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Trump lends helping wallet to McMahon

Developer wants to buy house of TV figure and avert foreclosure.

August 15, 2008|Ann Brenoff | Times Staff Writer

It's "The Donald" to the rescue.

Mega-developer and TV personality Donald Trump is negotiating to buy Ed McMahon's Beverly Hills house for an undisclosed amount and allow McMahon to continue living in it. Details of the deal are still being ironed out.

"I don't know the man, but I grew up watching him on TV," Trump told The Times.

McMahon, 85, was facing foreclosure within two weeks on his Beverly Hills home of 18 years. The television icon, who was Johnny Carson's sidekick for three decades, defaulted on $4.8 million in mortgage loans with Countrywide Financial Corp. He said in interviews that he was unable to work because of a neck injury that occurred about 18 months ago.

Trump said he stepped in because helping McMahon "would be an honor." His plan is to buy the home from the lender and lease it back to McMahon.

For The Record
Los Angeles Times Thursday, August 28, 2008 Home Edition Main News Part A Page 2 National Desk 4 inches; 164 words Type of Material: Correction
Trump-McMahon deal: An article in the Aug. 15 California section about Donald Trump buying Ed McMahon's house quoted Michael Eisner, a tax attorney with Eisner & Frank in Beverly Hills, as saying that if Trump were to lease the house to McMahon at below-market rates, the cost difference could be regarded as income from McMahon and subject to taxation. What Eisner actually said is that the difference could be regarded as income to McMahon and subject to taxation. The article also said Trump could potentially incur federal gift taxes if he exceeded his lifetime gift tax limitation or gave more than $12,000 a year in gifts to a nonrelative. Trump could potentially incur federal gift taxes if the amount gifted to McMahon through reduced rent exceeded the annual exclusion, which is $12,000 per recipient, whether that recipient is a relative or not; however, any gift tax could be eliminated or reduced if Trump has not exceeded his lifetime exclusion amount applicable to gift taxes.

"When I was at the Wharton School of Business," Trump said, "I'd watch him every night. How could this happen?"

The deal with Trump was discussed over the weekend when McMahon's listing agent, Alex Davis of Hilton & Hyland in Beverly Hills, flew to New York to make a personal appeal to Trump. Davis declined to comment.

The six-bedroom, five-bathroom house had been on the market for about two years.

At one point, it was listed at more than $7 million but dropped in increments, winding up this weekend at $4.6 million.

McMahon purchased the house in 1990 for $2.6 million, according to public records.

Lenders had set a deadline of two weeks for another buyer to be found.

Any deal carries potential tax consequences for both parties.

If Trump leases the house to McMahon at below market rates, the cost difference could be regarded as income from McMahon and subject to taxation, said Michael Eisner, a tax attorney with Eisner & Frank in Beverly Hills.

Also, Trump could potentially incur federal gift taxes if he exceeds his lifetime gift tax limitation or has given more than $12,000 a year in gifts to a non-relative.--

ann.brenoff@latimes.com

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