Bob Lord

[Cross-Posted from Emptywheel.net]

The news is out about Donald Trump’s $915 million of tax losses.

The real question is whether those losses were real economic losses, or just a tax artifice created by a clever planner.

Real estate developers like Trump benefit tax-wise from provisions that allow them to claim losses attributable to borrowed money. But those provisions are not a complete giveaway if the borrowing ultimately is repaid.

If the borrowing is not repaid, as we know to be the case of Trump’s casino debt, the tax law generally requires the person whose debt is forgiven to recognize income, which typically erases the tax benefit of those earlier losses. Even in those situations where debt forgiveness does not result in income, the borrower’s tax attributes are reduced by the amount of debt forgiven, and unused losses are at the top of the list of those tax attributes to be trimmed.

Could Trump have figured out how to have his cake and eat it too – that is, keep his losses for tax purposes, even while being excused from having to repay the borrowed money on which those losses were based? Yes, it is possible!

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They say close only counts in horseshoes and hand grenades.

Maybe add “Trump’s taxes” to that list.

In yet another bombshell story about Trump, the New York Times reported today that Trump’s 1995 tax return showed a $ 915 million loss, enough to shelter $50 million of income per year for 18 years.

In two respects, the Times missed the mark. The writers suggest that Trump’s use of losses from the early ’90s to offset future income is some sort of loophole:

But the most important revelation from the 1995 tax documents is just how much Mr. Trump may have benefited from a tax provision that is particularly prized by America’s dynastic families, which, like the Trumps, hold their wealth inside byzantine networks of partnerships, limited liability companies and S corporations.

The provision, known as net operating loss, or N.O.L., allows a dizzying array of deductions, business expenses, real estate depreciation, losses from the sale of business assets and even operating losses to flow from the balance sheets of those partnerships, limited liability companies and S corporations onto the personal tax returns of men like Mr. Trump. In turn, those losses can be used to cancel out an equivalent amount of taxable income from, say, book royalties or branding deals.

Is that correct? Is it the real issue here?

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I just finished one of the most moving books I’ve read recently: The Way to The Spring: Life and Death in Palestine, by Ben Ehrenreich.

I almost missed it. I’ve read a  lot on Israel-Palestine and thought I was reaching the point of diminishing returns. But The Way to the Spring is unique. Ehrenreich spent several years on the ground in the West Bank. Although he went as a writer, he became enmeshed in the lives of Palestinians. So much so that the book reads as if he’s writing about family members. In no way was that contrived. I felt a little bit of this in The General’s Son, by Miko Peled, but not nearly as much.

The bottom line is that more than any other book I’ve read on Israel-Palestine, The Way to the Spring allows you to see the Israeli occupation through Palestinian eyes.

Sort of like if a few of your close friends were Palestinian.

Which brings me to the point of this post.

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[Cross-posted from emptywheel]

[Note to readers: This is a post I was asked to write for emptywheel. Those of you familiar with the progressive blogosphere will recognize it as the site of Marcy Wheeler, who did history making work regarding the Valerie Plame outing. She’s an outstanding investigative journalist, so it’s an honor to have a post appear on her site]

A lot has been said about Trump’s refusal to make his tax returns public. But despite the volume of commentary, it’s not clear the right questions even are being asked.

Trump claims he can’t release his returns because he’s under audit. At some level, that’s a legitimate concern. It would hardly be fair if thousands of tax professionals who oppose Trump politically helped the IRS by publishing their own analyses of the returns. Ultimately, however, it’s a phony excuse.

But rather than challenge the logic behind Trump’s refusal to release returns, a series of questions should be asked:

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