Taxes

Report: Trump Didn’t Report “Hundreds of Millions” of Taxable Income

trumptajmahal
JM Ashby
Written by JM Ashby

The New York Times obtained new documents that show Republican presidential nominee Donald Trump avoided reporting hundreds of millions of dollars of taxable income in the 1990s.

After reviewing Trump's 1995 tax returns, the Times previously reported that Trump posted a nearly billion dollar loss which could have been used to avoid paying income taxes for next 20 years, but some experts questioned how he could do that because canceled debt must be reported to the IRS.

Now we know how he did it.

Investors and banks that financed Trump's failing Atlantic City casino business forgave the hundreds of millions of dollars of debt that Trump owed them, but Trump never reported the cancelled debt.

As that empire floundered in the early 1990s, Mr. Trump pressured his financial backers to forgive hundreds of millions of dollars in debt he could not repay. While the cancellation of so much debt gave new life to Mr. Trump’s casinos, it created a potentially crippling problem with the Internal Revenue Service. In the eyes of the I.R.S., a dollar of canceled debt is the same as a dollar of taxable income. This meant Mr. Trump faced the painful prospect of having to report the hundreds of millions of dollars of canceled debt as if it were hundreds of millions of dollars of taxable income. [...]

By avoiding reporting his canceled casino debt in the first place, however, Mr. Trump’s $916 million deduction would not have been reduced by hundreds of millions of dollars. He could have preserved the deduction and used it instead to avoid paying income taxes he might otherwise have owed on books, TV shows or branding deals. Under the rules in effect in 1995, the $916 million loss could have been used to wipe out more than $50 million a year in taxable income for 18 years.

Notably, Trump's own lawyers advised him not to do this according to the new documents reviewed by the New York Times but, obviously, he did it anyway and hasn't paid taxes since then. This is significant because Trump surrogates and other Republicans have downplayed Trump's tax avoidance by saying he was simply following the law, but this new information implicates him in an illegal tax avoidance scheme.

Trump would not have been able to use his massive loss of nearly a billion dollars to avoid paying taxes if he had reported the cancelled debt.

Speaking of debt, it's no mystery why no American banks will do business with Trump and why he now relies exclusively on foreign banks in Germany and Russia. Anyone who has ever bet on Trump's businesses has paid a high price for it.

The loophole that allowed Trump to avoid paying taxes for such a long time was actually closed by Congress. Hillary Clinton voted to close it as a senator.

  • ProudLiberalAlways

    What oh what to do with Crooked Donald? Thief Donald? Crooked thief Donald? Hey, I know——–LOCK HIM UP!!!!!!!!!!!!

  • muselet

    Kevin Drum explains Donald Trump’s equity-for-debt swap and quotes the New York Times‘s gobsmacked reaction:

    So Trump then had $916 million in operating losses, but no debt forgiveness to offset it. “Even in the opaque, rarefied world of gaming impenetrable tax regulations,” says the Times, “this particular maneuver was about as close as a company could get to waving a magic wand and making taxes disappear.”

    Steve Benen explains Trump’s stock-for-debt swap, then quotes a knowledgeable source:

    John Buckley, who served as the chief of staff for Congress’s Joint Committee on Taxation in 1993 and 1994, told the Times that Trump’s scheme violated a central principle of American tax law: “He deducted somebody else’s losses.”

    Anyone who still thinks Donald Trump is a clever businessman, and not a fraud and a thief, is an idiot.

    –alopecia

  • gescove

    Let’s see, taxes owed on $100’s of millions of unreported income plus interest, fines, and penalties. I look forward to the IRS auction of his gaudy, gold-plated crap and his long, long stint in jail. Karma is a bitch.

  • Nefercat

    But wait! Hillary Clinton’s assistant’s husband has emails on his computer! They may or may not have been sent to or from Clinton and they may or may not have a fucking goddamn thing to do with anything! Nothing else on the planet matters!

    The republicans screamed at full volume for decades about the godless commie rooskies, and now all of a sudden their attitude is meh, Putin looks all studly riding a horsie while shirtless.

    Imagine if it were Clinton tied up with Russian finances and banks, refusing to release her taxes, and weaseling out of nearly a billion dollars of reportable income. I’ll bet Trump’s drooling base would care then, wouldn’t they?

  • Dread_Pirate_Mathius

    this new information implicates him in an illegal tax avoidance scheme.

    The word you’re looking for evasion. Tax evasion.

    Tax avoidance is legal.
    Tax evasion is illegal.

    Deliberately failing to report forgiven debt taxable income is tax evasion.

    And, conveniently, there is no statute of limitations on tax evasion.

    • ProudLiberalAlways

      Just ask Al Capone!

  • Draxiar

    I want this mofo to burn. I’ve never hated a presidential candidate this much. I’ve never been so disappointed in the American people in such this way for their raw ignorance, double standards, and embrace of everything the U.S.A is supposed to be against. We’re not a perfect nation but I believe there’s more good than bad. With Trump, he’s the mascot of what is bad…and he’s proud of it.

  • Why is he not in prison? If any average person had done half of what he is accused we’d never see the light of day again. It’s all very frustrating.