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McLEAN AND CO.
McLEAN AND CO DECEMBER 2006
TALE OF TWO ENTREPRENEURS
Trump - Billionaire Real Estate Tycoon and Host of The Apprentice
Trump has a long list of accomplishments. While he may be best known in
pop culture for The Apprentice, he built his reputation and his fortune
(and lost it and built it again) in commercial real estate. He has
developed some of
Early Life: Donald
Trump was born
Real Estate Boom: In
the early 1970s, Trump shifted from his father's focus on middle-class
rental housing and turned toward commercial real estate development. The
Trump is known for turning bad real estate into lots of money and
understands the psychology of making deals, he still fell victim to the
recession of the late 1980s. Unable to meet loan payments, he declared
business bankruptcy in 1990. Rather than risking a court fight, his
creditors agreed to a debt restructuring. He managed to stay out of
personal bankruptcy, even though he had accumulated some $900 million in
Turnaround and Turnaround Again: Trump
was forced to relinquish his new airline, Trump Shuttle, and to sell off
"The Donald": Nicknamed
“The Donald,” Trump is popular for his extravagant, flamboyant,
arrogant, cocky personality. Part of his business tactics is media
exposure. He stands out from the others as he speaks his mind and will
refuse your handshake as he sees it as a barbaric gesture to hand out
germs. He criticizes others publicly and exploits his “know it all”
intellect. He is a consummate self-promoter who understands the power of
branding. The name "Trump" always appears in the name of his
The Apprentice: Trump
is host and producer of the reality series The Apprentice, where several
lucky candidates fight to become part of his organization. Each week one
contestant is asked by Trump to leave with the now-familiar,
"You're fired!" (Trump has filed a trademark claim on the
phrase). Trump was paid a mere $50,000 per episode for the first season,
but is now paid a reported $3 million per episode. He has expanded The
Apprentice with an additional series featuring Martha Stewart.
Just How Much Is Trump Worth?: The
Forbes 400 lists Trump's net worth as $2.7 billion.
Trump himself claims to be worth over $5 billion. But an October 2005 New York Times Magazine article says that both of
these claims are exaggerated, and that most likely he is not even a
Family Life: In
1977 Trump married fashion model Ivana Zelničkova and they have three
children: Donald, Jr. (1977), Ivanka (1981) and Eric (1984). They were
divorced in 1992. In 1993 he married actress Marla Maples, and together
they have one child, Tiffany (1993). They divorced in 1999. In 1999, he
began dating model Melanija Knavs, and they were married in 2005. Knavs
gained some notoriety after a tell-all about her sex life with Trump on
the Howard Stern show, followed by a nude layout in GQ magazine.
Branson - The Rebel Billionaire and the Ultimate Multipreneur
Whether in business or in thrill-seeking, this
billionaire can do it better than anyone else, or at least his track
record says so. From building an empire of over 200 companies and 25,000
employees to breaking records in the air or on the water, Richard has
done it all. How did he become one of the richest men in the world? The
simple answer is he delivered old products and services in new ways
while focusing on industries in which the customers were poorly served
and serving them better.
The Beginning: Born
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AND CO DECEMBER 2006 NEWSLETTER
1972, Virgin had signed their first artist, Mike Oldfield. 5 million
copies later, Virgin Music had made a name for itself, later signing
household names such as the Sex Pistols, Culture Club, The Rolling
Stones, Phil Collins, Genesis, and Janet Jackson. Crafty yet
controversial, provocative yet memorable, Virgin was soon to be a world
renowned brand name.
Virgin in the Air: Formed
in 1984, Virgin Atlantic Airways was profitable in its first year. Its
three classes of service - Economy, Premium Economy and Upper Class –
include free in-flight drinks and meals, often including ice cream, and
seat-back personal TVs, which was pioneered by Virgin. Upper Class
passengers can request complimentary limousine service to and from the
airport and have access to Virgin’s Clubhouse Lounge at
Other Virgin Conquests: With
an appetite for broken industries, Virgin has continued to diversify its
interests. In 1997, Virgin attempted to redefine the railway industry
with high-tech trains and an advanced level of service. In another move,
the company launched Virgin Mobile. Appealing to the younger
demographic, the company does not require contracts and puts a hip spin
on the traditional cell phone business. Virgin even has its own soft
drink and vodka, although neither has been a tremendous success.
And Finally, the Coolest Virgin Endeavour: At
$200,000 a pop, Virgin Galactic plans to take customers into suborbital
space, offering customers the chance to experience weightlessness for
seven minutes on a scaled up version of SpaceShipOne. Richard Branson
and some of his closest family members will be on the inaugural flight
some time in 2008.
The Thrill-Seeker: Richard
Branson has attempted several world record-breaking feats. In 1986, he
started his first charity at the age of 17, Richard has continued to be
generous throughout his life. He is currently a trustee of multiple
charities, including the Virgin Healthcare Foundation, a charity focused
on AIDS and health education. Most recently, he pledged $3 billion over
the next ten years to fight global warming in which he will invest all
profits from his train and airline divisions in renewable or clean
Luck or Skill?: Benjamin
Franklin once said, "The harder I work, the luckier I get."
This surely holds true for Sir Richard Branson, who has worked
tirelessly throughout his career. Even Sir Richard Branson himself
agrees and has been quoted as saying, "We were lucky to sign Mike
Oldfield and we were lucky to get hold of the Sex Pistols in 1977. We've
also been lucky that people liked Virgin Atlantic's unique airline
service across the
impressive as his portfolio, his bank accounts, and his list of
accomplishments may be, though, perhaps Branson's greatest
accomplishment is in creating an absolutely fabulous life for himself.
He travels the world, spending winter holidays with his family at his
South African game preserve and summers at his private island in the
FOR TAX EVADER
was owed to IRD and he had no means to pay it back
were 37 instances of failure to pay PAYE and failure to file tax returns
offending had occurred over a six-year period and related to 92
different tax returns.
The moral of the story is obviously to file your tax returns and pay your taxes on due date.
AND CO DECEMBER 2006 NEWSLETTER
CAN YOU BOOST GROSS PROFIT- IN DOLLARS AND G.P. MARGIN?
Very Important Tip
(cont Page 5)
AND CO DECEMBER 2006 NEWSLETTER
Eliminate or minimise high-cost purchases:
The following comments relate generally to discretionary
family trusts. They are intended to be by way of introductory comment
only. Any person considering setting up a trust should seek specific
specialist legal advice.
McLEAN AND CO DECEMBER 2006 NEWSLETTER PAGE
Traditionally in family situations, "cross
trusts" were used where one spouse settles a trust in favour of the
other spouse, with the children as subsequent beneficiaries, and
similarly the other spouse settles a trust in favour of the other spouse
and the children. Since the abolition of death duties in December 1992
numerous commentators have stated that there is no necessity for the
settlor to be separate from the beneficiaries in a trust.
McLEAN AND CO DECEMBER 2006 NEWSLETTER PAGE
20 WAYS TO SAVE ON YOUR HOME MORTGAGE
wants to pay of his or her mortgage quickly, with the minimum of cash
outlay. Here are a
number of pointers to let you do just that-
check them all or those of interest to you personally:
your term. Your monthly
payments will be slightly more but you will save a lot of interest in
the long run
more than you are required to
additional payments occasionally
4. Pay at
a higher repayment rate
fortnightly or even weekly instead of monthly
to a lender with a lower rate
around , particularly to some of the new non-bank lenders
a loan product that suits your personal circumstances.
your loan between fixed and floating to hedge your bets
10. Research various
lenders and stay in contact once you have you mortgage
11. Forget honeymoon rates
and gifts. Some lenders
offer a lower introductory interest rate or a gift if you take out a mortgage
with them. You should
investigate these to ensure there are no hidden costs or pitfalls.
12. Consolidate all your
debts. e.g. consolidate
debts with high interest rates into a debt with a lower interest rate
13. Avoid bridging finance.
You pay more for bridging finance and there are usually more
14. Make sure your loan can
be transferred- can you transfer the mortgage if you move house during
15. Pay all the fees up
front if you can. If
your cashflow permits it pay these costs up front rather than adding
them to the mortgage. This
means you are borrowing less and you will pay your mortgage off quicker
16. Develop a relationship
with a particular individual in the brokerage company you are dealing
17. Use your broker- ensure
they shop around for the best deal for you, explain the advantages and
disadvantages of each deal, and then you decide.
18. Selling and then
buying- watch those agent’s fees- research different agents- can you
sell your house yourself and avoid fees?
19. Buying a home or rental
investment property- never
pay the asking price. Do not let emotion rule your decision
20. Trusts and other
financial structures- you should look at structures which may give you
tax savings or suit your long term asset planning.
McLEAN AND CO MARCH 2006 NEWSLETTER PAGE 8
When you cease a business, sell or
dispose of a business asset, an adjustment is necessary in your
end of year tax return to
for the gain or loss. A gain is included as gross income and a
loss (except buildings) as an allowable deduction.
Where an asset ceases to be used in a business, or if you
cease business and don't sell your business assets immediately or if
they are kept for private use, the loss or gain must be accounted for
using the market value of the assets as at the beginning of the next
income year. You will have
to make an adjustment in your income tax return for the year after the
business ceased or the asset changed use, even if the loss or gain is
not realised until a later income year.
Selling an Asset
When you sell or dispose of an asset (other than a pooled
asset) for a different amount from its adjusted tax value, you must make
an adjustment in your end of year tax return to account for the loss or
gain. The adjustment is generally made in the year you sell or dispose
of an asset except when the business has ceased (see above).
You cannot claim a deduction for depreciation in the year
that you dispose of an asset, except in the case of buildings.
If we can assist further, please email McLean and Co. as follows:
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