The real Trump tax scandal: David Cay Johnston

[swag]

http://www.usatoday.com/story/opinion/2016/03/08/real-trump-tax-scandal-david-cay-johnston/81436212/

excerpt:

If Trump's returns show he has paid no income taxes in some years, that could be a reason he has not yet released details.

Congress says most Americans can deduct no more than $25,000 of real estate depreciation against their income. But if you work two days a week managing real estate and own enough that the depreciation exceeds your salary and other income, Congress lets you live income-tax-free. And for as long as you keep buying buildings and depreciating them, the tax does not come due.

After Trump graduated from college, he enjoyed a luxurious bachelor lifestyle in Manhattan while paying no income taxes. Depreciation on his buildings let him tell the IRS that his 1978 income was negative by $406,379. The next year, it was negative $3.4 million, according to documents I found in casino regulatory files.

To understand how reporting a negative income can be profitable, take a look at your pay stub. If Congress gave you a deal similar to Trump’s, instead of the government deducting taxes from your paycheck, you would keep that money — like an interest-free loan — and could use it to make more money.

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[TexasBushwhacker]

1. I think that is entirely possible

I also think he is not as wealthy as he says he is.

That being said, depreciation schedules have changed a lot since the 70s. Residential real estate used to be depreciated on a much quicker schedule. Let's say you have a $12 Million property. The land is worth $2 Million and the building is worth $10 Million. Depreciated over 10 years time, a $10 Million building would net $1 Million in untaxed income per year. Depreciated over 30 years would only net $300K in untaxed income. Still good, but not as good as in the 70s.