"Debt Parking"

[kpete]

Debt parking

Here is how debt parking works. Suppose the debtor (in this case The Donald) is going to get his debt cancelled for (say) 1c in the dollar. When he gets the debt wiped out the debtor (ie The Donald) will have to report assessable income equal to the debt wiped out (in this case 99 percent of $916 million).

The alternative though is for the debtor to set up a dummy party. The dummy party might be his wife or children or some company or trust set up by them or more likely some completely opaque offshore trust.

And that dummy party goes and buys the debt for say 1.1 cents in the dollar. Then they just sit there.

They don't force the debtor (ie The Donald) to repay. They don't make a profit or loss on the debt. And because the debtor never has his debt forgiven he never gets the assessment on debt forgiveness and he gets to keep his NOLs even though the losses did not come out of his pocket.

Every tax system worth its salt has some rules on "effective debt forgiveness" to prevent debt parking. And - from my experience which is now over twenty years old - none of them work entirely.

Now if Donald really has all those tax losses its pretty clear that the debt must be parked somewhere.

There is a vehicle out there (say an offshore trust or other undisclosed related party effectively controlled by Donald Trump) - which owns over $900 million in debt and is not bothering to collect it.

I do not have the time or energy to find that vehicle. But it is there. Now that this blog has gone public journalists are going to look for it.

There is a Pulitzer prize for whoever finds it. Just give me a nod at the acceptance ceremony.



MORE:
http://brontecapital.blogspot.com/2016/10/some-comments-on-new-york-times-story.html

[uponit7771]

1. YES!! I KNEW... KNEW this was the way tRump got money !! It wasn't cause he was CFP on most

... of his ventures he just parked the debt somewhere else based on assets !!!

Cuban is correct; if tRump was REALLY a billionaire ... IN LIQUID CASH... this election would be REALLY easy to self fund but tRump can't because his money is locked up in speculated assets.

[2naSalit]

2. And maybe

it has ties to a certain oligarchy which operates hand in hand with a certain "ruler" on the other side of the planet.

[lastlib]

7. (who would have a certain stake in keeping the offshore trust really opaque......)

Good guess!

[uponit7771]

9. +1, this is important because after a while banks catch on and the money has to come from elesewhere

[SunSeeker]

3. K & R for exposure.

[dawg]

4. It's possible that some of the debt was cancelled or repaid from future income.

We don't have the subsequent-year returns that would show us whether or not such a thing happened.

In order for a friendly entity to "hold" his debts, however, that entity would have to purchase the debts from the original creditors. They would be a fool to do this. Unless they were Russian oligarchs trying to buy a U.S. public figure. Or something like that.

Trump would be a fool to do it with money he controlled. Better to stiff the creditors and pay tax on the debt forgiveness income. As long as the tax rate is less than 100%, it's always better to stiff the creditors.

(Life Pro Tip: Do not loan money to Donald Trump!)

[ffr]

5. Take Wealth from American Again

He wins the election, he can forgive his debt. Brilliant that Donald! All on the backs of the rest of us, brought to you by the alt-right followers.

[FailureToCommunicate]

6. K & R

Oh what a tangled web we weave...

[keithbvadu2]

8. Is there an expiration date where the debt is not legally owed?

Then he would have to declare income?

[dixiegrrrrl]

10. I just looked up the term debt parking, which led to your excellent description

I needed the info because of this story today:

https://www.motherjones.com/politics/2019/09/donald-trump-has-never-explained-a-mysterious-50-million-chicago-unit-acquisition-loan-is-it-evidence-of-tax-fraud/https://www.motherjones.com/politics/2019/09/donald-trump-has-never-explained-a-mysterious-50-million-chicago-unit-acquisition-loan-is-it-evidence-of-tax-fraud/

ain't DU grand!! ....