EFTA00584463.pdf

Taxpayers: Leon Black and Debra Black ("Taxpayers") SSNs: Tax Form: 1040X Tax Year: 2013 Statement of Reasonable Cause for Failure to Timely File Forms 5471, 8865, 8858 and 8938 Taxpayers, husband and wife, are voluntarily filing the attached Form 1040X (the "Amended Return") for the sole purpose of filing Forms 5471, 8865, 8858 and 8938 (the "International Information Returns") for 2013, under the Internal Revenue Service's (the "IRS") 2014 Delinquent International Information Return Submission Procedures. The Taxpayers have not been contacted by the IRS regarding the Amended Return or the International Information Returns and have a long history of being fully compliant taxpayers. The Taxpayers are not under civil examination or criminal investigation by the IRS. This submission, pursuant to Treas. Reg. §§ 1.6038-2(k)(3) and 1.6038-3(k)(4), explains why the Taxpayers' failure to file the International Information Returns with the original Form 1040 for 2013 (the "Original Return") was due to reasonable cause and not willful neglect. The only change reflected in the Form 1040X filed today is the inclusion of the International Information Returns, and there is no change in taxable income reported by the Taxpayers, or in the tax liability owed by the Taxpayers, for 2013, which was timely paid. The Original Return, the Amended Return and the accompanying International Information Returns were prepared by the Taxpayers' professional accountants at Raich Ende Malter & Co. LLP ("REM-Co"). Background The Taxpayers own interests in a wide variety of entities related to Apollo Global Management, LLC ("Apollo"), the publicly traded alternative asset manager, through their interest in BRH Holdings, L.P. (EIN: 98-0541994) ("BRH" or the "Partnership"). Since the inception of BRH, employees of Apollo have assisted with the preparation of the tax returns of BRH as well as all the other controlled foreign partnerships, controlled foreign corporations and foreign disregarded entities (the "Foreign Entities") listed on the enclosed Exhibit A. The Foreign Entities, other than BRH and AP Professional Holdings LP, are also owned, in part, indirectly by Apollo. The appropriate Apollo entities timely and properly filed the Forms 8865 and 8858 with respect to these Foreign Entities, but determined that Apollo did not need to provide the underlying information to the Taxpayers, or alert the Taxpayers that they might have similar filing requirements. Thus, the Schedule K-1 for 2013 from the Partnership, provided to the Taxpayers, included all items of taxable income and loss attributable to the Taxpayers' interest in the Partnership, but did not indicate any obligation to file the International Information Returns with respect to BRH or the many other Foreign Entities held through BRH. In fact, the Schedule K-1 included a footnote specifically stating that there were no filing requirements with respect to foreign partnerships during the 2013 tax year and therefore a filing of Form 8865 was not required. The footnote in the Schedule K-1, however, did suggest that partners consult their tax advisors. As a result, the Taxpayers did consult with their professional accountants at REM- Co who did prepare and file Form 8865 for BRH based on the best available information in the Schedule K-1 provided. The other Foreign Entities are indirectly or constructively owned, in EFTA00584463 whole or in part, by BRH, and, as such, the tax information of such Foreign Entities is not directly reported to the Taxpayers or their tax advisors, but instead is rolled into the tax reporting of BRH. As a result, neither the Taxpayers nor their accountants at REM-Co were aware that any other International Information Return filings were required and, in any case, they were not provided the information necessary to properly complete the International Information Returns, making it impossible for the Taxpayers to timely file these informational returns. Importantly, all income reported on the Schedule K-1 from the Partnership was properly and timely reported to the IRS on the Original Return. A Form 8938 was timely filed by the Taxpayers with the Original Return and is being amended today simply to reflect the correct number of Forms 5471 and 8865 in Part IV required to be filed by the Taxpayers. The Taxpayers were unaware of their obligation to file the International Information Returns until August 2016. At that time, the Taxpayers and their representatives were first informed by Apollo's tax department that the Taxpayers likely had an obligation to file the International Information Returns with respect to BRH and the other Foreign Entities. Upon learning this information, the Taxpayers immediately requested additional information from Apollo and Deloitte (Apollo's tax advisor) and diligently reviewed the history and factual circumstances with their accountants and the law firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP. As a result of that review, it was determined that the Taxpayers were obligated to file the International Information Returns with respect to the Foreign Entities for 2013 (including some minor reporting changes to the previously filed BRH Form 8865), which the Taxpayers are now doing via the filing of the Amended Return. The Taxpayers are neither accountants nor lawyers. Because the Taxpayers' ownership arrangements related to the Partnership and other Foreign Entities are very complex, the Taxpayers have engaged and relied on experienced accountants to prepare their tax returns based upon the information and records provided to them, including by Apollo's tax department, which is responsible for overseeing tax compliance and reporting for an extremely complex business enterprise, and by Apollo's tax advisors at Deloitte, which prepared the applicable Schedule K-I. Basis for Reasonable Cause The Taxpayers have exercised ordinary business care and prudence by engaging and relying on experienced tax professionals in making a good faith effort to comply with an intricate set of information reporting rules relating to a complex business enterprise. When the Taxpayers signed and filed the Original Return, on the advice of their experienced tax advisors at REM-Co, the Taxpayers believed that the Original Return was accurate and complete. In addition, the Taxpayers acted as promptly as practicable upon learning of the filing oversight to gather all relevant records and information from the Apollo tax department and provided such information to their tax advisors, resulting in the filing today of the Amended Return and the International Information Returns. As noted, the Taxpayers have a long history of being compliant taxpayers and compliant international tax filers, have filed international information returns in the past, including all required FBAR Statements, and have never been subject to tax penalties. The Taxpayers are not under a civil examination or a criminal investigation by the IRS. The IRS has not contacted the Taxpayers about any of the delinquent International Information Returns that are the subject of this submission. The Foreign Entities that are the subject of the International EFTA00584464 Information Returns were not engaged in tax evasion. The Taxpayers are voluntarily filing the Amended Return today to ensure that all International Information Returns for 2013 have been properly filed. Finally, the Taxpayers also note that they have timely filed all required International Information Returns for the 2015 taxable period and will continue to ensure that all required International Information Returns are properly and timely filed in future taxable periods. Conclusion Based on the above, the Taxpayers believe, in good faith, that reasonable cause exists for their failure to file the International Information Returns with respect to the Foreign Entities with the Original Return. Therefore, the Taxpayers respectfully request that the IRS exercise its discretionary, regulatory authority to grant reasonable cause relief and not assert any penalties under Section 6038 of the Internal Revenue Code of 1986 or Treas. Reg. §§ 1.6038-2(k)(1) or 1.6038-3(k)(3). EFTA00584465 Under penalties of perjury, the Taxpayers declare that each of the statements and facts, to the best of their knowledge and belief, contained in this letter is true, correct and complete. Leon Black Debra Black EFTA00584466  I 2013-EXHIBIT A FOREIGN ENTITIES FORMS 8865 BRH HOLDINGS, LP APOLLO ADVISORS VI (EH) LP APOLLO ADVISORS VI (APO FC) LP APOLLO EPF ADVISORS LP AP PROFESSIONAL HOLDINGS LP APOLLO PRINCIPAL HOLDINGS III LP APOLLO PRINCIPAL HOLDINGS IV LP APOLLO PRINCIPAL HOLDINGS VII LP APOLLO PRINCIPAL HOLDINGS VIII LP APOLLO PRINCIPAL HOLDINGS IX LP APH HOLDINGS LP APH HOLDINGS (FC) LP APH HOLDINGS (DC) LP AMH HOLDINGS (CAYMAN) LP AAA ASSOCIATES LP APOLLO ANRP ADVISORS (IH) LP APOLLO ANRP ADVISORS (APO FC) LP FORMS 8858 GRANITE VENTURES II LTD GRANITE VENTURES III LTD APOLLO MANAGEMENT ADVISORS GMBH AAA HOLDINGS GP LIMITED AMI (LUXEMBOURG) S.A.R.L. APOLLO ALTERNATIVE ASSETS LP NEPTUNE FINANCE CCS, LTD APOLLO INTERNATIONAL MANAGEMENT (CANADA) ULC APOLLO VERWALTUNGS V GMBH AGRE DEBT FUND I GP, LTD AAA HOLDINGS GP, LP AGRE EUROPE CO-INVEST MANAGEMENT GP, LLC APOLLO SK STRATEGIC ADVISORS GP, LP APOLLO AION CAPITAL PARTNERS LP AGRE ASIA PACIFIC REAL ESTATE ADVISORS LP APH HFA HOLDINGS LP APOLLO EUROPE ADVISORS LP APOLLO TOTAL RETURN ADVISORS LP APOLLO ZEUS STRATEGIC ADVISORS LP AAA LIFE RECARRY LP APOLLO ACHILLES CO-INVEST GP, LLC EFTA00584467  2 2013-EXHIBIT A, FOREIGN ENTITIES FORMS 8858 (Continued) APOLLO ANGUILLA B LLC FINANCIAL CREDIT INVESTMENT ADVISORS II APOLLO ANRP CO-INVESTORS (IH-D) LP AAA GUERNSEY LIMITED APOLLO CO-INVESTORS VII (NR EH-D) LP APOLLO ANRP ADVISORS (IH-GP) LP APOLLO SPN CAPITAL MANAGEMENT LLC APOLLO CO-INVESTORS VI (EH-D) LP ADIC LIFE ADVISORS LP EPF II TEAM CARRY PLAN LP APOLLO SOMA II ADVISORS LP APOLLO STRATEGIC ADVISORS LP APOLLO EPF II CAPITAL MANAGEMENT LLC APOLLO SK STRATEGIC ADVISORS LLC APOLLO APC ADVISORS LP APOLLO APC CAPITAL MANAGEMENT LLC APOLLO SPN CAPITAL MANAGEMENT (APO FC-GP) LLC APOLLO EUROPEAN CREDIT ADVISORS LP APOLLO EUROPEAN STRATEGIC ADVISORS LP APOLLO CO-INVESTORS VII (NR FC-D) LP APOLLO AGRE PRIME CO-INVESTORS (D) LLC APOLLO ANRP ADVISORS (APO FC-GP) LLC APOLLO ANRP CO-INVESTORS (FC-D) LP APOLLO CO-INVESTORS VII (FC-D) LP APOLLO CO-INVESTORS VI (FC-D) LP APOLLO ADVISORS VI (APO FC-GP) LLC APOLLO ADVISORS VII (APO FC-GP) LLC AGRE EUROPE CO-INVEST ADVISORS GP, LLC AION CO-INVESTORS (D) LTD CAI STRATEGIC EUROPEAN REAL ESTATE ADVISORS GP, LLC APOLLO AGRE APREF CO-INVESTORS (D) LP APOLLO SK STRATEGIC CO-INVESTORS (DC-D) LLC APOLLO EPF CO-INVESTORS (B) LP APOLLO EPF CO-INVESTORS II (EURO) LP FORMS 5471 AAA MIP LIMITED APH III (SUB I) LTD APOLLO ADMINISTRATION GP LTD APOLLO ADVISORS VI (EH-GP) LTD APOLLO ADVISORS VII (EH-GP) LTD APOLLO GSS GP LIMITED GREENHOUSE HOLDINGS LTD EFTA00584468  3 2013-EXHIBIT A, FOREIGN ENTITIES FORMS 5471 (Continued) APH I (SUB I) LTD ANRP TALOS GENPAR LTD APH HFA HOLDINGS GP LTD APOLLO EPF CAPITAL MANAGEMENT LIMITED APOLLO LIFE ASSET LTD STONE TOWER OFFSHORE LTD APOLLO ALST GENPAR LTD APOLLO GAUCHO GENPAR LTD APOLLO ATHLON GENPAR LTD AGRE U.S. REAL ESTATE ADVISORS CAYMAN, LTD CPI CAPITAL PARTNERS EUROPE GP LTD CPI CCP EU-T SCOTS GP LTD STONE TOWER EUROPE LIMITED APOLLO TALOS GENPAR LTD BRH HOLDINGS GP LTD EFTA00584469