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http://brontecapital.blogspot.com/2016/10/some-comments-on-new-york-times-story.html?spref=tw&m=1<snip>
Some comments on the New York Times story about Donald Trump's tax returns
Decades ago - before I was a fund manager - I was the resident expert on tax avoidance working for the Australian Treasury. That was where I started to hone the accounting skills sometimes shown on this blog.
I very rarely do anything in tax - but now I think it is time.
The New York Times has published a story (including extracts) about Donald Trump's tax returns over two decades ago. The money-quote is this:
Donald J. Trump declared a $916 million loss on his 1995 income tax returns, a tax deduction so substantial it could have allowed him to legally avoid paying any federal income taxes for up to 18 years...
According to the New York Times the losses came
... through mismanagement of three Atlantic City casinos, his ill-fated foray into the airline business and his ill-timed purchase of the Plaza Hotel in Manhattan.
There is an issue here.
Donald Trump did not repay all the debt associated with those investments.
Either
the loss is a real loss and the Donald was really was out of pocket by $916 million (in which case he has legitimate NOLs)
or the loss was passed on to someone else by The Donald defaulting on debt - in which case Donald Trump should be assessed for income from debt forgiveness.
...more
6chars
(3,967 posts)Had company A loan company B $1b. Company A then sold the debt of was owed to company C for ten cents on the dollar (or had Company C just buy company for $100m), and Company A wrote off a $900m loss for tax purposes. Company C has never written this off as an uncollectible debt so company B never had a gain to be taxed for debt cancellation. Trump created a 900m tax write off out of thin air using a three shell technique. This is what the leak was inviting the press to figure out.
this is only a theory
Thanks kentuck.
annabanana
(52,791 posts)It is the reason so many people can't figure out how the rich stay rich despite congenital idiocy.
Jim Beard
(2,535 posts)that we can pick up on terms like how he stiffed people. He didn't pay back his debt which stiffed others but he got the tax writeoff anyway. Am I close?
Need to get it very condensed to make it easy to use against by being explained simply.
Thanks
Jim Beard
(2,535 posts)plan, Donald could take that billion dollar deduction BUT once he started paying it back, that would be taxable income.