NY Times “Close Enough for Newspaper Work” on Trump’s Taxes


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?

It’s not, but does it matter? I doubt it.

Truth is, there’s nothing inherently sinister about losses from one year being applied to offset income in another year. For example, suppose Trump had $915 million of income in the ’80s, on which he paid tax, then $915 million of losses in the ’90s, then another $915 million in income in the ’00s. His total economic income would be only $915 million, but if you didn’t allow him to offset the losses against income, he’d pay tax on double that amount.

The real issue here is not that Trump had losses, but whether those losses were real economic losses or just paper losses. If the losses were real, there’s nothing wrong with Trump using them to shelter income in subsequent years. If not, the tax windfall he received, over a quarter billion dollars, is obscene.

So, were the losses real? Probably not. And that’s why the Times not getting it right about the losses doesn’t matter.  The article doesn’t really explain why the losses may not have been real, other than to suggest it has something to do with Trump’s use of partnerships, limited liability companies and S corporations. But there’s nothing inherently sinister about doing business through partnerships and corporations either.

It’s doubtful Trump incurred a real economic loss of almost a billion dollars. I have an idea as to how he created such a huge fictitious loss and garnered an enormous tax windfall. But it’s only a guess, and very complicated. I read a post by another blogger who had an equally plausible theory as well.

And if the Times is wrong? If Trump’s $915 million loss was real?

Then he’s not the businessman he’s been telling us he is, huh?

You know what Trump would call a guy who lost $915 million in real money?



  1. Just have the taxpayers subsidize your losses, but bury your real income in another entity. Sounds like the ESA scam in Arizona. Just have the taxpayers pay your private religious school tuition bill, under the guise of “choice.” Isn’t business wonderful there, Steve Y.?

  2. WOW! I feel like such an idiot! I never lost enough money to wind up making money off of it. What a piker I am!! Gosh knows, Las Vegas tried to help me lose money but I was always a little embarrassed to admit I lost money there since everyone else I know bragged about winning big there. Anyway, I always thought the purpose of a business was to make money, not to lose it. I guess that was why I was never a big player like the Trumps of the world. I always worried first about making payroll and paying contractors. What a chump I was…

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