NYT Debunks Three Media Conspiracy Theories With Trump’s Tax Returns
Plus a dose of reality when it comes to real estate investing.
I don’t even know where to begin with the story on President Donald Trump’s tax returns in The New York Times. There is so much wrong with it that someone like me, with no accounting or tax background, can figure out the article is worthless.
But how about the three media conspiracy theories debunked by the story?
Audit
Trump has said for a while that he did not want to release his tax returns due to an audit by the IRS.
Did he lie? Nope. The NYT admitted that Trump is in “a decade-long audit battle with the Internal Revenue Service over the legitimacy of a $72.9 million tax refund that he claimed, and received, after declaring huge losses.”
Sure he could have released it. Trump said he could not, but it’s not against the law to release tax returns during an audit.
But the fact is Trump did not lie when he said the IRS was auditing him (emphasis mine):
And while the records do not lay out all the details of the audit, they match his lawyers’ statement during the 2016 campaign that audits of his returns for 2009 and subsequent years remained open, and involved “transactions or activities that were also reported on returns for 2008 and earlier.”
Michael Cohen
The media and the left wanted the tax returns because they were certain it would have information about a $130,000 payment to porn star Stormy Daniels. Nope:
The data contains no new revelations about the $130,000 payment to Stephanie Clifford, the actress who performs as Stormy Daniels — a focus of the Manhattan district attorney’s subpoena for Mr. Trump’s tax returns and other financial information. Mr. Trump has acknowledged reimbursing his former lawyer, Michael D. Cohen, who made the payoff, but the materials obtained by The Times did not include any itemized payments to Mr. Cohen. The amount, however, could have been improperly included in legal fees written off as a business expense, which are not required to be itemized on tax returns.
Russia, Russia, Russia
The tax returns did not have any new financial connections to Russia:
No subject has provoked more intense speculation about Mr. Trump’s finances than his connection to Russia. While the tax records revealed no previously unknown financial connection — and, for the most part, lack the specificity required to do so — they did shed new light on the money behind the 2013 Miss Universe pageant in Moscow, a subject of enduring intrigue because of subsequent investigations into Russia’s interference in the 2016 election.
But overall, the NYT proves one thing: Trump has great accountants who make sure he takes advantage of all the deductibles available to him.
Don’t like it? Get a better accountant. Still not satisfied? The repeal the 16th amendment and get rid of taxes.
Real Estate
Let’s look at the other aspect of this supposed jaw-dropping report.
Stop conflating cash income and taxable income!!
I spoke to a friend in finance and he also invests in real estate. From what he could tell in the story Trump more than likely took his salary or income and put it all back into his businesses.
Plus, you have to know how real estate investing works. You want the returns to show depreciation. Again, I am no expert, but my friend has experience.
Depreciation is a deduction for income tax purposes, but it is a non-cash item. You do not pay out of pocket. It is a non-cash expense. It’s designed to show the true value of the asset because it wears down, whether it’s real estate, machinery, etc.
Accountants have to account for the lower value. Real estate investors generally welcome that and it’s honestly not a big deal.
My friend gave me this example:
Let’s say you own a building and it takes in $1000 a year in rental income. This is just for simplicity. But over the year I as landlord have to pay property taxes, insurance, utilities. Those are the basics. I have to send a check for those. Let’s say the total of those is $800 a year. So I make $200 a year in profit after I pay all expenses.
So in my pocket I have $200 at the end of the year. So In April I give all this info to my accountant to do my personal taxes. He looks and sees I made the $200 but he has to account for the one year of depreciation in the value of the property.
Let’s say the property depreciated by $300 during the year. So recording everything the depreciation is added to take expenses of $800 for a total of $1100 which means for tax purposes the property lost $100.
I still have $200 in cash though but I reduced my tax liability.
Because I show that the property lost money which offsets my taxes
The depreciation reduces your tax liability. The property lost money so it offsets your taxes.
The IRS only lets you offset a certain amount each year. However, you are allowed to carry over the loss until it’s used up.
A few people have told me that they’ve seen people with millions in carryovers.
But this is another reason why releasing tax returns is stupid and dumb. The returns tell you nothing. It does not tell a story. It does offer in-depth details.
Trump, Jr., With the Mic Drop
Donald Trump, Jr., reminded everyone that tax returns do not show anything significant about a business or your basis in life (emphasis mine):
“Listen, it’s ridiculous, my father’s paid tens of millions of taxes,” he said. “If he does things in certain years where you get depreciation, where you get the write-off, where you get historical tax credits like we did when we took on the risk of building the Old Post Office in D.C., it’s the perfect example. That was literally a government contract. We bid against every hotel company in the world, historical tax credits that you use to offset tax payments for taking the risk to build that. That was done under the Obama administration. It literally took an act of Congress to get it done. So with that comes historical tax credits. That’s the reality. People don’t understand what goes into a business.”
“It doesn’t include property taxes, it doesn’t include payroll taxes, it doesn’t include real estate taxes, it doesn’t include so many of the things that he’s been paying taxes on forever, as he’s also putting thousands and thousands of people to work on an annual basis,” Trump continued. “But, of course, The New York Times does this, they put out a selective, you know, picture of all of these things the day before a debate to try to give someone like Joe Biden, you know, an attack line to come up with one or two catchy sound bites and that’s the game. We’ve seen it. We saw it two weeks ago with the debunked claim about the military. We’ve seen it for four years about the Russia hoax. If only they spent as much time looking for maybe, I don’t know, Hunter Biden’s tax returns and the Biden family issues, where Hunter’s taking money from a known associate of Vladimir Putin, $3.5 million and no one has any interest. Money that’s linked to human trafficking and prostitution rings in Eastern Europe. Think about that.”
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Comments
Seems the term over your skies applies here
Clear?
“New York Times Fails at Outlining President Trump’s Taxes Again…
Once again the New York Times attempts to make an issue out of President Trump’s real estate holdings working as a tax shelter and reducing income taxes.
In the article the Times completely obfuscates the way income taxes are strategically offset by depreciation, mortgage interest and the entire reason why real estate ownership is viewed as a business.
John Carney writing for Breitbart gets it:….”
The Last Refuge
Point of order: The 16th Amendment did not authorize the income tax. Income taxes are authorized in Article I, Sec. 8 of the Constitution which authorizes the imposition of excises, imposts, duties, and other indirect taxes. Please see Brushaber v. Union Pacific RR and Stanton v. Baltic Mining Co..
From Stanton:
‘‘[T]he Sixteenth Amendment conferred no new power of taxation but simply prohibited the previous complete and plenary power of income taxation possessed by Congress from the beginning from being taken out of the category of indirect taxation to which it inherently belonged.’’
See page 1954 at: https://www.govinfo.gov/content/pkg/GPO-CONAN-1992/pdf/GPO-CONAN-1992-10-17.pdf
Did you read Article 1 Section 8?? It’s pretty clear Congress can collect taxes. If you still not sure I had a couple of co-worker that subscribed to your threotyIm sure they will speack to you from prison.
Since this was all from other phony information keep in mind Title 18 is clear on what happens if you disclose tax information that isn’t yours.
And from what I understand, it sounds like they also got the payroll taxes of all of Trump’s employees too.
Don’t think that they aren’t going to start picking out people to destroy from this.
Real people don’t even pay that stuff any mind.
This only feeds the Trump haters.
the NYT proves one thing: Trump has great accountants who make sure he takes advantage of all the deductibles available to him.
Yes, I’d expect DJT to hire pretty much the best available.
But that raises a question which has bugged me for months. Why did he have anything at all to do with a twit like Michael Cohen? It’s hard to see him as any sort of paragon worthy of DJT’s business. Cohen must have some superpower not apparent to the rest of us, one making him worth hiring. Or maybe he’s the screwup relative of someone Trump owes a favor. Still very odd.
I think Trump felt sorry for Cohen. He gave him a chance as he gave Manigault a chance, and that twit who said he liked her better than he liked his own daughters, and Scaramucci, and Manafort, et al. He gives people a chance and often they don’t just blow it, but try to bite Trump.
Trump twisted the tax code for his own nefarious ends!
Um, no. What he (and his accountants) did as described by the NYT is perfectly legal and it is done by others.
If you have a problem with this, blame Congress and a multitude of lobbyists for making the tax code so complicated.
Funny how it is not a huge deal that all of this tax info and also the information of a whole bunch of his employees were handed over to the NYT.
I will sarcastically opine that I’m sure Bill Barr will get to the bottom of this before the start of the next millennium
Do you think the FBI will investigate the Pubic Serpents who illegally handed over a Private Citizens Tax details to a known and proven LEFT WING anti-American organisation like the NYT? In your dreams maybe!
And who was in the senate for 180 years?
One other interesting point is that they didn’t receive copies of the tax returns just printouts of the tax return information. This means it was an IRS leak because these reports only come from IRS agents. Somebody should go to jail for this crime.
The article must be full of supposition. They claim the assets are upside down. By that, the value is less than money owed. There is no way they can get this from the tax returns. They can get it from the annual required federal disclosure forms that Trump has filed including 2019. For real estate, only basic information appears on the tax return and “basis” or value information reported is completely different than fair value and even purchase prices.
There is no way to discern from his personal tax returns that he has hundreds of millions in debt coming due in the next few years. This doesn’t appear in any 1040 filings. The authors are stretching any possible facts that they might have. A tax return also has no information regarding to whom the money is owed.
There’s more points for sure, but Trump owns many more than 500 businesses, each flowing information through to his tax returns resulting in easily 5,000 pages per year. Data transcripts may summarize to half of that, but the format is like 1985 digital script printing. Think green screens and dot matrix printers running for two days. Nobody could ever understand any of it much less be able to come to any conclusions based on them.
Almost all of his real estate is at book value (original cost) on the tax returns, which is usually much less than fair market value. So Trump could have some real property that he bought 20 years ago for a $1M, but it’s current value is $10M. If he borrows $5M on that property, his net worth would be $5M ($10M – $5M), but his book value would be negative $4M ($1M – $5M), so a NYT ignoramus would think Trump is bankrupt.
Curious how the uncurious got so curious after being un-curious for 8 years of the Obamas/Clintons/Biden and Kerry too.
After all, Benghazi was just a spontaneous protest due to a youtube video.
and yes…I still use a sharpy to write Tax Cheat on money next to Turbo Tax Tim Geitner’s name.
confession- the bill you guys posted some years ago was probably mine.
You need to make a correction, it is “deduction”, not “deductibles”.
But overall, the NYT proves one thing: Trump has great accountants who make sure he takes advantage of all the deductibles available to him.
Some applicable Code sections in the US Code to the unlawful release of tax return info are 26 USC 6103 and 26 USC 7213.
As we are seeing from Barr’s DOJ, there are rules that only apply to certain people. That’s why I’m on board with Nancy’s threat to impeach Barr
We sort of expected that from you.
The reason that tax information is so sacred isn’t a moral one but a constitutional one. If you’re required to report illegal income, then that’s requiring self-incrimination.
Unless – here’s the fix – the IRS can disclose tax information to nobody. That requirement is the origin of no-disclosure mandates, not some moral reason of privacy.
The buried lede of this story is how ridiculous our tax code is. Is anyone credibly accusing Trump of breaking the law? The fact that he deducted $70,000 sounds ridiculous, but it’s technically legal. The real story behind this should be that if we want the “rich” to pay their “fair share”, just burn the entire tax system to the ground and replace it with a bare flat tax.
As an aside, it’s always interesting to look at some bizarre, narrowly-written tax “loopholes” and see that the few people who benefit were political donors to the law’s author. Applies to both parties.
^^^ $70k worth of haircuts. Thought it but forgot to type it.
Yeah a low rate broad based flat no deduction tax would be fine if we can figure out a way to account for differences in generating income between capital intensive v labor intensive.
Not to mention unwinding many current investment decisions based on tax code. That would be a bit difficult but doable.
……………and of course we ALL want to pay more taxes……..
So Trump filed his taxes and the various itemized reductions, use multiple schedule forms calculating depreciation, maintenance, etc?
Um the folks at the Times and other MSM outlets breathlessly heralding this as a ‘story’ don’t know diddly about real estate and the impact of real estate on personal income tax.
I and every other person who owns real estate for an investment uses every deduction allowed. Just like Trump but on a much smaller scale. These are not esoteric deductions.
Maybe some of these folks actually don’t know because NYC real estate is so pricey that they lease and haven’t even taken basic homeowners deductions? Maybe they.are simply ignorant?
The Left:”Trump is the worst businessman who ever lived – he lost billions!!!”
The Left, in the same breath:”Trump just paid $750 in taxes!!!”
You can’t make this stuff up…
Well, I seem to recall that the Left spent years screaming about how W was a total moron and the stupidest man ever to be president, while also shrieking about how he was an evil genius who could tell hurricanes where to make landfall.
So I’d say, par for their course.
Lefties don’t understand business.
didn’t hear any loud out cry when it was revealed a few years ago that GE did not pay any taxes, no complains when companies like Apple keep there profits offshore to avoid US taxes. I don’t care if Pres Trump paid any taxes, by the way where are Biden’s tax returns he said he released 20 years of them, did he pull a Kerry and released them to friendlys.
What all those ignorant critics don’t know is that while the annual real estate depreciation allowance may be a great tax benefit, they get you when you sell the property because you have to pay cap gains tax on the gain from the depreciated value of the property.
This can be avoided if you do a Section 1031 (“Starker”) exchange for another property, much the equivalent of rolling over an IRA. In its 2017 tax reform, Congress eliminated these “like-kind exchanges” for all BUT real estate, which is understandable, especially for things like collectibles, but the principle on which the exchange provision was based over 100 years ago was that productive capital should remain productive.
Hence, once can keep trading properties up and deferring cap gains tax indefinitely. God help us if idiots like Sen. Ron Wyden of Oregon get their way. He wants to tax the gain on the value of an asset each year–whether or not the asset was sold!
And by the way, the ignorance of the depreciation benefit is not found only on the Left. A couple of years ago Nicole Gelinas of the right-of-center City Journal took NYC Mayor Bill DeBlasio to task for doing the exact same thing. DeBlasio may be a disaster, but that’s not something for which he did anything wrong.