Thoughts on Jay Monahan's Use of the Private Jet?

[StuM]

I, like many others, am not a lawyer but I would find it unreasonable to be taxed on an expense my employer mandated of me.  Private Jet would be significantly more expensive than a standard airline, even compared to 1st class, and to to mandate that and then tax him seems unreasonable to me.  I would question how his spouse's private travel is accounted for.  I personally have gone on company provided trips and have taken my wife and in those instances the company may pay the airfare but I was taxed on the value of her airfare.  Again, I would take issue with mandating the high cost of a private jet and then getting the tax bill.

As for why they are mandating it, they mentioned "Security, privacy & efficiency" and were likely given limited space to make a description and thus did not go into great detail.  High level executives often travel by private jet for many reasons including, saving time so they can be more productive and deal with issues as needed.  Can you imagine standing in a long security line and having to deal with questions on a major issue such as a merger, a competitor (i.e. LIV) or other pressing business?  Most CEOs are never "Off the clock".  They are available 24/7 for pressing business and I see no difference in him than the CEO of a large company.

Edited September 16, 2022 by StuM

[GolfLug]

1 hour ago, iacas said:

Pretty sure none of you are tax lawyers.

Ha ha ha ha ha .. Touche'

[cutchemist42]

4 hours ago, iacas said:

No. That’d be ridiculous.

Pretty sure none of you are tax lawyers.

Nor am I to be clear.

Other leagues are set up differently. With owners.

Right but places with more oversight and competitiveness usually pay their CEOs something commensurate with the amount of business they produce.

I think for the quality of CEO they are getting, the PGA Tour is overpaying if Gary Bettman and Silver are making around $10mill for being much more accomplished, especially considering the last year.

Edited September 16, 2022 by cutchemist42

[turtleback]

8 hours ago, Darkfrog said:

Hit with a WSJ paywall, but I kind of feel like this is a non-story. And possibly feels like a PR piece drummed up by LIV to make the PGA Tour and more specifically Jay Monahan look bad.

My wife worked for a couple non-profits and their executives and board members had many lavish perks that were just part of doing business with executive/board member type people. I think often we intuitively associate "non-profit" with an organization being frugal/practical, which isn't necessarily the case. 

I stopped giving to United Way when I got a small local chapter as a consulting client and saw the payroll.  $300,000 for the director of a small local chapter and another handful of employees making six figures - and this was in the early 90s - blew the gaffe, for me.

[saevel25]

52 minutes ago, turtleback said:

I stopped giving to United Way when I got a small local chapter as a consulting client and saw the payroll.  $300,000 for the director of a small local chapter and another handful of employees making six figures - and this was in the early 90s - blew the gaffe, for me.

Still, untied way could give 5x benefit versus smaller charities that have less salary to the higher ups. 

[Denny Bang Bang]

10 hours ago, iacas said:

No. That’d be ridiculous.

Pretty sure none of you are tax lawyers.

Nor am I to be clear.

Other leagues are set up differently. With owners.

It’s not ridiculous at all for personal use of a company asset to be considered a taxable fringe benefit.

And no, I’m not a tax attorney.  But I did spend 10 years of my career in corporate taxation.  Happy to share where you’d want look in Title 26 or the Treasury Regs to read up on it if any of you please.

Edited September 17, 2022 by Denny Bang Bang

[Vinsk]

15 minutes ago, Denny Bang Bang said:

Happy to share where you’d want look in Title 26 or the Treasury Regs to read up on it if any of you please.

[Denny Bang Bang]

57 minutes ago, Vinsk said:

Yea, not exactly any thrilling reads to share.  But it’s pretty straightforward stuff.

First thing we learned in intro to Federal Taxation after the tax calc was IRC Section 61.  Regarding fringe benefits specifically you can dive into Treasury Reg 1.61-21, which gets into examples, valuation and all that.  Probably the easiest read would be Pub 15B, I believe there’s a section that specifically gets into transportation.

[iacas]

6 hours ago, Denny Bang Bang said:

It’s not ridiculous at all for personal use of a company asset to be considered a taxable fringe benefit.

And yet… plenty of CEOs, etc. get to use a private jet and have it paid for by the organization, without a tax to themselves. No?

What's ridiculous would be the PGA Tour policy board saying "you must do this thing" with the private jet, then taxing him on the use.

This is seemingly (clearly?) just a LIV stan trying to make Monahan look bad.

[boogielicious]

16 hours ago, StuM said:

Private Jet would be significantly more expensive than a standard airline, even compared to 1st class,

It’s not that much more depending on how many are flying. A close friend of mine flew private back and forth to Florida during the pandemic. He could afford it but he said it was just a bit more than first class.

[Denny Bang Bang]

3 hours ago, iacas said:

And yet… plenty of CEOs, etc. get to use a private jet and have it paid for by the organization, without a tax to themselves. No?

What's ridiculous would be the PGA Tour policy board saying "you must do this thing" with the private jet, then taxing him on the use.

This is seemingly (clearly?) just a LIV stan trying to make Monahan look bad.

It’s a taxable fringe benefit, regardless.  It’s not the organization’s choice whether or not it’s a taxable benefit… it’s federal tax law.  These organizations should be valuing the benefit and withholding taxes.  One option, which is very common, is to gross up compensation to “cover” the tax withholding.  The benefit is still taxed, but compensation is adjusted to cover the additional taxes.

To your last point, yea, someone is trying to make Monahan and the PGA Tour bad.  Private use of company assets are common.

[turtleback]

On 9/16/2022 at 6:43 PM, saevel25 said:

Still, untied way could give 5x benefit versus smaller charities that have less salary to the higher ups. 

Can you clarify?  I have no idea what you are trying to say.

[Aguirre]

Thoughts? Like, what do you mean? I'm genuinely perplexed. Hey, private jet guy, you do you. How's that for thoughts?

 

[TourSpoon]

Working for a large entity, the CEO really has limited time to make him or herself readily available to board members, customers, stakeholders, etc. Seeing that the PGA Tour has relationships that are geographically diverse, it makes sense to me that private travel is part of the deal so that face time is preserved. In other words, he gets on his plane, carries out his calls in the air, hits the ground running, back on the plane and home for dinner. Given the complexity of the Tour and their partnerships, I have no issue with it.  

 

[turtleback]

Hey, if FBI Director Christopher Wray can do it, why not Jay Monahan?

[WillieT]

The perks available to upper echelon professionals such as the Commissioner are just part of doing business whether for profit or not.  Not sure why he “has” to use it for personal as well as professional travel, except he is “on call” and may need on occasion leave to go to an event or “required in person” meeting in a expedited manner.  I am not naïve enough to think that such actions are a regular thing as the world since Covid has learned to Zoom.  Oh well, just another day in the world of golf as we know it.