NEW YORK–(ENEWSPF)–November 1, 2016
Paid for with your tax dollars.
The ‘proof’ that Donald Trump is a business genius? He lost a billion dollars and survived to buy more gaudy crap than anyone this side of Tsar Nicholas. Only, as it turns out, that billion dollar loss doesn’t prove that Trump is a wily comeback artist. It proves that he’s one of the biggest tax cheats in history.
Donald J. Trump proudly acknowledges he did not pay a dime in federal income taxes for years on end. He insists he merely exploited tax loopholes legally available to any billionaire — loopholes he says Hillary Clinton failed to close during her years in the United States Senate. …
But newly obtained documents show that in the early 1990s, as he scrambled to stave off financial ruin, Mr. Trump avoided reporting hundreds of millions of dollars in taxable income by using a tax avoidance maneuver so legally dubious his own lawyers advised him that the Internal Revenue Service would most likely declare it improper if he were audited.
When Trump’s incredibly foolish scheme to park three casinos in Atlantic City failed, partners and banks walked away from hundreds of millions in investments and loans. When they forgave Trump’s debt, all of that forgiveness should have shown up in Trump’s taxes, dollar for dollar, not as loss, but as income.
Only Donald Trump didn’t report it as income. At the same time investors were hurrying to get away from their unfortunate brush with Trump, Donald Trump was reporting their forgiveness as his personal loss.
“Whatever loophole existed was not ‘exploited’ here, but stretched beyond any recognition,” said Steven M. Rosenthal, a senior fellow at the nonpartisan Tax Policy Center who helped draft tax legislation in the early 1990s.
Donald Trump used that phantom loss to avoid paying any taxes for the next 18 years.
Even the other losses from Trump’s massive casino blunder should have been offset by the income he had to report from the forgiven loans. Rather than being able to write off taxes for decades, Trump should have reported income requiring him to pay tens of millions of dollars in that same year, and in every year since. In all, Trump cheated his way out $916 million in taxes owed.
Mr. Trump declined to comment for this article.
You bet he did. So did Trump’s tax lawyers.
At the time, Mr. Trump would have been hard-pressed to pay tens of millions of dollars in taxes. According to assessments of his financial stability by New Jersey casino regulators, there were times in the early 1990s when Mr. Trump had no more than a few million dollars in his various bank accounts. He was so strapped for cash that his creditors were apoplectic when they learned that Mr. Trump had bought Marla Maples an engagement ring estimated to be worth $250,000.
There was a scheme behind Trump’s actions … one that his own lawyers told him wouldn’t work.
Trump made his debt disappear through a sleight-of-hand maneuver in which he substituted worthless ownership in his bankrupt company for the debt. For instance, he might give 10% interest in a Trump casino to a bank and call it worth $100 million, then write off the debt as paid. With a stroke of the pen, he dodged reporting the loan forgiveness as income, and also counted the debt repayment as a loss. Corporations had done something similar for years, handing over useless stock or options in exchange for debt, and Congress had already moved to block the trick.
Before proceeding with his plan, Mr. Trump did what most prudent taxpayers do: He sought a formal tax opinion letter. …
But the opinion letters Mr. Trump received from his tax lawyers at Willkie Farr & Gallagher were far from the gold standard. The letters bluntly warned that there was no statute, regulation or judicial opinion that explicitly permitted Mr. Trump’s tax gambit. “Due to the lack of definitive judicial or administrative authority,” his lawyers wrote, “substantial uncertainties exist with respect to many of the tax consequences of the plan.”
Because we have only one partial return from Trump in the last three decades, it’s impossible to tell if the IRS detected or challenged Trump’s money-for-nothing scheme. What is sure is that what Trump did is a direct violation of the intent of tax law.
Regardless of whether the I.R.S. objected, Mr. Trump’s tax avoidance in this case violated a central principle of American tax law, said Mr. Buckley, the former chief of staff for Congress’s Joint Committee on Taxation, who later served as chief tax counsel for Democrats on the House Ways and Means Committee.
“He deducted somebody else’s losses,” Mr. Buckley said. By that, Mr. Buckley meant that only the bondholders who forgave Mr. Trump’s unpaid casino debts should have been allowed to use those losses to offset future income and reduce their taxes. That Mr. Trump used the same losses to reduce his taxes ultimately increases the tax burden on everyone else, Mr. Buckley explained. “He is double dipping big time.”
There’s no doubt that the investors who forgave Trump’s debt didn’t count his phantom ownership as having any value—if they even knew about it. They would have taken a write off for their losses. Donald Trump then took a write off for those same losses, cheating US taxpayers out of not just the tens of millions he would have owed that year, but the full $916 million he avoided over the next two decades.
These days, the loophole Trump “stretched beyond recognition” is definitively closed. And who did that?
Among the members of Congress who voted to finally close the loophole: Senator Hillary Clinton of New York.
1995 might seem like a long time ago, and Donald Trump may be feeling safe. But it’s worth noting.
False, Fraudulent, or Missing Returns: No IRS Statute of Limitations
It is also important to note that no deadline applies where the IRS can establish that a taxpayer has: 1) filed a false or fraudulent return; 2) willfully attempted to evade tax; or 3) failed to file a return. Unlike the circumstances above where tax returns are filed (even with errors), these are cases in which a taxpayer is willfully or intentionally not filing taxes or is filing fraudulent return(s). Not only will there be no time limit on IRS action against such taxpayers, but heightened interest fees and penalties will apply.
Al Capone got 11 years for failing to pay $215,000 in back taxes. By that scale, Donald Trump should get out around the year 48,882.
Source: http://dailykos.com
