File 033181
Donald Trump Used Legally Dubious Method to Avoid Paying Taxes (File 033181)
New York Times investigation revealing Trump's use of a legally questionable tax avoidance maneuver in the early 1990s that allowed him to avoid reporting hundreds of millions in taxable income, potentially escaping tens of millions in federal taxes.
Summary
The document details Trump's tax avoidance strategy employed during his financial crisis in the early 1990s, where he used an aggressive and legally dubious tax maneuver to avoid reporting hundreds of millions in taxable income from his Atlantic City casino ventures. Tax experts consulted by the New York Times concluded that Trump's strategy stretched existing tax law provisions far beyond their intended use and violated core American tax policy principles by allowing him to claim enormous tax benefits from losses involving other people's money. The maneuver was later outlawed by Congress. Trump's refusal to release his tax returns prevented full transparency about the extent of his tax avoidance.
Donald Trump Used Legally Dubious Method to Avoid Paying TaxesPhotoDonald J. Trump in Atlantic City in 1990, seeking approval for his Trump Taj Mahal casino. Credit Associated PressDonald J. Trump proudly acknowledges he did not pay a dime in federal income taxes for years on end. Heinsists he merely exploited tax loopholes legally available to any billionaire — loopholes he says HillaryClinton failed to close during her years in the United States Senate. “Why didn’t she ever try to changethose laws so I couldn’t use them?” Mr. Trump asked during a campaign rally last month.But newly obtained documents show that in the early 1990s, as he scrambled to stave off financial ruin,Mr. Trump avoided reporting hundreds of millions of dollars in taxable income by using a tax avoidancemaneuver so legally dubious his own lawyers advised him that the Internal Revenue Service would mostlikely declare it improper if he were audited.Thanks to this one maneuver, which was later outlawed by Congress, Mr. Trump potentially escapedpaying tens of millions of dollars in federal personal income taxes. It is impossible to know for surebecause Mr. Trump has declined to release his tax returns, or even a summary of his returns, breaking apractice followed by every Republican and Democratic presidential candidate for more than four decades.Tax experts who reviewed the newly obtained documents for The New York Times said Mr. Trump’s taxavoidance maneuver, conjured from ambiguous provisions of highly technical tax court rulings, clearlypushed the edge of the envelope of what tax laws permitted at the time. “Whatever loophole existed wasnot ‘exploited’ here, but stretched beyond any recognition,” said Steven M. Rosenthal, a senior fellow atthe nonpartisan Tax Policy Center who helped draft tax legislation in the early 1990s.GraphicMr. Trump managed to save millions inpersonal taxes by borrowing – then losing– other people’s money.Moreover, the tax experts said the maneuver trampled a core tenet ofAmerican tax policy by conferring enormous tax benefits on Mr. Trumpfor losing vast amounts of other people’s money — in this case, moneyinvestors and bankshad entrusted to him to build a casino empire inAtlantic City.Continue reading the main storyOPEN Graphic