Trump scandals continue to pile up

The New York Times today reports on how Donald Trump avoided reporting hundreds of millions in taxable income with a tactic so legally dubious that his lawyers said an I.R.S. audit would most likely find it improper. Donald Trump Used Legally Dubious Method to Avoid Paying Taxes:

Screenshot from 2016-05-11 15:01:45Donald J. Trump proudly acknowledges he did not pay a dime in federal income taxes for years on end. He insists he merely exploited tax loopholes legally available to any billionaire[.]

But newly obtained documents show that in the early 1990s, as he scrambled to stave off financial ruin, Mr. Trump avoided reporting hundreds of millions of dollars in taxable income by using a tax avoidance maneuver so legally dubious his own lawyers advised him that the Internal Revenue Service would most likely declare it improper if he were audited.

Thanks to this one maneuver, which was later outlawed by Congress, Mr. Trump potentially escaped paying tens of millions of dollars in federal personal income taxes. It is impossible to know for sure because Mr. Trump has declined to release his tax returns, or even a summary of his returns, breaking a practice followed by every Republican and Democratic presidential candidate for more than four decades.

Tax experts who reviewed the newly obtained documents for The New York Times said Mr. Trump’s tax avoidance maneuver, conjured from ambiguous provisions of highly technical tax court rulings, clearly pushed the edge of the envelope of what tax laws permitted at the time. “Whatever loophole existed was not ‘exploited’ here, but stretched beyond any recognition,”said Steven M. Rosenthal, a senior fellow at the nonpartisan Tax Policy Center who helped draft tax legislation in the early 1990s.

Moreover, the tax experts said the maneuver trampled a core tenet of American tax policy by conferring enormous tax benefits on Mr. Trump for losing vast amounts of other people’s money — in this case, money investors and banks had entrusted to him to build a casino empire in Atlantic City.

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.

But Mr. Trump’s audacious tax-avoidance maneuver gave him a way to simply avoid reporting any of that canceled debt to the I.R.S. “He’s getting something for absolutely nothing,” John L. Buckley, who served as the chief of staff for Congress’s Joint Committee on Taxation in 1993 and 1994, said in an interview.

The new documents, which include correspondence from Mr. Trump’s tax lawyers and bond offering disclosure statements, might also help explain how Mr. Trump reported a staggering loss of $916 million in his 1995 tax returns, portions of which were first published by The Times last month.

United States tax laws allowed Mr. Trump to use that $916 million loss to cancel out an equivalent amount of taxable income. But tax experts have been debating how Mr. Trump could have legally declared a deduction of that magnitude at all. Among other things, they have noted that Mr. Trump’s huge casino losses should have been offset by the hundreds of millions of dollars in taxable income he surely must have reported to the I.R.S. in the form of canceled casino debt.

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.

Mr. Trump declined to comment for this article.

* * *

The story of how Mr. Trump sidestepped a potentially ruinous tax bill from that forgiven debt emerged from documents recently discovered by The Times during a search of the casino bankruptcy filings. The documents offer only a partial description of events, and none of Mr. Trump’s tax lawyers agreed to be interviewed for this article.

* * *

It is unclear whether the I.R.S. ever challenged Mr. Trump’s use of this specific tax maneuver. According to a financial disclosure statement prepared by Mr. Trump’s accountants, he was under audit by the tax authorities as of 1993, only a year after he avoided reporting hundreds of millions of dollars in taxable income because of this legally suspect tactic. But the results of that audit are unknown, and the agency declined to comment on Monday.

Regardless of whether the I.R.S. objected, Mr. Trump’s tax avoidance in this case violated a central principle of American tax law, said Mr. Buckley, the former chief of staff for Congress’s Joint Committee on Taxation, who later served as chief tax counsel for Democrats on the House Ways and Means Committee.

“He deducted somebody else’s losses,” Mr. Buckley said. By that, Mr. Buckley meant that only the bondholders who forgave Mr. Trump’s unpaid casino debts should have been allowed to use those losses to offset future income and reduce their taxes. That Mr. Trump used the same losses to reduce his taxes ultimately increases the tax burden on everyone else, Mr. Buckley explained. “He is double dipping big time.”

In any event, Mr. Trump can no longer benefit from the same maneuver. Just as Congress acted in 1993 to ban stock-for-debt swaps by corporations, it acted in 2004 to ban equity-for-debt swaps by partnerships.

Among the members of Congress who voted to finally close the loophole: Senator Hillary Clinton of New York.

While Trump was engaged in illegal “double dipping” tax avoidance schemes, he also was not quite the philanthropist he claims to be. The Washington Post reports, Trump boasts about his philanthropy. But his giving falls short of his words.

In the fall of 1996, a charity called the Association to Benefit Children held a ribbon-cutting in Manhattan for a new nursery school serving children with AIDS. The bold-faced names took seats up front.

There was then-Mayor Rudolph W. Giuliani (R) and former mayor David Dinkins (D). TV stars Frank and Kathie Lee Gifford, who were major donors. And there was a seat saved for Steven Fisher, a developer who had given generously to build the nursery.

Then, all of a sudden, there was Donald Trump.

“Nobody knew he was coming,” said Abigail Disney, another donor sitting on the dais. “There’s this kind of ruckus at the door, and I don’t know what was going on, and in comes Donald Trump. [He] just gets up on the podium and sits down.”

Trump was not a major donor. He was not a donor, period. He’d never given a dollar to the nursery or the Association to Benefit Children, according to Gretchen Buchenholz, the charity’s executive director then and now.

But now he was sitting in Fisher’s seat, next to Giuliani.

“Frank Gifford turned to me and said, ‘Why is he here?’ ” Buchenholz recalled recently. By then, the ceremony had begun. There was nothing to do.

“Just sing past it,” she recalled Gifford telling her.

So they warbled into the first song on the program, “This Little Light of Mine,” alongside Trump and a chorus of children — with a photographer snapping photos, and Trump looking for all the world like an honored donor to the cause.

Afterward, Disney and Buchenholz recalled, Trump left without offering an explanation. Or a donation. Fisher was stuck in the audience. The charity spent months trying to repair its relationship with him.

“I mean, what’s wrong with you, man?” Disney recalled thinking of Trump, when it was over.

For as long as he has been rich and famous, Donald Trump has also wanted people to believe he is generous. He spent years constructing an image as a philanthropist by appearing at charity events and by making very public — even nationally televised — promises to give his own money away.

Trump-BarnumIt was, in large part, a facade. A months-long investigation by The Washington Post has not been able to verify many of Trump’s boasts about his philanthropy.

Instead, throughout his life in the spotlight, whether as a businessman, television star or presidential candidate, The Post found that Trump had sought credit for charity he had not given — or had claimed other people’s giving as his own.

It is impossible to know for certain what Trump has given to charity, because he has declined to release his tax returns. In all, The Post was able to identify $7.8 million in charitable giving from Trump’s own pocket since the early 1980s.

In public appearances, Trump often made it appear that he gave far more.

Trump promised to give away the proceeds of Trump University. He promised to donate the salary he earned from “The Apprentice.” He promised to give personal donations to the charities chosen by contestants on “Celebrity Apprentice.” He promised to donate $250,000 to a charity helping Israeli soldiers and veterans.

Together, those pledges would have increased Trump’s lifetime giving by millions of dollars. But The Post has been unable to verify that he followed through on any of them.

Instead, The Post found that his personal giving has almost disappeared entirely in recent years.

* * *

The charity that Trump has given the most money to over his lifetime appears to be his own: the Donald J. Trump Foundation.

But that charity, too, was not what it seemed.

The Trump Foundation appeared outwardly to be a typical, if small, philanthropic foundation — set up by a rich man to give his riches away.

In reality, it has been funded largely by other people. Tax records show the Trump Foundation has received $5.5 million from Trump over its life, and nothing since 2008. It received $9.3 million from other people.

Another unusual feature: One of the foundation’s most consistent causes was Trump himself.

New findings, for instance, show that the Trump Foundation’s largest-ever gift — $264,631 — was used to renovate a fountain outside the windows of Trump’s Plaza Hotel.

* * *

At other times, Trump used his foundation’s funds to settle legal disputes involving Trump’s for-profit companies and to buy two large portraits of himself, including one that wound up hanging on the wall of the sports bar at a Trump-owned golf resort. Those purchases raised questions about whether Trump had violated laws against “self-dealing” by charity leaders.

There’s much more to the Post‘s analysis of Trump’s bogus claims of philanthropy. You get the idea.

Donald Trump is a grifter, a con man, and a fraud. He is not at all the successful businessman he pretends to be. He makes money by using other people’s money, and then sticks them with the bill while keeping their money. Donald Trump is a successful grifter and con man. He is trying to pull the biggest con job of all time . . . the presidency of the United States.

15 responses to “Trump scandals continue to pile up

  1. Section 1236.22 of the 2009 National Archives and Records Administration (NARA) and 18 U.S.C Sec. 793(f) of the federal code.

  2. African American writer Kiese Laymon, who lives in Mississippi, has posted on Facebook and Twitter recently to encourage people to vote. Here’s an excerpt from his Facebook post yesterday:

    “I wonder if people who don’t live in these Trump states know how hard these folks go for this man. I’ve been down here in Oxford Mississippi all year but this weekend I felt something different in a lot of these white folks. They’re bouncing, sanctified almost, wearing all their Trump shit, eager as fuck to vote, eager as fuck to win, maniacally eager to see us lose. It’s not just poor white folk. Down here, it’s white folk. It’s white folk. Many of them want something back that they’ve never really lost.”

    “I’ve never seen anything like it other than how some of us acted in 2008. But that was different. There’s a zeal in these folks to punish black folk, “nasty” women, trans folk, queer folk, Muslims, Mexicans. Even though Obama loved them to death (and our destruction), they are full of an energy I’ve never ever seen or felt before. These folks don’t have the numbers to win nationally but the numbers they have are so hype, and our folks are so not hype to vote this time around.”

    “We live in a nation with a huge appetite for our suffering. The nation’s functionality insists on our suffering. But this … this ain’t the same shit, y’all. It’s really not. If you’re in the middle of one of these places, you know what I’m talking about. I know you know. Let’s please take care of us. Let’s hold on to each other down here, and over there, and wherever we find ourselves November 8th, no matter what, because something more acutely painful than we’re accustomed to isn’t simply coming; it is here. I swear it’s here.”

    • Y’all may not know about Kiese Laymon.

      https://en.wikipedia.org/wiki/Kiese_Laymon

    • I haven’t lived in the Confederacy for a very long time, but throughout this election there has been something reminiscent of the old days as impossible as that might seem. Mr. Laymon’s post hit me kind of hard, seeming to validate my suspicions.

      This is the kind of thing you can’t really imagine, you have to be there. If I went to a Trump rally I suspect I would suffer some kind of double impact from the horror of it all plus being catapulted back into Emmett Till’s America. Or is it now just George Zimmerman’s America?

      All of these “scandals” one after another have become virtually meaningless. Trump supporters aren’t interested in his scandals. What we’ve got here is the last dying gasp of White Supremacy. The writing is on the wall and the smarter ones know it. Trump is using them, for God knows what end. I have always believed his primary motivation was his seething hatred of the black POTUS. Even that doesn’t matter anymore.

      This election is about hate. I just can’t see it any other way.

    • Not sure you need to go to Mississippi to see that, Liza. I’m seeing it here. And he’s right. It’s not just poor whites. It’s almost all whites. White Americans have lost their collective mind.

      • Right now I do not believe that Trump will win. But if these fools somehow manage to get him elected, they will pay for it later. Unfortunately, so will we.

      • For Sure Not Tom

        Shhhhhhh! Don’t say “collective”. Freaks out us old white folks.

  3. Senator John Kavanagh

    You missed your calling, AZBlueMeanie. You should be a Three Card Monte dealer because you are really good at taking peoples’ eyes off the real issues, such as Hillary’s emails, dropping poll numbers and the Clinton Foundation, aka Bill and Hillary’ ATM cash machine.

    • Concerned Citizen

      Senator Kavanagh, Trump redirecting attention away from himself and his Trump organization “Russian-connection”. ..treason? Not to mention — what’s he hiding by not disclosing his tax returns? Then there’s his followers. The KKK endorsing him. Making America great again?

      • Sen. John Kavanagh

        True to BFA form, another comment that ignores my comment and redirects the discussion to something else.

        I said,

        You missed your calling, AZBlueMeanie. You should be a Three Card Monte dealer because you are really good at taking peoples’ eyes off the real issues, such as Hillary’s emails, dropping poll numbers and the Clinton Foundation, aka Bill and Hillary’ ATM cash machine.

        How about commenting on that?

        • For Sure Not Tom

          Which emails specifically show criminal actions and what law/statute/mafia code of ethic was broken?

          Because I hear screaming and whining from conservatives to lock her up, but no one ever says the exact law she broke.

          I can’t stand Clinton(s), please stop forcing people to defend her. If we’re going to beat up on HRC, let’s do it for factual reasons, like how she’s actually a Republican.

          • Senator John Kavanagh

            All the classified ones on her private server, not to mention the ones that might be on Carlos Danger’s laptop.

          • For Sure Not Tom

            That’s not an answer. What crimes has Hillary committed?

            Be specific or shut up.

  4. In the past 24 hours, the Times has said the Trump and the Russians are not connected and that Trump followed the law when paying his taxes. Well done, Times.

    By the way, is “legally dubious” the left’s new term for ‘legal, but we don’t like it’?