Jan.02

electoral-vote.com

Dem 51

   

GOP 49

Trump's Taxes Are Finally Public

For decades, presidential candidates voluntarily released multiple years' worth of their tax returns. Donald Trump broke the string and it took the courts to pry them away from his stubby little hands. But they are out now and the analyses are starting to roll in. The returns are extremely complex, so new aspects may come to light over the course of the next few days and even weeks, as forensic accountants put on their green eyeshades and start studying them. If you are a forensic accountant, here are the raw returns for 2015, 2016, 2017, 2018, 2019 and 2020.

Here the amounts of adjusted gross income and the net tax for each of the 6 years for which returns were released.

As you can imagine, preparing tax returns that include over 400 entities that Trump owns was not easy. In 2015, Trump paid Mazars LLP $573,581 for tax prep. In 2016, he paid $1,295,385. The 2017 tax law eliminated the deduction for tax preparation, so Trump didn't list it as a deduction in subsequent years.

Here are some of the more noteworthy items on the tax returns that have come out so far:

• Loans: Trump received interest payments from three of his adult children on loans he made to them. They raise all manner of questions. First of all, were they really gifts in disguise? If so, then Trump may be guilty of evading the gift tax. We don't know if the children claimed deductions on the interest they paid, but if the loans were really gifts and the children deducted the interest anyway, that would be illegal. Also, if they are truly loans (meaning there is an agreement about when the loans are to be repaid), and the interest rate charged is below the market interest rate, the difference could be a (taxable) gift. Some of the interest payments are round numbers—for example, $24,000.00 from Eric Trump. That is odd, but not impossible. If Trump loaned Eric $600,000 at 4%, the annual interest would be exactly $24,000.00. But auditors would want to see proof.
  
  
• Matching amounts: For several of Trump's businesses, the expenses matched the income to the dollar. For example, DJT Aerospace LLC, which operates Trump's personal helicopter, had income of $42,965 and expenses of $42,965. Seems very, very unlikely. An auditor would surely want to see the details of both the income and expenses. This magical matching also happened with a number of Trump's other businesses. The possibility of this happening by chance over and over with different companies is indistinguishable from zero.
  
  
• Foreign income and bank accounts: Trump had business income, expenses, or paid foreign taxes in these countries: Azerbaijan, Brazil, Canada, China, Georgia, Grenada, India, Indonesia, Ireland, Israel, Mexico, Panama, Qatar, South Korea, St. Maarten, St. Vincent, Turkey, United Arab Emirates, the Dominican Republic, the Philippines and the United Kingdom. He had bank accounts in multiple foreign countries. That is legal, provided he filed the FBAR form each year reporting each account and the maximum in it at any time during the year. It is not possible to see from the tax returns whether Trump indeed also filed the required FBARs. He did pay foreign taxes. In fact, in 2017, he paid more in foreign taxes than in U.S. taxes. He may have maintained the foreign bank accounts in order to pay the foreign taxes.
  
  
• The pandemic hit Trump hard: Much of Trump's income is from hotels and golf courses and these sectors were hard hit during the pandemic. In 2020, his businesses lost $4.8 million. That was enough to wipe out his tax bill for 2020. Trump listed no charitable contributions for 2020. That is a bit odd because he pledged to donate his entire salary of $400,000 to charity. That would have given him a $400,000 tax deduction. While it is not required to take the deduction, Trump is such a pennypincher that passing up such a large deduction would be unusual.
  
  
• The 2017 tax law: The 2017 tax law Trump signed limited the total amount of state and local tax deductions to $10,000, in order to stick it to the high-tax blue states. In 2018, Trump listed $10.5 million in state and local taxes, but he was allowed to deduct only $10,000. In 2019, he paid $8.4 million in state and local taxes, but could deduct only $10,000. By way of comparison, in 2016 and 2017, he deducted $5.2 million each year for state and local taxes. It is not clear yet if he benefited due to other provisions in the tax law he signed.
  
  
• New accountant: In 2020, Trump was dropped by his long-standing accountant Mazars because they didn't believe the numbers he was feeding them. He switched to Timothy Horan of BKM Sowan Horan, a Texas firm. Maybe Horan doesn't care if the numbers are accurate. He just adds them up.
  

No doubt more revelations will be unveiled later this week. (V)