Trump's Tax Returns Are 'One Piece of the Puzzle.' Prosecutors Are Getting More.




  • In Politics
  • 2021-02-23 12:56:05Z
  • By The New York Times
President Donald Trump at the White House on Dec.
President Donald Trump at the White House on Dec.  

When New York prosecutors finally get to examine the federal tax returns of former President Donald Trump, they will discover a veritable how-to guide for getting rich while losing millions of dollars and paying little to no income taxes.

Whether they find evidence of crimes, however, will also depend on other information not found in the actual returns.

The U.S. Supreme Court on Monday cleared the way for the Manhattan district attorney, Cyrus Vance Jr., to obtain eight years of Trump's federal income tax returns and other records from his accountants. The decision capped a long-running legal battle over prosecutors' access to the information.

The New York Times last year provided more or less a preview of what awaits Vance, when it obtained and analyzed decades of income tax data for Trump and his companies. The tax records provide an unprecedented and highly detailed look at the byzantine world of Trump's finances, which for years he has simultaneously bragged about and sought to keep secret.

The Times' examination showed that the former president reported hundreds of millions of dollars in business losses, went years without paying federal income taxes and faces an IRS audit of a $72.9 million tax refund he claimed a decade ago.

Among other things, the records revealed that Trump had paid just $750 in federal income taxes in his first year as president and no income taxes at all in 10 of the previous 15 years. They also showed he had written off $26 million in "consulting fees" as a business expense between 2010 and 2018, some of which appear to have been paid to his older daughter, Ivanka Trump, while she was a salaried employee of the Trump Organization.

The legitimacy of the fees, which reduced Trump's taxable income, has since become a subject of Vance's investigation, as well as a separate civil inquiry by Letitia James, the New York attorney general. James and Vance are Democrats, and Trump has sought to portray the multiple inquiries as politically motivated, while denying any wrongdoing.

Vance's office has issued subpoenas and conducted interviews in recent months as it scrutinizes a variety of financial matters, including whether the Trump Organization misrepresented the value of assets when obtaining loans or paying property taxes, as well as the payment of $130,000 in hush money during the 2016 campaign to Stephanie Clifford, the pornographic film actress whose stage name is Stormy Daniels. Among those interviewed have been employees of Deutsche Bank, one of Trump's largest lenders.

For all their revelations, Trump's tax records are also noteworthy for what they do not show, including any new details about the payment to Clifford, which was the initial focus of Vance's investigation when it began two years ago.

The tax returns represent a self-reported accounting of revenues and expenses, and often lack the specificity required to know, for instance, if legal costs related to hush-money payments were claimed as a tax write-off, or if money from Russia ever moved through Trump's bank accounts. The absence of that level of detail underscores the potential value of other records that Vance won access to with Monday's Supreme Court decision.

In addition to the tax returns, Trump's accountants, Mazars USA, must also produce business records on which those returns are based and communications with the Trump Organization. Such material could provide important context and background to decisions that Trump or his accountants made when preparing to file taxes.

John D. Fort, a former chief of the IRS criminal investigation division, said tax returns were a useful tool for uncovering leads, but could only be fully understood with additional financial information obtained elsewhere.

"It's a very key personal financial document, but it's just one piece of the puzzle," said Fort, a CPA and the director of investigations with Kostelanetz & Fink in Washington. "What you find in the return will need to be followed up on with interviews and subpoenas."

Still, the Times' investigation of Trump's returns exposed a number of misleading assertions and falsehoods he has propagated about his wealth and business acumen.

Numerous claims by Trump of generous philanthropy fell apart upon examination of his tax returns, which raised questions about both the amount of certain donations and the overall nature of his tax-deductible giving. For example, $119.3 million of the roughly $130 million in charitable deductions he claimed since 2005 turned out to be the estimated value of pledges not to develop real estate, sometimes after a planned project fell through.

At least two of those land-based charitable deductions, one related to a golf course in Los Angeles and the other a Westchester County, New York, estate called Seven Springs, are known to be part of the civil inquiry by James, who is examining whether appraisals supporting the tax write-offs were inflated.

More broadly, the tax records showed how the public disclosures he filed as a candidate and then as president offered a distorted view of his overall finances by reporting glowing numbers for his golf courses, hotels and other businesses based on the gross revenues they collected each year. The actual bottom line, after losses and expenses, was much gloomier: In 2018, while Trump's public filings showed $434.9 million in revenue, his tax returns declared a total of $47.4 million in losses.

And such dire numbers were not an anomaly. Trump's many golf courses, a core component of his business empire, reported losses of $315.6 million from 2000 to 2018, while the income from licensing his name to hotels and resorts had all but dried up by the time he entered the White House. In addition, Trump has hundreds of millions of dollars in loans, much of which he personally guaranteed, coming due in the next few years.

The Times' investigation also found that he faces a potentially devastating IRS audit focusing on the huge refund he claimed in 2010, which covered all the federal income taxes he paid from 2005 to 2008, plus interest. Trump repeatedly cited the ongoing audit as the reason he could not release his tax returns, after initially saying he would, even though nothing about the audit process prevented him from doing so.

If an IRS ruling were to ultimately go against him, Trump could be forced to pay back more than $100 million, factoring in interest and possible penalties, in addition to some $21.2 million in state and local tax refunds that were based on the figures in his federal filings.

This article originally appeared in The New York Times.

© 2021 The New York Times Company

COMMENTS

More Related News

Mike Pompeo is speaking at CPAC amid rumors of a 2024 presidential bid
Mike Pompeo is speaking at CPAC amid rumors of a 2024 presidential bid
  • World
  • 2021-02-25 01:48:24Z

Mike Pompeo has quickly reentered the political fray, raising money for Republicans, addressing key political gatherings and joining an advocacy group run by...

Biden revokes Trump orders on
Biden revokes Trump orders on 'anarchist' cities and more

President Joe Biden on Wednesday formally revoked a series of presidential orders and memorandum signed by Donald Trump, including one that sought to cut...

It
It's been 1 year since Trump infamously tweeted the 'coronavirus is very much under control' in the U.S.
  • World
  • 2021-02-24 21:37:00Z

Well, that didn't age well. It's now been one year since former President Donald Trump infamously tweeted that the "coronavirus is very much under control...

Here
Here's what Trump's tax returns could mean for the investigations into his finances

Donald Trump has fought hard to keep his personal tax returns, and the Trump Organization's a secret. The Supreme Court just let prosecutors get them.

GOP Rep. Somehow Blames Mail Slowdown on Antifa and Black Lives Matter
GOP Rep. Somehow Blames Mail Slowdown on Antifa and Black Lives Matter

Twitter/@NicoleGoodkindRep. Andy Biggs (R-AZ) on Wednesday ludicrously faulted the recent slowdown in post office deliveries on the antifa and Black Lives...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Politics