When New York prosecutors finally examine former President Donald Trump’s federal tax returns, they’ll discover a real practical guide to getting rich while losing millions of dollars and paying little to no income tax.
However, whether they find evidence of crimes will also depend on other information not found in the actual statements.
On Monday, the US Supreme Court cleared the way for Manhattan District Attorney Cyrus Vance Jr. to obtain eight years of Trump’s federal income tax returns and other records from his accountants. The decision culminated a long-running legal battle over prosecutors’ access to information.
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Last year, The New York Times gave more or less a sneak peek of what to expect for Vance, when it obtained and analyzed decades of income tax data from Trump and his companies. The tax records provide an unprecedented and highly detailed look at the Byzantine world of Trump’s finances, which for years he boasted and tried to keep secret simultaneously.
The Times examination showed the former president reported hundreds of millions of dollars in business losses, spent years without paying federal income taxes, and faces an IRS audit of a $ 72.9 million tax refund he claimed a decade ago. .
Among other things, records revealed that Trump had paid only $ 750 in federal income taxes in his first year as president and no income taxes in 10 of the previous 15 years. They also showed that she had written off $ 26 million in “consulting fees” as a business expense between 2010 and 2018, some of which appears to have been paid to her eldest daughter, Ivanka Trump, while she was a salaried employee of the Trump Organization. .
The legitimacy of the tariffs, which lowered Trump’s taxable income, has since become a topic of Vance’s investigation, as well as a separate civil investigation of Letitia James, the New York attorney general. James and Vance are Democrats, and Trump has tried to present the multiple investigations as politically motivated, while denying any wrongdoing.
Vance’s office has issued subpoenas and conducted interviews in recent months while examining a variety of financial matters, including whether the Trump Organization misrepresented the value of assets by obtaining loans or paying property taxes, as well as the payment of $ 130,000 in secret money during the 2016 Campaign for Stephanie Clifford, the pornographic film actress whose stage name is Stormy Daniels. Among those interviewed are employees of Deutsche Bank, one of Trump’s largest lenders.
Despite all his disclosures, Trump’s tax records are also noteworthy for what they do not show, including new details about the Clifford payment, which was the initial focus of Vance’s investigation when it began two years ago.
Tax returns represent self-reported income and expense accounting and often lack the specificity needed to know, for example, whether legal costs related to secret money payments were claimed as a tax write-off, or whether the money from Russia once moved through Trump’s bank accounts. The absence of that level of detail underscores the potential value of other records Vance gained access to with the Supreme Court decision Monday.
In addition to tax returns, Trump’s accountants, Mazars USA, must also produce business records on which those returns are based and communications with the Trump Organization. Such material could provide important context and background for the decisions that Trump or his accountants made in preparing to file taxes.
John D. Fort, former head of the IRS criminal investigation division, said the tax returns were a useful tool for uncovering clues, but could only be fully understood with additional financial information obtained elsewhere.
“It’s a very key personal financial document, but it’s just one piece of the puzzle,” said Fort, a certified public accountant and research director at Kostelanetz & Fink in Washington. “What you find in the statement should be the subject of interviews and subpoenas.”
Still, the Times investigation into Trump’s returns exposed a number of misleading claims and falsehoods he has spread about his wealth and business acumen.
Trump’s numerous claims of generous philanthropy crumbled when examining his tax returns, raising questions about the amount of certain donations and the general nature of his tax-deductible donations. For example, $ 119.3 million of the roughly $ 130 million in charitable deductions it claimed since 2005 turned out to be the estimated value of promises not to develop real estate, sometimes after a planned project failed.
At least two of those land-based charitable deductions – one related to a golf course in Los Angeles and the other to a Westchester County, New York, estate called Seven Springs – are known to be part of James’ civil investigation. , who is examining whether the assessments that supported the tax write-offs were inflated.
More broadly, the tax records showed how the public disclosures he filed as a candidate and later as president offered a distorted view of his overall finances by reporting glowing numbers from his golf courses, hotels, and other businesses based on the gross income they were making. they collected every year. . The actual bottom line, after losses and expenses, was much bleaker: In 2018, while Trump’s public returns showed $ 434.9 million in revenue, his tax returns reported a total of $ 47.4 million. in losses.
And such dire numbers weren’t an anomaly. Trump’s many golf courses, a central component of his business empire, posted losses of $ 315.6 million between 2000 and 2018, while the revenue from licensing his name to hotels and resorts had virtually dried up when he entered the White House. Additionally, Trump has hundreds of millions of dollars in loans, many of which he personally guaranteed, that mature in the next few years.
The Times investigation also found that he faces a potentially devastating IRS audit that focuses on the huge refund he claimed in 2010, which covered all federal income taxes he paid from 2005 to 2008, plus interest. Trump repeatedly cited the ongoing audit as the reason he was unable to publish his tax returns, after initially saying that he would, although nothing in the audit process prevented him from doing so.
If an IRS ruling were to go against him, Trump could be forced to return more than $ 100 million, taking into account interest and possible penalties, in addition to an estimated $ 21.2 million in state and local tax refunds being they based on the numbers from their federal filings.
This article originally appeared in The New York Times.
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