2

There is a story in the news about Nikki Haley (now former US ambassador to the UN) taking trips in a friend's (and political supporter's) private jet.

See story: Watchdog wants investigation of Nikki Haley’s private jet flights to SC

According to the article, Haley declared these trips, but rather than declaring the true market value of a private plane ride from New York to South Carolina (~$24,000), she declared the value to be that of a first class flight on a commercial airline (~$3200).

This actually makes perfect sense to me. She didn't receive $24,000 of value. She can't sell the flight she got on eBay. All she got was a free trip, which saved her about $3200. So it seems reasonable to argue that the value of what she got was indeed about $3200.

So if we start valuing things in the way this watchdog group is demanding, then what happens if a politician meets Warren Buffet? The market value for eating lunch with Warren Buffet is $650,000. If Buffet would have invited Halley out for lunch, would Halley have to declare a $650,000 gift?

Improve this question
3
  • I'm voting to close this question as off-topic because it is only tangentially about the law
    – BlueDogRanch
    Oct 10, 2018 at 17:20
  • 1
    At the risk of stating the obvious, if the utility of a private plane ride was the same than that of a first class ticket, nobody would have private planes or ride on them. Value as a function of utility is highly subjective and as such it is not used as a serious measurement: "Yes that is a Picasso hanging there, but since I do not understand modern art let's value it the same than $10 Spice Girls poster"; "See the $300.000 Ferrari that a donor gave me, since I do not drive fast I will value it at slighty less than a Ford Bronco (there is less place for groceries)"
    – SJuan76
    Oct 10, 2018 at 18:06
  • @SJuan76 the painting and the cars are silly examples. The recipient can turn around and sell those at the FMV. A private plane ride cannot be sold, would not have been bought, and didn't cost anything to give. I am looking for a better reason as to the what the proper valuation should be
    – CodyBugstein
    Oct 10, 2018 at 18:17

1 Answer 1

Reset to default
3

I think you're working off some false premises here.

  1. Whatever FMV is in the context of a meeting with Warren Buffet purchased by investors, it's probably different in the context of the U.S. Ambassador to the United Nations.

    Buffett has little to gain from a meeting with people whose job he's been doing more successfully for half a century. He has more to gain from meeting with high-ranking government officials; this is why political donors frequently drop thousands of dollars to attend a dinner where such officials are speaking, even when there's only an off chance of so much as a handshake.

  2. Assuming that a campaign-finance calculation of fair market value is roughly equivalent to that in the tax context, FMV for a lunch with Warren Buffett probably isn't $650,000.

    Because the Buffet lunch was purchased at a charitable auction, tax law would generally recognize that the price paid was not necessarily an accurate reflection of FMV. Instead, it would acknowledge that some portion of the price -- the amount in excess of FMV -- was actually a charitable gift.

That of course still leaves the question of what FMV actually is for a lunch with Warren Buffet.

Improve this answer
4
  • 1
    But even if it's not 650K, certainly the FMV for lunch with Buffet is very expensive
    – CodyBugstein
    Oct 10, 2018 at 17:20
  • For the average investor, I think that's correct. For a high-ranking government official, I'm not sure that's correct.
    – bdb484
    Oct 10, 2018 at 17:26
  • 1
    But high-ranking government officials are also average investors, are they not? They can easily use the content of their conversation for their own personal finances as well
    – CodyBugstein
    Oct 10, 2018 at 18:19
  • 1
    I don't think those meetings are spent providing the officials with hot market tips. If either side is using those conversations to figure out how to invest, it's probably Buffett.
    – bdb484
    Oct 10, 2018 at 23:31

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .