 "Trump avoided reporting millions using dubious tax manoeuvre")
Republican candidate Donald Trump avoided reporting hundreds of millions of dollars in taxable income in early 1990s by using a tax avoidance manoeuvre that was considered “legally dubious”, a leading US newspaper has claimed.
In a special report, the New York Times said while the legal manoeuvre was later outlawed by the Congress, Trump used it to potentially escape paying tens of millions of dollars in federal personal income taxes. The report cited tax experts as saying that the manoeuver “trampled a core tenet” of American tax policy by conferring enormous tax benefits to 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
Trump has boasted that he did not pay federal income taxes for years on end by exploiting tax loopholes legally available to any billionaire. The Times said that newly obtained documents show that in the early 1990s, as he scrambled to stave off financial ruin, Trump avoided reporting hundreds of millions of dollars in taxable income by using a “tax avoidance manoeuver so legally dubious his own lawyers advised him that the Internal Revenue Service would likely declare it improper if he were audited”.
Tax experts who reviewed the newly obtained documents were quoted as saying that Trump’s tax avoidance manoeuver 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,” Steven M Rosenthal, a senior fellow at the nonpartisan Tax Policy Center who helped draft tax legislation in the early 1990s, said in the report.
The report said that as Trump’s casino empire floundered in the early 1990s, he 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 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 cancelled debt is the same as a dollar of taxable income. This meant Trump faced the painful prospect of having to report the hundreds of millions of dollars of cancelled debt as if it were hundreds of millions of dollars of taxable income,” the report said.
However, Trump’s “audacious” tax-avoidance manoeuver gave him a way to simply avoid reporting any of that cancelled 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’ Joint Committee on Taxation in 1993 and 1994, said in an interview.
Trump did not respond to the report but his spokeswoman Hope Hicks said NYT’s questions suggest “either a fundamental misunderstanding or an intentional misreading of the law.
“Trump does not think that taxpayers should file returns that resolve all doubt in favour of the I.R.S. And any tax experts that you have consulted are engaged in pure speculation. There is no news here,” Hicks said.
In a special report, the New York Times said while the legal manoeuvre was later outlawed by the Congress, Trump used it to potentially escape paying tens of millions of dollars in federal personal income taxes. The report cited tax experts as saying that the manoeuver “trampled a core tenet” of American tax policy by conferring enormous tax benefits to 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
Trump has boasted that he did not pay federal income taxes for years on end by exploiting tax loopholes legally available to any billionaire. The Times said that newly obtained documents show that in the early 1990s, as he scrambled to stave off financial ruin, Trump avoided reporting hundreds of millions of dollars in taxable income by using a “tax avoidance manoeuver so legally dubious his own lawyers advised him that the Internal Revenue Service would likely declare it improper if he were audited”.
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“Whatever loophole existed was not ‘exploited’ here, but stretched beyond any recognition,” Steven M Rosenthal, a senior fellow at the nonpartisan Tax Policy Center who helped draft tax legislation in the early 1990s, said in the report.
The report said that as Trump’s casino empire floundered in the early 1990s, he 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 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 cancelled debt is the same as a dollar of taxable income. This meant Trump faced the painful prospect of having to report the hundreds of millions of dollars of cancelled debt as if it were hundreds of millions of dollars of taxable income,” the report said.
However, Trump’s “audacious” tax-avoidance manoeuver gave him a way to simply avoid reporting any of that cancelled 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’ Joint Committee on Taxation in 1993 and 1994, said in an interview.
Trump did not respond to the report but his spokeswoman Hope Hicks said NYT’s questions suggest “either a fundamental misunderstanding or an intentional misreading of the law.
“Trump does not think that taxpayers should file returns that resolve all doubt in favour of the I.R.S. And any tax experts that you have consulted are engaged in pure speculation. There is no news here,” Hicks said.