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View Diary: Vid of Romney's Friends Jets Parked Near Park City! Who Are They? I Flight Tracked Them! (222 comments)

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  •  Point of information: This is mostly useless. (22+ / 0-)

    Here's why.  This is based on my very brief time in the airplane finance business in the early 1990s.

    Airplanes are generally not owned by the people who use and fly them, except for recreational fliers.

    That's because airplanes are heavy capital investments.  They generate huge tax depreciation deductions.  In fact, they generate such huge deductions that the companies that fly airplanes generally can't use them.  Most operating airlines have thin profit margins so they can't use the deductions.

    The biggest airlines in the US own almost none of their planes and the same is even more true of small airlines and charter companies.

    So most commercial planes are owned by other companies that need big deductions and they are then leased back to the user.  The transactions are called sale lease back and leveraged lease.  A huge number of planes at one time were owned by finance companies in Ireland which specialized in this business.

    In the past, when you entered an airplane, say flown by United, you could look for a little plate near the pilots door that would tell you who owned the plane.  It was usually some special purpose finance subsidiary or trust, or a huge profitable industrial company that was savvy about depreciation deductions.

    So this list of the registered owners of the planes reflects these complex transactions and phantom owners, not the actual people flying in to the meeting.  That's why so many of the listed owners are "trustees."  Even those trustees are merely nominees who issue trust certificates that pass the tax deductions on to other investors.

    •  To clarify (11+ / 0-)

      Even many corporations that have corporate jets and wealthy individuals use the tax depreciation deduction pass through trust certificate structure.

      My main point is that almost none of the registered owners are likely to be the actual parties attending the meeting.  The registered owners are financial intermediaries, trustees and nominees.

    •  But the money spent to lease... (1+ / 0-)
      Recommended by:
      War on Error

      these aircraft, which to most business is a tax deduction if it's business related, is THAT going to be listed as a tax deductible expense on the returns of the individuals and corporations flying jets to a purely political event?

      Is that permissible? Can I deduct my personal transportation costs to drive to a Dem rally?  Could the ordinary attendee at Netroots Nation do so?   IANATA (I am not a tax accountant ;)... but I don't think so.

      Sadly, we don't have a right to look at tax returns, even for publicly held corps.  There ought to be a disclosure law.

      •  It's really awful from a tax policy perspective (1+ / 0-)
        Recommended by:

        Not to get into the weeds of business tax, which is rather incomprehensible, but the idea is that the user sells the plane to the investor;  the investor gets this huge depreciation tax deduction, which he shares with the user by leasing it back at a dollar cost that is lower than, eg, the cost of a "mortgage" on the plane; the investor also borrows most of the cost of the purchase price of the plane and so also gets a very large deduction for interest payments; the lease payments, as you point out, are current expenses and are deductible in each year.  

        So this is like a double dip, or triple dip deduction structure -- ie multiple parties getting multiple deductions for on  actual piece of machinery.

    •  Yeah, but you've got to assume that those who (0+ / 0-)

      own the planes are friends with the people flying on the plans.

      Why would someone who owns a plane fly people they don't know on it?

      To Park, Utah?

      To see Mitt Romney?

      •  Actually it's completely anonymous/impersonal (0+ / 0-)

        The user picks out a plane from the manufacturer.  The manufacturer and user go to a bank or specialized finance company or investment bank.  The bank runs the numbers and figures out pricing of the lease.  The investment bank chooses a separate bank that will act as trustee, which is purely formal, ministerial (ie paper ownership) role.  The investment bank's bond brokers line up potential investors.  The investment bank then "underwrites" the transaction by putting up the money to buy the plane and the manufacturer delivers the plane to the user.  The investment bank then sells trust certificates to the investors, getting back the money it put up to buy the plane, plus fees.

        The user of the plane doesn't ever meet the investors and usually doesn't know who they are or care.  The user/lessee makes his lease payments to the trustee who then distributes the lease payments to the investors.

        I'm not sure what you mean by "owner."  If you mean the formal owners listed in the diary -- that would be like the bank you send your mortgage payments to.  If you mean the economic owners, the investors, the user rarely even knows who they are.

        Think of it like a mortgage and mortgage backed securities.  The user or homeowner has little relationship with the bank s/he sends his/her check to (the servicer) and even less relationship with the holders of the mortgage backed securities.

        Of course the user of the plane (the lessee) sort of thinks of the plane as his/its, as "owning" it, but my point is that the specific kind of data revealed in the diary, which lists formal owners, not users/lessees (hence mostly listed as "trustees" and finance companies) tells us nothing about who flew out to meet with Mittens.

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