Looking for insight in to Trump's Taxes
So what I want to know is whether or not this is that unusual for someone in real estate.
The discussion on r/politics is myopic and the discussion on /r/tax lacks detail.
From the NYT article:
The numbers show that in 1985, Mr. Trump reported losses of $46.1 million from his core businesses — largely casinos, hotels and retail space in apartment buildings. They continued to lose money every year, totaling $1.17 billion in losses for the decade.
Trump's statement/tweet:
“You always wanted to show losses for tax purposes....almost all real estate developers did – and often re-negotiate with banks, it was sport,
Now my very limited understanding of real estate and taxes is this:
- You can depreciate the building but not the land
- Depreciation can be carried over multiple years
- When you sell property you can roll those proceeds into the purchase of another property, thus delaying income tax
Are those accurate? If so, do they explain Trump's taxes?
I'm thinking not (I suspect Russian money laundering is the real source of income). However, I have yet to read a good discussion of the specifics. Has anyone read such a discussion or have insight to add?
Main story from NYT:
https://www.nytimes.com/interactive/2019/05/07/us/politics/donald-trump-taxes.html?action=click&module=Top%20Stories&pgtype=Homepage
CNBC's article about Trump's response:
https://www.cnbc.com/2019/05/08/trump-defends-tax-tactics-after-nyt-story-says-he-racked-up-more-than-1-billion-in-losses-it-was-sport.html
EDIT: As an aside, I got into a wee bit of trouble because my wife's (very) small business lost money three years running. The accountant that I worked with informed me that if a business losses $ three years in a row, the IRS considers it a "hobby" and you can't subtract those losses from your personal taxes. Is that in play with Trump at all? If not, why not?
EDIT2: I'm going to answer my own question I think. I heard a good segment on NPR yesterday that addressed my question. You can read the transcript here: https://www.npr.org/2019/05/08/721552462/president-trump-defends-himself-against-report-he-did-not-pay-taxes-for-8-years
The bottom line is it's not so unusual but it doesn't exclude the possibility of him running his businesses poorly either. So I think it's not really what the headlines have made it out to be.
“His losses were so big that in 1991 they accounted for fully 1% of all business losses declared that year by individual American taxpayers”
https://boingboing.net/2019/05/07/ten-years-of-trump-tax-info-ob.html
So clearly this goes beyond simple depreciation (where I think you are able to depreciate a max of 1/30th per year)
Edit:
Trump gets most of his money from licensing his brand.
the fact that this man has managed to convince hundreds of thousands of people that he was a good businessman and to defend that position when most of his success is literally just him falling up the stairs through an act of god or someone's handout really does demonstrate how easy it is to get people to believe things against all contrary evidence.
A lot of the credit/blame for that goes to The Apprentice.
This was a good article about it from a few months ago: How Mark Burnett Resurrected Donald Trump as an Icon of American Success
It isn't about the money you have. It's about the money you control.
You only get taxed when you put the money in your pocket. If it's tied up in a business venture then it isn't "yours," and you haven't "earned" any income. That's why millionaires keep their money in the stock market.
You only get taxed on the money in your pocket, and as long as it's in the form of stocks it doesn't count as a personal income. You could make millions of dollars on the stock market, but you only pay taxes on the money you keep from selling those stocks. If you immediately re-invest the cash back into the stock market then you haven't "earned" any income. You've just moved some money around.
This isn't any kind of shady business. That's the way our laws work. It's legal, and well known.
Now, let's say one year I make a billion dollars, and cash out. That's enough to live on for the rest of my life. From that point on, I wouldn't need to have an income. What happens in the stock market, or what one of my businesses do, doesn't affect my personal income if I never pay myself. Now, if I take some of that billion and invest it in one of my businesses I'll end up with a negative income. The business can use that to make a lot of money, but it isn't "mine" until I pay myself. That's what Trump has been doing.
Did you know that for a number of years Steve Jobs only made $1/yr? Seriously! As the CEO of Apple, he got himself set up with an insane benefits package and stock options. Pretty much all of his personal needs were provided by the company in the form of "benefits." Things like a company provided home, company provided car, company provided everything. They paid him with stocks, but he didn't cash them out so he never "earned" any money. On paper he was a multi-millionaire, but if you looked at his checking account you'd think he was a pauper. It was all perfectly legal, and there was no fraud involved. Just good accountants.
Thanks for a serious and informative reply!
Just don't take anything I say as serious financial advice.
I put this in my post as an edit but am putting it as a comment as well in case that's easier for people to find.
It never is.
Lol, russian money laundering. Like Pizza-gate, but for liberals.
Your accountant probably told you that because the income level on your business is so low as to be negligable. With the idea being that you cant file your woodworking hobby as a business and claim losses on it for tax reasons because its... Not a business.
From the bits I know about big finance, everything Trump has said about his losses holds up. You choose what to report and if youre privately held then theres no reason to report endlessly higher profits if itd be detrimental to you.
Please try to avoid starting your posts off with such an inflammatory tone. That immediately puts people into "argument mode" instead of encouraging a discussion. The content of your comment would have been exactly the same without that line, and it would have felt much less antagonistic.
Got a good summary I could read from somewhere? That's news to me.
Assuming you don't scoff at the idea of reading a WaPO article, they did a decent write-up on it recently.
Also, Buzzfeed News' piece on the large quantity of objectively shady condo deals Trump has made over the years.
Lastly, the Moscow Project sources their statements exceedingly well and generally stays away from gratuitous hearsay or unsubstantiated scandal. This one covers much more than just any potential money laundering, however, and is an exceptionally long read from start to finish. If you prefer they have it broken into chapters that flow chronologically, focusing on different aspects of the Trump presidency and how they relate to what we know happened and didn't happen.
thanks! I don't shy away from the washington post, they generally do decent work. Looks like I've got some reading to do!
I think it may be difficult to find something truly succinct given that we're talking about 30 years of financial transactions, but I'll keep looking.
I think this is a good write-up in the New Republic:
https://newrepublic.com/article/143586/trumps-russian-laundromat-trump-tower-luxury-high-rises-dirty-money-international-crime-syndicate
Here is an equally long write-up in the New Yorker:
https://www.newyorker.com/magazine/2017/08/21/trumps-business-of-corruption
EDIT: Again, given we're talking about 30 years of financial transactions, a summary is difficult. Here is a relatively short write-up by reddit user u/PoppinKream that goes into detail on a handful of transactions. It's quite well-sourced (as is the norm with u/PoppinKream). I think this is probably closest to what you're looking for.
https://old.reddit.com/r/politics/comments/7wmcme/trump_sold_a_40_million_estate_to_a_russian/du1i1ix/?context=3
Primary source: https://www.fincen.gov/news/news-releases/fincen-fines-trump-taj-mahal-casino-resort-10-million-significant-and-long
A podcast from ProPublica was based in part on the FinCEN settlement above and gives a good amount of backstory. The entire Trump, Inc podcast series is excellent. They're clearly critical of Trump and his business dealings but without being sensationalistic about it.
CNN article from 2017:
Primary sources linked from that CNN article:
https://assets.documentcloud.org/documents/3722293/FinCEN-Trump-Taj-Mahal-1998-settlement.pdf
https://assets.documentcloud.org/documents/3727001/Responsive-Docs-for-17-205-F-Pagliery.pdf
Choosing what you do and don't report on your taxes has a name: tax fraud.
You can't omit income anything but you can choose what to report as profit and loss.
Well put.
Private companies do not report anything to the public.
Private companies must report all income and only valid expenses to the IRS.
Private companies can't inflate assets when applying for loans.
These losses are huge, but surely not unexpected after such high profile bankruptcies that Trump had.