Wynn might get $5.5 million tax deduction for art

Wednesday, April 26, 2000 | 1:05 a.m.

During a Department of Taxation workshop Tuesday, Wynn lobbyist Harvey Whittemore cited comments by state Sen. Joe Neal last year as evidence the Bellagio can deduct the cost of renting Wynn's personal $200 million art collection.

In speaking out against Wynn's art tax break bill last year, Neal, D-North Las Vegas, said the legislation would let the Bellagio deduct costs of renting Wynn's personal collection and reduce money that otherwise would go to charities.

The department and Whittemore met to finalize a draft regulation on the new law that lets the Bellagio get sales and property tax breaks for displaying the art collection.

The hotel gets the tax break, although it still can charge $12 admission to the gallery. Nevadans get half-price tickets, and school groups are admitted for free 60 days per year.

Any excess revenue earned from admission charges - after the deduction of gallery expenses - must be donated by the Bellagio to charities.

Wynn charges the Bellagio about $5.5 million in rent to show his personal collection. The Bellagio and Wynn each own about $200 million worth of the art in the gallery.

During the workshop, Whittemore said Neal pointed out that the Bellagio's deductible expenses include the $5.5 million cost of renting Wynn's personal art.

Since total admission revenue to the gallery last year was about $7 million, the ability to deduct $5.5 million in art rental charges would dramatically reduce the amount the Bellagio must donate to charity.

Besides the rental costs, the gallery also may deduct expenses such as security, costs of gallery personnel, lighting costs, etc.

Taxation Department lawyers testified that their examination of legislative records showed that the Bellagio can't deduct the costs of renting Wynn's personal collection.

But Whittemore disagreed, quoting from legislative transcripts in which Neal mentioned the law would permit the deduction of "pretty significant items," including "rent."

By that statement, Whittemore said Neal meant the "rent of art work."

Neal, who wasn't present at the workshop, agreed Whittemore's interpretation was correct.

"I was trying to convince the folks not to vote for it because the deduction was wrong," Neal added.

The draft regulations will be approved or rejected by the state Tax Commission during a meeting in July.

Whittemore said the MGM will purchase the Bellagio collection in its yet uncompleted $6.6 billion buyout of Mirage Resorts. No decision has been made on whether the MGM will lease Wynn's personal art.