Tuesday, Feb. 29, 2000 | 10:19 a.m.
CARSON CITY -- Details are being hammered out on a final state regulation to give a tax exemption to Steve Wynn's Bellagio art collection, now valued at $400 million.
A review committee of the state Taxation Department met Monday with Bellagio lawyer Harvey Whittemore on technical changes in the regulation, which will be the subject of one more meeting before being submitted to the Nevada Tax Commission for final approval.
The 1997 Legislature approved a tax break for the art collection and the law was amended in 1999 to clarify some of the interpretations and disputes in the original law.
Whittemore said it has not yet been calculated how big a tax break the Bellagio will enjoy. But Sen. Joe Neal, D-Las Vegas, a critic of the law, suggests Wynn and the hotel-casino may receive $17 million to $18 million in reduced taxes.
Discussion Monday centered on the business expenses that could be deducted by the Bellagio in displaying the paintings. For instance, Whittemore said a warehouse used to store the paintings before they are put on display should be considered a direct cost.
The law gives exemptions in paying sales tax and on the property tax. There's also the question of valuing the art. Whittemore gave an example of a man who paid $20 million for a painting in an art gallery. The family of the man objected to the purchase. Without ever taking possession, Whittemore said the man had to sell the piece for $14 million, taking a $6 million loss without ever acquiring title.
Dino DiCianno, deputy executive director of the taxation department, said there would be one more hearing of a review panel to go over a suggested final version of the regulation.
In 1999 more than 600,000 people visited the Bellagio gallery, which collected in excess of $7 million. There was no report of the expenses but Whittemore said they were "very significant."
After the law was initially passed in 1997, the tax commission approved a regulation that admission to the art gallery must be free in order to qualify for the tax exemption. There is a $12 admission charge and Wynn sued the state.
"With the 1999 legislation that was passed, there is reason to go forward with litigation," Whittemore said.
The 1999 law said Wynn must give Nevadans a 50 percent break on the admission.
Asked about future, Whittemore said, "Steve and Elaine (Wynn) are evaluating for their own personal portfolio additional pieces if they become available. The corporation is very satisfied with the nature of the gallery right now. Over the next year there will be some shows that will be amazing because there will be some swapping of art."
The Wynns lease some of their own painting to the gallery for display.