparer may represent, provided the preparer (1) prepared nd gre te ret orca ren prepared therein snare space onthe fom) ws gl fo wh teeta Sad Reaeirannaats far Cie tear oe paaanane tne ressioed Hesand Pong Gennen Pragram Revers of Completion(s). See Special Rules end Requirements for Unenrotied Return Preparers in the instructions for k Student Attomey or CPA—receives permission to pnauti tapapenhaien Ge Siblard sidan efitehoestehn no clon, lentee, eraneoeaiea ctudert working in an LITC or STGP. See inetrutions tor Part tor additonal ivornatven and and requirements. ft Enrolled Retirement Pian Agent—enrolied as a retirement pian under the requirements of Circular 230 (the authority to practice before the intemal Revenue Service is limited by section 10.3(e)). soent iF THIS DECLARATION OF STATIVE iS NOT CONPLETED, SIGNED, AND DATED, THE IRS WILL RETURN THE POWER OF ATTORNEY. REPRESENTATIVES MUST SIGN IN THE ORDER LISTED IN PART I, LINE 2. Note. For designations d-f, enter your title, positicn, or relationship to the taxpayer in the “Licensing jurisdiction* column. EFTA00592522