Since we announced last month that Donald Trump had switched to a regular private jet, likely his Cessna Citation X, TBEN has found its most famous Boeing 757 VIP parked at a remote airport north of New York. It is apparently in a state of disrepair. Very sad! The articles hypothesized that the 45e the president was unable or unwilling to spend about $ 6 million to make it fit to carry passengers.
His least preferred wired news network slyly reasoned, “Although the current state of its finances is not public, the Covid-19 pandemic has taken its toll on the hospitality industry that is home to so many of its businesses. ”
If you are a hater, don’t chuckle too loudly. Without spending a dime on repairs, Trump may well be able to turn the stranded airliner into a cash machine, generating millions of dollars a year in profits.
For months, I asked people who might know the future of the luxury plane, once owned by Microsoft co-founder Paul Allen, and before that, a former Danish low-cost airline. Some thought it might end up in the rental market. VIP airliners fetch $ 15,000 to $ 40,000 an hour when leased. Others have suggested that it was intended to be the centerpiece of a future presidential library. Expensive repairs seem to rule out the first. It turns out that the latter wouldn’t have many tax benefits and could cost $ 45 huge loss of profits.
Trump Presidential Library
According to a lawyer specializing in UHNW tax strategies, the Verry much The problem with Trump donating his 757 to his presidential library is the way they’re set up. He says that setting up a library usually involves the outgoing president forming a 501 (c) (3) charitable foundation with its namesake, which will be directly linked to their presidential library (i.e., the George Bush Presidential Library Foundation ) or a larger charity. mission that includes funding for the construction and management of the library (i.e. the Barack Obama Foundation, the Clinton Foundation, among others). All libraries dating back to Reagan are 501 (c) (3) organizations (or formed under larger 501 (c) (3) organizations) for tax purposes.
Regarding the assessment of a potential deduction for Trump’s parked plane donation, counsel refers to IRS guidelines (Pub. 526). It specifies that if the donor donates an eligible vehicle with a declared fair market value greater than $ 500, the donor can deduct the lesser of the following amounts: the gross proceeds from the sale of the vehicle by the organization or the fair market value of the vehicle on the date of contribution.
A note on the subject he passed on to me indicates that if the fair market value is greater than your cost (or whatever), the donor may have to reduce the fair market value to arrive at the deductible amount. For property used in a trade or business that is ordinary income property – to the extent of any gain that would have been treated as ordinary income due to depreciation if the property had been sold for its fair market value at the time contribution – the amount the donor can deduct for the contribution of such property its fair market value less the amount that would constitute ordinary income if the donor sold the property for its fair market value.
This rule limits the deduction to the donor’s base in the property. So, he says, if Trump now has an adjusted base of zero dollars on the plane, any charitable deduction would also be zero. If the plane had a fair market value of $ 5 million at the time of donation and Trump would have ordinary income of $ 5 million (adjusted basis of zero dollars after depreciation and all income would be ordinary), his charitable deduction would be zero dollars. .
If the current Palm Beach, Florida resident contributes a property that has a lower fair market value than its base, the deduction is limited to the fair market value. A deduction cannot be claimed for the difference between the basis of the property and its fair market value, he says.
A key factor that complicates a donation to a museum is the fair market value of Trump’s plane. In its current state, it is a difficult task with a lot of variables. It could be worth a lot more than its average counterpart given the attached history and opulent interior, or it could be worth next to nothing as it is a 30-year-old plane stuck on the runway, according to the reports. experts.
“I think it’s certainly possible, if not likely, that the fair market value of his aircraft is greater than its base – after depreciation, in which case it would likely be limited to the base for the purposes of a charitable deduction.” However, if Trump is left with a cost base, it is theoretically possible that the aircraft’s current fair market value will be less than its adjusted base. In this case, the deduction would likely be limited to the current fair market value. “
If you are like me and you are not a UHNW tax expert and you do not have experience in donating cars and planes to non-profit organizations, the two specialists tell me at the end account that they see no financial benefit for Trump. donating his 757 to his presidential library or other non-profit organization. They came to the same conclusion. The former president’s keen marketing and sales acumen means the plane is unlikely to be heading for junkyard.
Viva Las Vegas
The art of the transaction. With Trump’s loyal MAGA followers, the plane could become a very profitable tourist attraction. For example, grounded Concorde supersonic jet screens are popular prints. A Concorde exhibit in Manchester, England, before the pandemic, attracted 250,000 visitors a year.
One resting place that might make sense is Las Vegas, where Trump is already partnering with fellow billionaire Phillip Ruffin at a Trump International hotel. “Best Friend” Ruffin owns nearby Circus Circus and Treasure Island.
According to a TBEN report, Ruffin’s 2019 acquisition of Circus Circus for $ 825 includes the Adventuredome, a five-acre indoor theme park. Tickets cost $ 40. In 2014, the most recent statistics we could find, it attracted 3.2 million visitors.
Needless to say, Vegas has an array of paid attractions with a wide array of admission fees. Access to the Eiffel Tower Observation Deck in Paris Las Vegas starts at $ 22.59. The Las Vegas Mob Museum costs $ 29.50. For $ 36.99, you can see artifacts from the RMS Titanic at the Luxor. The SkyJump at the Stratosphere will set you back $ 133 for the time it takes to drop 829 feet.
So how much could the former president pocket by sending his 757 on a one-way flight to the entertainment capital of the world?
Circulating 1,000 visitors a day through an airplane exhibit between 10 a.m. and 6 p.m. would be no problem, says a former theme park manager. Multiply that by $ 20 per ticket and 365 days, and you end up with $ 7.3 million. Trump’s 757 could make money after hours as an event space for private parties. Renting it for $ 10,000 over 100 nights would generate another million dollars. Souvenirs, including miniatures, add more money.
Return to a Boeing Business Jet
Oh, and in case you were wondering, how is Trump going to get the plane to Vegas when he needs millions of dollars in repairs? An aviation insider tells us all he needs is to get an FAA ferry flight waiver. This is something that occurs at a low level in the agency and is routine, allowing airlines and owners to fly their broken aircraft to an MRO for fixes.
If Trump partners with Ruffin, another perk could be an upgrade to the kind of VIP private jet he’s used to. Ruffin-related companies own at least three private jets, including a 1999 Boeing Business Jet, which Trump used during his 2016 White House run.