Date: September 27th, 2020 5:38 PM
Author: DrakeMallard
Actually they find out he's telling the truth about audits and does what every real estate guy does to avoid taxes
https://www.nytimes.com/interactive/2020/09/27/us/donald-trump-taxes.html
nytimes.com
Trump’s Taxes Show Chronic Losses and Years of Income Tax Avoidance
By Russ Buettner, Susanne Craig and Mike McIntire
The Times obtained Donald Trump’s tax information extending over
more than two decades, revealing struggling properties, vast
write-offs, an audit battle and hundreds of millions in debt coming due.
Donald J. Trump paid $750 in federal income taxes the year he
won the presidency. In his first year in the White House, he paid
another $750.
He had paid no income taxes at all in 10 of the previous 15
years — largely because he reported losing much more money than he made.
As the president wages a re-election campaign that polls say he
is in danger of losing, his finances are under stress, beset by losses
and hundreds of millions of dollars in debt coming due that he has
personally guaranteed. Also hanging over him is a decade-long audit
battle with the Internal Revenue Service over the legitimacy of a $72.9
million tax refund that he claimed, and received, after declaring huge
losses. An adverse ruling could cost him more than $100 million.
The tax returns that Mr. Trump has long fought to keep private
tell a story fundamentally different from the one he has sold to the
American public. His reports to the I.R.S. portray a businessman who
takes in hundreds of millions of dollars a year yet racks up chronic
losses that he aggressively employs to avoid paying taxes. Now, with his
financial challenges mounting, the records show that he depends more
and more on making money from businesses that put him in potential and
often direct conflict of interest with his job as president.
The New York Times has obtained tax-return data extending over
more than two decades for Mr. Trump and the hundreds of companies that
make up his business organization, including detailed information from
his first two years in office. It does not include his personal returns
for 2018 or 2019. This article offers an overview of The Times’s
findings; additional articles will be published in the coming weeks.
The returns are some of the most sought-after, and
speculated-about, records in recent memory. In Mr. Trump’s nearly four
years in office — and across his endlessly hyped decades in the public
eye — journalists, prosecutors, opposition politicians and conspiracists
have, with limited success, sought to excavate the enigmas of his
finances. By their very nature, the filings will leave many questions
unanswered, many questioners unfulfilled. They comprise information that
Mr. Trump has disclosed to the I.R.S., not the findings of an
independent financial examination. They report that Mr. Trump owns
hundreds of millions of dollars in valuable assets, but they do not
reveal his true wealth. Nor do they reveal any previously unreported
connections to Russia.
The President’s Taxes
In response to a letter summarizing The Times’s findings, Alan
Garten, a lawyer for the Trump Organization, said that “most, if not
all, of the facts appear to be inaccurate” and requested the documents
on which they were based. After The Times declined to provide the
records, in order to protect its sources, Mr. Garten took direct issue
only with the amount of taxes Mr. Trump had paid.
“Over the past decade, President Trump has paid tens of millions
of dollars in personal taxes to the federal government, including
paying millions in personal taxes since announcing his candidacy in
2015,” Mr. Garten said in a statement.
With the term “personal taxes,” however, Mr. Garten appears to
be conflating income taxes with other federal taxes Mr. Trump has paid —
Social Security, Medicare and taxes for his household employees. Mr.
Garten also asserted that some of what the president owed was “paid with
tax credits,” a misleading characterization of credits, which reduce a
business owner’s income-tax bill as a reward for various activities,
like historic preservation.
The tax data examined by The Times provides a road map of
revelations, from write-offs for the cost of a criminal defense lawyer
and a mansion used as a family retreat to a full accounting of the
millions of dollars the president received from the 2013 Miss Universe
pageant in Moscow.
Together with related financial documents and legal filings, the
records offer the most detailed look yet inside the president’s
business empire. They reveal the hollowness, but also the wizardry,
behind the self-made-billionaire image — honed through his star turn on
“The Apprentice” — that helped propel him to the White House and that
still undergirds the loyalty of many in his base.
Ultimately, Mr. Trump has been more successful playing a business mogul than being one in real life.
“The Apprentice,” along with the licensing and endorsement deals
that flowed from his expanding celebrity, brought Mr. Trump a total of
$427.4 million, The Times’s analysis of the records found. He invested
much of that in a collection of businesses, mostly golf courses, that in
the years since have steadily devoured cash — much as the money he
secretly received from his father financed a spree of quixotic
overspending that led to his collapse in the early 1990s.
“The Apprentice,” along with endorsements and other income that
sprang from his growing fame, brought Donald Trump $427.4 million. Rob
DeLorenzo/Zuma Press
Indeed, his financial condition when he announced his run for
president in 2015 lends some credence to the notion that his long-shot
campaign was at least in part a gambit to reanimate the marketability of
his name.
As the legal and political battles over access to his tax
returns have intensified, Mr. Trump has often wondered aloud why anyone
would even want to see them. “There’s nothing to learn from them,” he
told The Associated Press in 2016. There is far more useful information,
he has said, in the annual financial disclosures required of him as
president — which he has pointed to as evidence of his mastery of a
flourishing, and immensely profitable, business universe.
In fact, those public filings offer a distorted picture of his
financial state, since they simply report revenue, not profit. In 2018,
for example, Mr. Trump announced in his disclosure that he had made at
least $434.9 million. The tax records deliver a very different portrait
of his bottom line: $47.4 million in losses.
Tax records do not have the specificity to evaluate the
legitimacy of every business expense Mr. Trump claims to reduce his
taxable income — for instance, without any explanation in his returns,
the general and administrative expenses at his Bedminster golf club in
New Jersey increased fivefold from 2016 to 2017. And he has previously
bragged that his ability to get by without paying taxes “makes me
smart,” as he said in 2016. But the returns, by his own account,
undercut his claims of financial acumen, showing that he is simply
pouring more money into many businesses than he is taking out.
The picture that perhaps emerges most starkly from the mountain
of figures and tax schedules prepared by Mr. Trump’s accountants is of a
businessman-president in a tightening financial vise.
Most of Mr. Trump’s core enterprises — from his constellation of
golf courses to his conservative-magnet hotel in Washington — report
losing millions, if not tens of millions, of dollars year after year.
His revenue from “The Apprentice” and from licensing deals is
drying up, and several years ago he sold nearly all the stocks that now
might have helped him plug holes in his struggling properties.
The tax audit looms.
And within the next four years, more than $300 million in loans —
obligations for which he is personally responsible — will come due.
Against that backdrop, the records go much further toward
revealing the actual and potential conflicts of interest created by Mr.
Trump’s refusal to divest himself of his business interests while in the
White House. His properties have become bazaars for collecting money
directly from lobbyists, foreign officials and others seeking face time,
access or favor; the records for the first time put precise dollar
figures on those transactions.
At the Mar-a-Lago club in Palm Beach, Fla., a flood of new
members starting in 2015 allowed him to pocket an additional $5 million a
year from the business. At his Doral golf resort near Miami, the
roofing materials manufacturer GAF spent at least $1.5 million in 2018
even as its industry was lobbying the Trump administration to roll back
“egregious” federal regulations. In 2017, the Billy Graham Evangelistic
Association paid at least $397,602 to the Washington hotel, where the
group held at least one event during its four-day World Summit in
Defense of Persecuted Christians.
The Times was also able to take the fullest measure to date of
the president’s income from overseas, where he holds ultimate sway over
American diplomacy. When he took office, Mr. Trump said he would pursue
no new foreign deals as president. Even so, in his first two years in
the White House, his revenue from abroad totaled $73 million. And while
much of that money was from his golf properties in Scotland and Ireland,
some came from licensing deals in countries with authoritarian-leaning
leaders or thorny geopolitics — for example, $3 million from the
Philippines, $2.3 million from India and $1 million from Turkey.
In the Philippines, where Mr. Trump licensed his name to a
Manila tower, he or his companies paid $156,824 in taxes in 2017. Hannah
Reyes Morales for The New York Times
He reported paying taxes, in turn, on a number of his overseas
ventures. In 2017, the president’s $750 contribution to the operations
of the U.S. government was dwarfed by the $15,598 he or his companies
paid in Panama, the $145,400 in India and the $156,824 in the
Philippines.
Mr. Trump’s U.S. payment, after factoring in his losses, was
roughly equivalent, in dollars not adjusted for inflation, to another
presidential tax bill revealed nearly a half-century before. In 1973,
The Providence Journal reported that, after a charitable deduction for
donating his presidential papers, Richard M. Nixon had paid $792.81 in
1970 on income of about $200,000.
The leak of Mr. Nixon’s small tax payment caused a
precedent-setting uproar: Henceforth, presidents, and presidential
candidates, would make their tax returns available for the American
people to see.
The contents of thousands of personal and business tax records fill in financial details that have been withheld for years.
“I would love to do that,” Mr. Trump said in 2014 when asked
whether he would release his taxes if he ran for president. He’s been
backpedaling ever since.
When he ran, he said he might make his taxes public if Hillary
Clinton did the same with the deleted emails from her private server —
an echo of his taunt, while stoking the birther fiction, that he might
release the returns if President Barack Obama released his birth
certificate. He once boasted that his tax returns were “very big” and
“beautiful.” But making them public? “It’s very complicated.” He often
claims that he cannot do so while under audit — an argument refuted by
his own I.R.S. commissioner. When prosecutors and congressional
investigators issued subpoenas for his returns, he wielded not just his
private lawyers but also the power of his Justice Department to
stalemate them all the way to the Supreme Court.
Mr. Trump’s elaborate dance and defiance have only stoked
suspicion about what secrets might lie hidden in his taxes. Is there a
financial clue to his deference to Russia and its president, Vladimir V.
Putin? Did he write off as a business expense the hush-money payment to
the pornographic film star Stormy Daniels in the days before the 2016
election? Did a covert source of money feed his frenzy of acquisition
that began in the mid-2000s?
The Times examined and analyzed the data from thousands of
individual and business tax returns for 2000 through 2017, along with
additional tax information from other years. The trove included years of
employee compensation information and records of cash payments between
the president and his businesses, as well as information about ongoing
federal audits of his taxes. This article also draws upon dozens of
interviews and previously unreported material from other sources, both
public and confidential.
All of the information The Times obtained was provided by
sources with legal access to it. While most of the tax data has not
previously been made public, The Times was able to verify portions of it
by comparing it with publicly available information and confidential
records previously obtained by The Times.
To delve into the records is to see up close the complex
structure of the president’s business interests — and the depth of his
entanglements. What is popularly known as the Trump Organization is in
fact a collection of more than 500 entities, virtually all of them
wholly owned by Mr. Trump, many carrying his name. For example, 105 of
them are a variation of the name Trump Marks, which he uses for
licensing deals.
Fragments of Mr. Trump’s tax returns have leaked out before.
Transcripts of his main federal tax form, the 1040, from 1985 to
1994, were obtained by The Times in 2019. They showed that, in many
years, Mr. Trump lost more money than nearly any other individual
American taxpayer. Three pages of his 1995 returns, mailed anonymously
to The Times during the 2016 campaign, showed that Mr. Trump had
declared losses of $915.7 million, giving him a tax deduction that could
have allowed him to avoid federal income taxes for almost two decades.
Five months later, the journalist David Cay Johnston obtained two pages
of Mr. Trump’s returns from 2005; that year, his fortunes had rebounded
to the point that he was paying taxes.
In 1995, the year Mr. Trump broke ground on the Trump
International Hotel and Tower in New York, he would declare losses of
$915.7 million — a sum so large, it could be carried forward to cancel
out taxable income for years. Francis Specker/New York Post Archives,
via NYP Holdings, Inc., via Getty Images
By 2005, his fortunes had turned and he was paying income taxes:
He had exhausted the tax-reducing power of that nearly $1 billion loss
just as he began to see a surge of celebrity income after “The
Apprentice” debuted. Michael Nagle/Getty Images
The vast new trove of information analyzed by The Times
completes the recurring pattern of ascent and decline that has defined
the president’s career. Even so, it has its limits.
Tax returns do not, for example, record net worth — in Mr.
Trump’s case, a topic of much posturing and almost as much debate. The
documents chart a great churn of money, but while returns report debts,
they often do not identify lenders.
The data contains no new revelations about the $130,000 payment
to Stephanie Clifford, the actress who performs as Stormy Daniels — the
focus of the Manhattan district attorney’s subpoena for Mr. Trump’s tax
returns and other financial information. Mr. Trump has acknowledged
reimbursing his former lawyer, Michael D. Cohen, who made the payoff,
but the materials obtained by The Times did not include any itemized
payments to Mr. Cohen. The amount, however, could have been improperly
included in legal fees written off as a business expense, which are not
required to be itemized on tax returns.
No subject has provoked more intense speculation about Mr.
Trump’s finances than his connection to Russia. While the tax records
revealed no previously unknown financial connection — and, for the most
part, lack the specificity required to do so — they did shed new light
on the money behind the 2013 Miss Universe pageant in Moscow, a subject
of enduring intrigue because of subsequent investigations into Russia’s
interference in the 2016 election.
The records show that the pageant was the most profitable Miss
Universe during Mr. Trump’s time as co-owner, and that it generated a
personal payday of $2.3 million — made possible, at least in part, by
the Agalarov family, who would later help set up the infamous 2016
meeting between Trump campaign officials seeking “dirt” on Mrs. Clinton
and a Russian lawyer connected to the Kremlin.
In August, the Senate Intelligence Committee released a report
that looked extensively into the circumstances of the Moscow pageant,
and revealed that as recently as February, investigators subpoenaed the
Russian singer Emin Agalarov, who was involved in planning it. Mr.
Agalarov’s father, Aras, a billionaire who boasts of close ties to Mr.
Putin, was Mr. Trump’s partner in the event.
Emin Agalarov, left, a Russian singer whose family was involved
in planning the 2013 Miss Universe pageant in Moscow. Mr. Trump made
$2.3 million from that year’s pageant, the records show. Irina
Bujor/Kommersant.ru, via Associated Press
The committee interviewed a top Miss Universe executive, Paula
Shugart, who said the Agalarovs offered to underwrite the event; their
family business, Crocus Group, paid a $6 million licensing fee and
another $6 million in expenses. But while the pageant proved to be a
financial loss for the Agalarovs — they recouped only $2 million — Ms.
Shugart told investigators that it was “one of the most lucrative deals”
the Miss Universe organization ever made, according to the report.
That is borne out by the tax records. They show that in 2013,
the pageant reported $31.6 million in gross receipts — the highest since
at least the 1990s — allowing Mr. Trump and his co-owner, NBC, to split
profits of $4.7 million. By comparison, Mr. Trump and NBC shared losses
of $2 million from the pageant the year before the Moscow event, and
$3.8 million from the one the year after.
Losses reported by businesses Mr. Trump owns and runs helped
wipe out tax bills on hundreds of millions of dollars in celebrity
income.
While Mr. Trump crisscrossed the country in 2015 describing
himself as uniquely qualified to be president because he was “really
rich” and had “built a great company,” his accountants back in New York
were busy putting the finishing touches on his 2014 tax return.
After tabulating all the profits and losses from Mr. Trump’s
various endeavors on Form 1040, the accountants came to Line 56, where
they had to enter the total income tax the candidate was required to
pay. They needed space for only a single figure.
Zero.
For Mr. Trump, that bottom line must have looked familiar. It
was the fourth year in a row that he had not paid a penny of federal
income taxes.
Mr. Trump’s avoidance of income taxes is one of the most
striking discoveries in his tax returns, especially given the vast wash
of income itemized elsewhere in those filings.
Mr. Trump’s net income from his fame — his 50 percent share of
“The Apprentice,” together with the riches showered upon him by the
scores of suitors paying to use his name — totaled $427.4 million
through 2018. A further $176.5 million in profit came to him through his
investment in two highly successful office buildings.
So how did he escape nearly all taxes on that fortune? Even the
effective tax rate paid by the wealthiest 1 percent of Americans could
have caused him to pay more than $100 million.
The answer rests in a third category of Mr. Trump’s endeavors:
businesses that he owns and runs himself. The collective and persistent
losses he reported from them largely absolved him from paying federal
income taxes on the $600 million from “The Apprentice,” branding deals
and investments.
That equation is a key element of the alchemy of Mr. Trump’s
finances: using the proceeds of his celebrity to purchase and prop up
risky businesses, then wielding their losses to avoid taxes.
Throughout his career, Mr. Trump’s business losses have often
accumulated in sums larger than could be used to reduce taxes on other
income in a single year. But the tax code offers a workaround: With some
restrictions, business owners can carry forward leftover losses to
reduce taxes in future years.
That provision has been the background music to Mr. Trump’s
life. As The Times’s previous reporting on his 1995 return showed, the
nearly $1 billion in losses from his early-1990s collapse generated a
tax deduction that he could use for up to 18 years going forward.
The newer tax returns show that Mr. Trump burned through the
last of the tax-reducing power of that $1 billion in 2005, just as a
torrent of entertainment riches began coming his way following the debut
of “The Apprentice” the year before.
For 2005 through 2007, cash from licensing deals and
endorsements filled Mr. Trump’s bank accounts with $120 million in pure
profit. With no prior-year losses left to reduce his taxable income, he
paid substantial federal income taxes for the first time in his life: a
total of $70.1 million.
As his celebrity income swelled, Mr. Trump went on a buying
spree unlike any he had had since the 1980s, when eager banks and his
father’s wealth allowed him to buy or build the casinos, airplanes,
yacht and old hotel that would soon lay him low.
When “The Apprentice” premiered, Mr. Trump had opened only two
golf courses and was renovating two more. By the end of 2015, he had 15
courses and was transforming the Old Post Office building in Washington
into a Trump International Hotel. But rather than making him wealthier,
the tax records reveal as never before, each new acquisition only fed
the downward draft on his bottom line.
Consider the results at his largest golf resort, Trump National
Doral, near Miami. Mr. Trump bought the resort for $150 million in 2012;
through 2018, his losses have totaled $162.3 million. He has pumped
$213 million of fresh cash into Doral, tax records show, and has a $125
million mortgage balance coming due in three years.
Trump National Doral near Miami, Mr. Trump’s largest golf
resort. Since 2000, he has reported losing more than $315.6 million at
his golf courses. Scott McIntyre for The New York Times
His three courses in Europe — two in Scotland and one in Ireland — have reported a combined $63.6 million in losses.
Over all, since 2000, Mr. Trump has reported losses of $315. 6 million at the golf courses that are his prized possessions.
For all of its Trumpworld allure, his Washington hotel, opened
in 2016, has not fared much better. Its tax records show losses through
2018 of $55.5 million.
And Trump Corporation, a real estate services company, has
reported losing $134 million since 2000. Mr. Trump personally bankrolled
the losses year after year, marking his cash infusions as a loan with
an ever-increasing balance, his tax records show. In 2016, he gave up on
getting paid back and turned the loan into a cash contribution.
Mr. Trump has often posited that his losses are more accounting magic than actual money out the door.
Last year, after The Times published details of his tax returns
from the 1980s and 1990s, he attributed the red ink to depreciation,
which he said in a tweet would show “losses in almost all cases” and
that “much was non monetary.”
“I love depreciation,” Mr. Trump said during a presidential debate in 2016.
Depreciation, though, is not a magic wand — it involves real
money spent or borrowed to buy buildings or other assets that are
expected to last years. Those costs must be spread out as expenses and
deducted over the useful life of the asset. Even so, the rules do hold
particular advantages for real estate developers like Mr. Trump, who are
allowed to use their real estate losses to reduce their taxable income
from other activities.
What the tax records for Mr. Trump’s businesses show, however,
is that he has lost chunks of his fortune even before depreciation is
figured in. The three European golf courses, the Washington hotel, Doral
and Trump Corporation reported losing a total of $150.3 million from
2010 through 2018, without including depreciation as an expense.
To see what a successful business looks like, depreciation or
not, look no further than one in Mr. Trump’s portfolio that he does not
manage.
After plans for a Trump-branded mini-city on the Far West Side
of Manhattan stalled in the 1990s, Mr. Trump’s stake was sold by his
partner to Vornado Realty Trust. Mr. Trump objected to the sale in
court, saying he had not been consulted, but he ended up with a 30
percent share of two valuable office buildings owned and operated by
Vornado.
His share of the profits through the end of 2018 totaled $176.5
million , with depreciation factored in. He has never had to invest more
money in the partnership, tax records show.
Among businesses he runs, Mr. Trump’s first success remains his
best. The retail and commercial spaces at Trump Tower, completed in
1983, have reliably delivered more than $20 million a year in profits, a
total of $ 336 .3 million since 2000 that has done much to help keep
him afloat.
Mr. Trump has an established track record of stiffing his
lenders. But the tax returns reveal that he has failed to pay back far
more money than previously known: a total of $287 million since 2010.
The I.R.S. considers forgiven debt to be income, but Mr. Trump
was able to avoid taxes on much of that money by reducing his ability to
declare future business losses. For the rest, he took advantage of a
provision of the Great Recession bailout that allowed income from
canceled debt to be completely deferred for five years, then spread out
evenly over the next five. He declared the first $28.2 million in 2014.
Once again, his business losses mostly absolved his tax responsibilities. He paid no federal income taxes for 2014.
Mr. Trump was periodically required to pay a parallel income tax
called the alternative minimum tax, created as a tripwire to prevent
wealthy people from using huge deductions, including business losses, to
entirely wipe out their tax liabilities.
Mr. Trump paid alternative minimum tax in seven years between
2000 and 2017 — a total of $24.3 million, excluding refunds he received
after filing. For 2015, he paid $641, 931 , his first payment of any
federal income tax since 2010.
As he settled into the Oval Office, his tax bills soon returned
to form. His potential taxable income in 2016 and 2017 included $24.8
million in profits from sources related to his celebrity status and
$56.4 million for the loans he did not repay. The dreaded alternative
minimum tax would let his business losses erase only some of his
liability.
Each time, he requested an extension to file his 1040; and each
time, he made the required payment to the I.R.S. for income taxes he
might owe — $1 million for 2016 and $4.2 million for 2017. But virtually
all of that liability was washed away when he eventually filed, and
most of the payments were rolled forward to cover potential taxes in
future years.
To cancel out the tax bills, Mr. Trump made use of $9.7 million
in business investment credits, at least some of which related to his
renovation of the Old Post Office hotel, which qualified for a
historic-preservation tax break. Although he had more than enough
credits to owe no taxes at all, his accountants appear to have carved
out an allowance for a small tax liability for both 2016 and 2017.
When they got to line 56, the one for income taxes due, the amount was the same each year: $750.
“The Apprentice” created what was probably the biggest income
tax bite of Mr. Trump’s life. During the Great Recession bailout, he
asked for the money back.
Testifying before Congress in February 2019, the president’s
estranged personal lawyer, Mr. Cohen, recalled Mr. Trump’s showing him a
huge check from the U.S. Treasury some years earlier and musing “that
he could not believe how stupid the government was for giving someone
like him that much money back.”
In fact, confidential records show that starting in 2010 he
claimed, and received, an income tax refund totaling $72.9 million — all
the federal income tax he had paid for 2005 through 2008, plus
interest.
The legitimacy of that refund is at the center of the audit
battle that he has long been waging, out of public view, with the I.R.S.
The records that The Times reviewed square with the way Mr.
Trump has repeatedly cited, without explanation, an ongoing audit as
grounds for refusing to release his tax returns. He alluded to it as
recently as July on Fox News, when he told Sean Hannity, “They treat me
horribly, the I.R.S., horribly.”
And while the records do not lay out all the details of the
audit, they match his lawyers’ statement during the 2016 campaign that
audits of his returns for 2009 and subsequent years remained open, and
involved “transactions or activities that were also reported on returns
for 2008 and earlier.”
Mr. Trump harvested that refund bonanza by declaring huge
business losses — a total of $1.4 billion from his core businesses for
2008 and 2009 — that tax laws had prevented him from using in prior
years.
But to turn that long arc of failure into a giant refund check,
he relied on some deft accounting footwork and an unwitting gift from an
unlikely source — Mr. Obama.
Business losses can work like a tax-avoidance coupon: A dollar
lost on one business reduces a dollar of taxable income from elsewhere.
The types and amounts of income that can be used in a given year vary,
depending on an owner’s tax status. But some losses can be saved for
later use, or even used to request a refund on taxes paid in a prior
year.
Until 2009, those coupons could be used to wipe away taxes going
back only two years. But that November, the window was more than
doubled by a little-noticed provision in a bill Mr. Obama signed as part
of the Great Recession recovery effort. Now business owners could
request full refunds of taxes paid in the prior four years, and 50
percent of those from the year before that.
Mr. Trump had paid no income taxes in 2008. But the change meant
that when he filed his taxes for 2009, he could seek a refund of not
just the $13.3 million he had paid in 2007, but also the combined $56.9
million paid in 2005 and 2006, when “The Apprentice” created what was
likely the biggest income tax bite of his life.
The records reviewed by The Times indicate that Mr. Trump filed
for the first of several tranches of his refund several weeks later, in
January 2010. That set off what tax professionals refer to as a “quickie
refund,” a check processed in 90 days on a tentative basis, pending an
audit by the I.R.S.
His total federal income tax refund would eventually grow to
$70.1 million, plus $2,733,184 in interest. He also received $21.2
million in state and local refunds, which often piggyback on federal
filings.
Whether Mr. Trump gets to keep the cash, though, remains far from a sure thing.
Refunds require the approval of I.R.S. auditors and an opinion
of the congressional Joint Committee on Taxation, a bipartisan panel
better known for reviewing the impact of tax legislation. Tax law
requires the committee to weigh in on all refunds larger than $2 million
to individuals .
Records show that the results of an audit of Mr. Trump’s refund
were sent to the joint committee in the spring of 2011. An agreement was
reached in late 2014, the documents indicate, but the audit resumed and
grew to include Mr. Trump’s returns for 2010 through 2013. In the
spring of 2016, with Mr. Trump closing in on the Republican nomination,
the case was sent back to the committee. It has remained there,
unresolved, with the statute of limitations repeatedly pushed forward.
Precisely why the case has stalled is not clear. But experts say
it suggests that the gap between the sides remains wide. If
negotiations were to deadlock, the case would move to federal court,
where it could become a matter of public record.
The dispute may center on a single claim that jumps off the page
of Mr. Trump’s 2009 tax return: a declaration of more than $700 million
in business losses that he had not been allowed to use in prior years.
Unleashing that giant tax-avoidance coupon enabled him to receive some
or all of his refund.
The material obtained by The Times does not identify the
business or businesses that generated those losses. But the losses were a
kind that can be claimed only when partners give up their interest in a
business. And in 2009, Mr. Trump parted ways with a giant money loser:
his long-failing Atlantic City casinos.
Mr. Trump announced in 2009 that he was abandoning his stake in
his Atlantic City casino business. Mark Makela for The New York Times
After Mr. Trump’s bondholders rebuffed his offer to buy them
out, and with a third round of bankruptcy only a week away, Mr. Trump
announced in February 2009 that he was quitting the board of directors.
“If I’m not going to run it, I don’t want to be involved in it,”
he told The Associated Press. “I’m one of the largest developers in the
world. I have a lot of cash and plenty of places I can go.”
The same day, he notified the Securities and Exchange Commission
that he had “determined that his partnership interests are worthless
and lack potential to regain value” and was “hereby abandoning” his
stake.
The language was crucial. Mr. Trump was using the precise
wording of I.R.S. rules governing the most beneficial, and perhaps
aggressive, method for business owners to avoid taxes when separating
from a business.
A partner who walks away from a business with nothing — what tax
laws refer to as abandonment — can suddenly declare all the losses on
the business that could not be used in prior years. But there are a few
catches, including this: Abandonment is essentially an all-or-nothing
proposition. If the I.R.S. learns that the owner received anything of
value, the allowable losses are reduced to just $3,000 a year.
And Mr. Trump does appear to have received something. When the
casino bankruptcy concluded, he got 5 percent of the stock in the new
company. The materials reviewed by The Times do not make clear whether
Mr. Trump’s refund application reflected his public declaration of
abandonment. If it did, that 5 percent could place his entire refund in
question.
If the auditors ultimately disallow Mr. Trump’s $72.9 million
federal refund, he will be forced to return that money with interest,
and possibly penalties, a total that could exceed $100 million. He could
also be ordered to return the state and local refunds based on the same
claims.
In response to a question about the audit, Mr. Garten, the Trump
Organization lawyer, said facts cited by The Times were incorrect,
without citing specifics. He did, however, write that it was “illogical”
to say Mr. Trump had not paid taxes for those three years just because
the money was later refunded.
“While you claim that President Trump paid no taxes in 10 of the
15 previous years,” Mr. Garten said, “you also assert that President
Trump claimed a massive refund for tens of millions for taxes he did
pay. These two claims are entirely inconsistent and, in any event, not
supported by the facts.”
House Democrats who have been in hot pursuit of Mr. Trump’s tax
returns most likely have no idea that at least some of the records are
sitting in a congressional office building. George Yin, a former chief
of staff for the joint committee, said that any identifying information
about taxpayers under review was tightly held among a handful of staff
lawyers and was rarely shared with politicians assigned to the
committee.
It is possible that the case has been paused because Mr. Trump
is president, which would raise the personal stakes of re-election. If
the recent Fox interview is any indication, Mr. Trump seems increasingly
agitated about the matter.
“It’s a disgrace what’s happened,” he told Mr. Hannity. “We had a
deal done. In fact, it was — I guess it was signed even. And once I
ran, or once I won, or somewhere back a long time ago, everything was
like, ‘Well, let’s start all over again.’ It’s a disgrace.”
Helping to reduce Mr. Trump’s tax bills are unidentified
consultants’ fees, some of which can be matched to payments received by
Ivanka Trump.
Examining the Trump Organization’s tax records, a curious
pattern emerges: Between 2010 and 2018, Mr. Trump wrote off some $26
million in unexplained “consulting fees” as a business expense across
nearly all of his projects.
In most cases the fees were roughly one-fifth of his income: In
Azerbaijan, Mr. Trump collected $5 million on a hotel deal and reported
$1.1 million in consulting fees, while in Dubai it was $3 million with a
$630,000 fee, and so on.
Mysterious big payments in business deals can raise red flags,
particularly in places where bribes or kickbacks to middlemen are
routine. But there is no evidence that Mr. Trump, who mostly licenses
his name to other people’s projects and is not involved in securing
government approvals, has engaged in such practices.
Rather, there appears to be a closer-to-home explanation for at
least some of the fees: Mr. Trump reduced his taxable income by treating
a family member as a consultant, and then deducting the fee as a cost
of doing business.
The “consultants” are not identified in the tax records. But
evidence of this arrangement was gleaned by comparing the confidential
tax records to the financial disclosures Ivanka Trump filed when she
joined the White House staff in 2017. Ms. Trump reported receiving
payments from a consulting company she co-owned, totaling $747,622, that
exactly matched consulting fees claimed as tax deductions by the Trump
Organization for hotel projects in Vancouver and Hawaii.
Eric, Ivanka and Donald Trump Jr. with their father at an
announcement of the Vancouver hotel project in 2013. Ms. Trump appears
to have both managed that deal, and another in Hawaii, as a salaried
Trump Organization executive, and also been paid as a “consultant” on
them. Jonathan Hayward/The Canadian Press, via Associated Press
Ms. Trump had been an executive officer of the Trump companies
that received profits from and paid the consulting fees for both
projects — meaning she appears to have been treated as a consultant on
the same hotel deals that she helped manage as part of her job at her
father’s business.
When asked about the arrangement, the Trump Organization lawyer, Mr. Garten, did not comment.
Employers can deduct consulting fees as a business expense and
also avoid the withholding taxes that apply to wages. To claim the
deduction, the consulting arrangement must be an “ordinary and
necessary” part of running the business, with fees that are reasonable
and market-based, according to the I.R.S. The recipient of the fees is
still required to pay income tax.
The I.R.S. has pursued civil penalties against some business
owners who devised schemes to avoid taxes by paying exorbitant fees to
related parties who were not in fact independent contractors. A 2011 tax
court case centered on the I.R.S.’s denial of almost $3 million in
deductions for consulting fees the partners in an Illinois accounting
firm paid themselves via corporations they created. The court concluded
that the partners had structured the fees to “distribute profits, not to
compensate for services.”
There is no indication that the I.R.S. has questioned Mr.
Trump’s practice of deducting millions of dollars in consulting fees. If
the payments to his daughter were compensation for work, it is not
clear why Mr. Trump would do it in this form, other than to reduce his
own tax liability. Another, more legally perilous possibility is that
the fees were a way to transfer assets to his children without incurring
a gift tax.
A Times investigation in 2018 found that Mr. Trump’s late
father, Fred Trump, employed a number of legally dubious schemes decades
ago to evade gift taxes on millions of dollars he transferred to his
children. It is not possible to discern from this newer collection of
tax records whether intra-family financial maneuverings were a
motivating factor.
However, the fact that some of the consulting fees are identical
to those reported by Mr. Trump’s daughter raises the question of
whether this was a mechanism the president used to compensate his adult
children involved with his business. Indeed, in some instances where
large fees were claimed, people with direct knowledge of the projects
were not aware of any outside consultants who would have been paid.
On the failed hotel deal in Azerbaijan, which was plagued by
suspicions of corruption, a Trump Organization lawyer told The New
Yorker the company was blameless because it was merely a licenser and
had no substantive role, adding, “We did not pay any money to anyone.”
Yet, the tax records for three Trump L.L.C.s involved in that project
show deductions for consulting fees totaling $1.1 million that were paid
to someone.
In Turkey, a person directly involved in developing two Trump
towers in Istanbul expressed bafflement when asked about consultants on
the project, telling The Times there was never any consultant or other
third party in Turkey paid by the Trump Organization. But tax records
show regular deductions for consulting fees over seven years totaling $2
million.
Ms. Trump disclosed in her public filing that the fees she
received were paid through TTT Consulting L.L.C., which she said
provided “consulting, licensing and management services for real estate
projects.” Incorporated in Delaware in December 2005, the firm is one of
several Trump-related entities with some variation of TTT or TTTT in
the name that appear to refer to members of the Trump family.
Like her brothers Donald Jr. and Eric, Ms. Trump was a longtime
employee of the Trump Organization and an executive officer for more
than 200 Trump companies that licensed or managed hotel and resort
properties. The tax records show that the three siblings had each drawn a
salary from their father’s company — roughly $480,000 a year, jumping
to about $2 million after Mr. Trump became president — though Ms. Trump
no longer receives a salary. What’s more, Mr. Trump has said the
children were intimately involved in negotiating and managing his
projects. When asked in a 2011 lawsuit deposition whom he relied on to
handle important details of his licensing deals, he named only Ivanka,
Donald Jr. and Eric.
On Ms. Trump’s now-defunct website, which explains her role at
the Trump Organization, she was not identified as a consultant. Rather,
she has been described as a senior executive who “actively participates
in all aspects of both Trump and Trump branded projects, including deal
evaluation, predevelopment planning, financing, design, construction,
sales and marketing, and ensuring that Trump’s world-renowned physical
and operational standards are met.
“She is involved in all decisions — large and small.”
Hair stylists, table linens, property taxes on a family estate — all have been deducted as business expenses.
Private jets, country clubs and mansions have all had a role in the selling of Donald Trump.
“I play to people’s fantasies,” he wrote in “Trump: The Art of
the Deal.” “People want to believe that something is the biggest and the
greatest and the most spectacular. I call it truthful hyperbole. It’s
an innocent form of exaggeration — and a very effective form of
promotion.”
If the singular Trump product is Trump in an exaggerated form —
the man, the lifestyle, the acquisitiveness — then everything that feeds
the image, including the cost of his businesses, can be written off on
his taxes. Mr. Trump may be reporting business losses to the government,
but he can still live a life of wealth and write it off.
Take, for example, Mar-a-Lago, now the president’s permanent
residence as well as a private club and stage set on which Trump luxury
plays out. As a business, it is also the source of millions of dollars
in expenses deducted from taxable income, among them $109,433 for linens
and silver and $197,829 for landscaping in 2017. Also deducted as a
business expense was the $210,000 paid to a Florida photographer over
the years for shooting numerous events at the club, including a 2016 New
Year’s Eve party hosted by Mr. Trump.
Mar-a-Lago, where a flood of new members starting in 2015
allowed Mr. Trump to pocket an additional $5 million a year from the
business, is also a source of millions in tax deductions. Saul Martinez
for The New York Times
Mr. Trump has written off as business expenses costs — including
fuel and meals — associated with his aircraft, used to shuttle him
among his various homes and properties. Likewise the cost of haircuts,
including the more than $70,000 paid to style his hair during “The
Apprentice.” Together, nine Trump entities have written off at least
$95,464 paid to a favorite hair and makeup artist of Ivanka Trump.
In allowing business expenses to be deducted, the I.R.S.
requires that they be “ordinary and necessary,” a loosely defined
standard often interpreted generously by business owners.
Perhaps Mr. Trump’s most generous interpretation of the business
expense write-off is his treatment of the Seven Springs estate in
Westchester County, N.Y.
Seven Springs is a throwback to another era. The main house,
built in 1919 by Eugene I. Meyer Jr., the onetime head of the Federal
Reserve who bought The Washington Post in 1933, sits on more than 200
acres of lush, almost untouched land just an hour’s drive north of New
York City.
“The mansion is 50,000 square feet, has three pools, carriage
houses, and is surrounded by nature preserves,” according to The Trump
Organization website.
Mr. Trump had big plans when he bought the property in 1996 — a
golf course, a clubhouse and 15 private homes. But residents of
surrounding towns thwarted his ambitions, arguing that development would
draw too much traffic and risk polluting the drinking water.
Mr. Trump instead found a way to reap tax benefits from the
estate. He took advantage of what is known as a conservation easement.
In 2015, he signed a deal with a land conservancy, agreeing not to
develop most of the property. In exchange, he claimed a $21.1 million
charitable tax deduction.
Mr. Trump classified the Seven Springs estate as an investment
property, not a personal residence, allowing for certain tax savings.
Meanwhile, Eric Trump has called it a “home base,” and the Trump
Organization website describes it as a “retreat for the Trump family.”
Tony Cenicola/The New York Times
The tax records reveal another way Seven Springs has generated
substantial tax savings. In 2014, Mr. Trump classified the estate as an
investment property, as distinct from a personal residence. Since then,
he has written off $2.2 million in property taxes as a business expense —
even as his 2017 tax law allowed individuals to write off only $10,000
in property taxes a year.
Courts have held that to treat residences as businesses for tax
purposes, owners must show that they have “an actual and honest
objective of making a profit,” typically by making substantial efforts
to rent the property and eventually generating income.
Whether or not Seven Springs fits those criteria, the Trumps have described the property somewhat differently.
In 2014, Eric Trump told Forbes that “this is really our
compound.” Growing up, he and his brother Donald Jr. spent many summers
there, riding all-terrain vehicles and fishing on a nearby lake. At one
point, the brothers took up residence in a carriage house on the
property. “It was home base for us for a long, long time,” Eric told
Forbes.
And the Trump Organization website still describes Seven Springs as a “retreat for the Trump family.”
Mr. Garten, the Trump Organization lawyer, did not respond to a question about the Seven Springs write-off.
The Seven Springs conservation-easement deduction is one of four
that Mr. Trump has claimed over the years. While his use of these
deductions is widely known, his tax records show that they represent the
lion’s share of his charitable giving — about $119.3 million of roughly
$130 million in personal and corporate charitable contributions
reported to the I.R.S.
The Trump National Golf Club in Los Angeles, another site where
Mr. Trump has claimed a conservation-easement deduction. Bryan Denton
for The New York Times
Two of those deductions — at Seven Springs and at the Trump
National Golf Club in Los Angeles — are the focus of an investigation by
the New York attorney general, who is examining whether the appraisals
on the land, and therefore the tax deductions, were inflated.
Another common deductible expense for all businesses is legal
fees. The I.R.S. requires that these fees be “directly related to
operating your business,” and businesses cannot deduct “legal fees paid
to defend charges that arise from participation in a political
campaign.”
Yet the tax records show that the Trump Corporation wrote off as
business expenses fees paid to a criminal defense lawyer, Alan S.
Futerfas, who was hired to represent Donald Trump Jr. during the Russia
inquiry. Investigators were examining Donald Jr.’s role in the 2016
Trump Tower meeting with Russians who had promised damaging information
on Mrs. Clinton. When he testified before Congress in 2017, Mr. Futerfas
was by his side.
Mr. Futerfas was also hired to defend the president’s embattled
charitable foundation, which would be shut down in 2018 after New York
regulators said it had engaged in “a shocking pattern of illegality.”
The Trump Corporation paid Mr. Futerfas at least $1.9 million in
2017 and 2018, tax records show. Also written off was at least $259,684
paid to Williams & Jensen, another law firm brought in during the
same period to represent Donald Trump Jr.
Deals in countries led by strongmen, tenants who have business
before the federal government, and hotels and clubs that draw those
seeking access or favor.
In May, the chairman of a trade group representing Turkish
business interests wrote to Commerce Secretary Wilbur Ross urging
support for increased trade between the United States and Turkey. The
ultimate goal was nothing less than “reorienting the U.S. supply chain
away from China.”
The letter was among three sent to cabinet secretaries by Mehmet
Ali Yalcindag, chairman of the Turkey-U.S. Business Council, who noted
that he had copied each one to Mr. Trump.
The president needed no introduction to Mr. Yalcindag: The
Turkish businessman helped negotiate a licensing deal in 2008 for his
family’s company to develop two Trump towers in Istanbul. The tax
records show the deal has earned Mr. Trump at least $13 million — far
more than previously known — including more than $1 million since he
entered the White House, even as his onetime associate now lobbies on
behalf of Turkish interests.
Mr. Yalcindag said he had “remained friendly” with Mr. Trump
since their work together years ago, but that all communications between
his trade group and the administration “go through formal channels and
are properly disclosed.”
Mehmet Ali Yalcindag, pictured with the Trumps in 2012, helped
negotiate a licensing deal in Istanbul that brought Mr. Trump at least
$13 million. He now lobbies on behalf of Turkish business interests.
Trump Organization, via PR Newswire
The ethical quandaries created by Mr. Trump’s decision to keep
his business while in the White House have been documented. But the full
financial measure of his extraordinary confluence of interests — a
president with a wealth of business entanglements at home and in myriad
geopolitical hot spots — has remained elusive.
The tax records for Mr. Trump and his hundreds of companies show
precisely how much money he has received over the years, and how
heavily he has come to rely on leveraging his brand in ways that pose
potential or direct conflicts of interest while he is president. The
records also provide the first reliable window onto his finances before
2014, the earliest year covered by his required annual disclosures,
showing that his total profits from some projects outside the United
States were larger than indicated by those limited public filings.
Based on the financial disclosures, which report much of his
income in broad ranges, Mr. Trump’s earnings from the Istanbul towers
could have been as low as $3.2 million. In the Philippines, where he
licensed his name to a Manila tower nearly a decade ago, the low end of
the range was $4.1 million — less than half of the $9.3 million he
actually made. In Azerbaijan, he collected more than $5 million for the
failed hotel project, about twice what appeared on his public filings.
It did not take long for conflicts to emerge when Mr. Trump ran
for president and won. The Philippines’ strongman leader, Rodrigo
Duterte, chose as a special trade envoy to Washington the businessman
behind the Trump tower in Manila. In Argentina, a key person who had
been involved in a Uruguayan licensing deal that earned Mr. Trump $2.3
million was appointed to a cabinet post.
The president’s conflicts have been most evident with Turkey,
where the business community and the authoritarian government of
President Recep Tayyip Erdogan have not hesitated to leverage various
Trump enterprises to their advantage. When Turkish-American relations
were at a low point, a Turkish business group canceled a conference at
Mr. Trump’s Washington hotel; six months later, when the two countries
were on better terms, the rescheduled event was attended by Turkish
government officials. Turkish Airlines also chose the Trump National
Golf Club in suburban Virginia to host an event.
More broadly, the tax records suggest other ways in which Mr.
Trump’s presidency has propped up his sagging bottom line. Monthly
credit card receipts, reported to the I.R.S. by third-party card
processing firms, reflect the way certain of his resorts, golf courses
and hotels became favored stamping grounds, if not venues for
influence-trading, beginning in 2015 and continuing into his time in the
White House.
The credit card data does not reflect total revenue, and is
useful mainly for showing short-term ups and downs of consumer interest
in a business. While two of Mr. Trump’s marquee draws — the Washington
hotel in the Old Post Office and the Doral golf resort — are loaded with
debt and continue to lose money, both have seen credit card
transactions rise markedly with his political ascent.
Though the Trump International Hotel in Washington is loaded
with debt and losing money, its credit card transactions have risen with
Mr. Trump’s political ascent. Al Drago for The New York Times
At the hotel, the monthly receipts grew from $3.7 million in
December 2016 shortly after it opened, to $5.4 million in January 2017
and $6 million by May 2018. At Doral, after Mr. Trump declared his
candidacy in June 2015, credit card revenue more than doubled, to $13
million, for the three months through August, compared with the same
period the year before.
One Trump enterprise that has been regularly profitable, and is a
persistent source of concern about ethical conflicts and national
security lapses, is the Mar-a-Lago club. Profits there rose sharply
after Mr. Trump declared his candidacy, as courtiers eagerly joining up
brought a tenfold rise in cash from initiation fees — from $664,000 in
2014 to just under $6 million in 2016, even before Mr. Trump doubled the
cost of initiation in January 2017. The membership rush allowed the
president to take $26 million out of the business from 2015 through
2018, nearly triple the rate at which he had paid himself in the prior
two years.
Some of the largest payments from business groups for events or
conferences at Mar-a-Lago and other Trump properties have come since Mr.
Trump became president, the tax records show.
At Doral, Mr. Trump collected a total of at least $7 million in
2015 and 2016 from Bank of America, and at least $1.2 million in 2017
and 2018 from a trade association representing food retailers and
wholesalers. The U.S. Chamber of Commerce paid Doral at least $406,599
in 2018.
Beyond one-time payments for events or memberships, large
corporations also pay rent for space in the few commercial buildings Mr.
Trump actually owns. Walgreens, the pharmacy giant that resolved an
antitrust matter before federal regulators in 2017, pays $3.4 million a
year for a lease at 40 Wall Street, a Trump-owned office building in
Manhattan.
Another renter at 40 Wall, for $2.5 million a year, is Atane
Engineers, which changed its name in 2018 after a corruption scandal
that culminated in two former top executives’ pleading guilty to paying
bribes for city infrastructure contracts. Despite the criminal case —
which landed the company on New York State’s list of “non-responsible
entities” that require a waiver to obtain state contracts — the newly
christened Atane registered as an eligible federal contractor with no
restrictions listed in its file.
Rental income over all at 40 Wall has risen markedly, from $30.5
million in 2014 to $43.2 million in 2018. The tax records show that the
cost of existing leases there has risen. and at least four law firms
appear to have moved in since Mr. Trump ran for president.
Mr. Trump has a 30 percent stake in two valuable office towers,
including one in Midtown Manhattan, shared with and managed by Vornado
Realty Trust. Dave Sanders for The New York Times
The other tower, in San Francisco, co-owned with Vornado, whose
C.E.O. is a Trump ally and whose tenants include firms that lobby the
federal government. Jim Wilson/The New York Times
In addition to buildings he owns outright, there is the
president’s stake in the Vornado partnerships that control two valuable
office towers — 1290 Sixth Avenue in Manhattan and 555 California Street
in San Francisco. Vornado’s chief executive, Steven Roth, is a close
Trump ally recently named to the White House economic recovery council.
Last year, the president appointed Mr. Roth’s wife, Daryl Roth, to the
Kennedy Center board of trustees.
Vornado tenants include a roster of blue-chip firms paying
multimillion-dollar leases, many of whom regularly do business with,
lobby or are regulated by the federal government. Among the dozens of
leases paid in 2018 to Mr. Trump’s Vornado partnerships, according to
his tax records, were $5.8 million from Goldman Sachs; $3.1 million from
Microsoft; $32.7 million from Neuberger Berman, an investment
management company; and $8.8 million from the law firm Kirkland &
Ellis.
Threats are converging: mounting business losses, the looming I.R.S. audit and personally guaranteed debts coming due.
When Mr. Trump glided down a gilded Trump Tower escalator to
kick off his presidential campaign in June 2015, his finances needed a
jolt.
His core businesses were reporting mounting losses — more than
$100 million over the previous two years. The river of celebrity-driven
income that had long buoyed them was running dry.
If Mr. Trump hoped his unlikely candidacy might, at least,
revitalize his brand, his barrage of derogatory remarks about immigrants
quickly cost him two of his biggest and easiest sources of cash —
licensing deals with clothing and mattress manufacturers that had netted
him more than $30 million. NBC, his partner in Miss Universe — source
of nearly $20 million in profits — announced that it would no longer
broadcast the pageant; he sold it soon after.
Now his tax records make clear that he is facing a battery of threats to his business and his own financial well-being.
Over the past decade, he appears to have filled the cash-flow gaps with a series of one-shots that may not be available again.
In 2012, he took out a $100 million mortgage on the commercial
space in Trump Tower. He took nearly the entire amount as a payout, his
tax records show. His company has paid more than $15 million in interest
on the loan, but nothing on the principal. The full $100 million comes
due in 2022.
In 2013, he withdrew $95.8 million from his Vornado partnership account.
And in January 2014, he sold $98 million in stocks and bonds,
his biggest single month of sales in at least the last two decades. He
sold $54 million more in stocks and bonds in 2015, and $68.2 million in
2016. His financial disclosure released in July showed that he had as
little as $873,000 in securities left to sell.
Mr. Trump’s businesses reported cash on hand of $34.7 million in 2018, down 40 percent from five years earlier.
What’s more, the tax records show that Mr. Trump has once again
done what he says he regrets, looking back on his early 1990s meltdown:
personally guaranteed hundreds of millions of dollars in loans, a
decision that led his lenders to threaten to force him into personal
bankruptcy.
This time around, he is personally responsible for loans and
other debts totaling $421 million, with most of it coming due within
four years. Should he win re-election, his lenders could be placed in
the unprecedented position of weighing whether to foreclose on a sitting
president.
There is, however, a tax benefit for Mr. Trump. While business
owners can use losses to avoid taxes, they can do so only up to the
amount invested in the business. But by taking personal responsibility
for that $421 million in debt, Mr. Trump would be able to declare that
amount in losses in future years.
The balances on those loans had not been paid down by the end of
2018. And the businesses carrying the bulk of the debt — the Doral golf
resort ($125 million) and the Washington hotel ($160 million) — are
struggling, which could make it difficult to find a lender willing to
refinance it.
The unresolved audit of his $72.9 million tax refund hangs over his head.
The broader economy promises little relief. Across the country,
brick-and-mortar stores are in decline, and they have been very
important to Trump Tower, which has in turn been very important to Mr.
Trump. Nike, which rented the space for its flagship store in a building
attached to Trump Tower and had paid $195.1 million in rent since the
1990s, left in 2018.
The president’s most recent financial disclosure reported modest
gains in 2019. But that was before the pandemic hit. His already
struggling properties were shut down for several months earlier this
year. The Doral resort asked Deutsche Bank to allow a delay on its loan
payments. Analysts have predicted that the hotel business will not fully
recover until late 2023.
The President’s Taxes
Mr. Trump still has assets to sell. But doing so could take its
own toll, both financial and to Mr. Trump’s desire to always be seen as a
winner. The Trump family said last year that it was considering selling
the Washington hotel, but not because it was losing money.
In Mr. Trump’s telling, any difficulty in his finances has been caused by the sacrifices made for his current job.
“They say, ‘Trump is getting rich off our nation,’” he said at a
rally in Minneapolis last October. “I lose billions being president,
and I don’t care. It’s nice to be rich, I guess, but I lose billions.”
(http://www.autoadmit.com/thread.php?thread_id=4634677&forum_id=2#40996823)
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