Democrats released six years of former President Trump’s tax return information last week as part of reports into the presidential audit program, revealing that the former president wasn’t receiving regular audits from the IRS and that he was reporting big business losses every year.
On Friday, Trump’s actual tax returns from 2015 to 2020 are set to be released, after Democrats said they needed additional time to redact the documents and remove personal information.
Tax experts aren’t expecting huge revelations from the raw returns, which were summarized in reports from both the Democratic-controlled Ways and Means Committee and the nonpartisan Joint Committee on Taxation (JCT). But the more detailed documents could provide additional information on key areas of interest regarding Trump’s businesses and his professional associations.
Were Trump’s losses refreshed in 2020?
The JCT report on Trump’s taxes revealed that Trump was reporting large losses every year, usually in the tens of millions of dollars, offsetting his gains and reducing what he owed in taxes — and sometimes wiping out his tax liability altogether, as in 2020.
The losses from 2015 to 2018 were actually just pieces of a larger $105 million loss, which was itself part of a $700 million loss that was broken up and reported over different years.
These broken-up losses are common accounting strategies for people in the real estate development world, who are allowed to report regular depreciation expenses as losses.
In 2019, Trump reported positive income and paid taxes, but then reported he was again in the red in 2020, leading some experts to think that Trump’s losses in that year go beyond strategic accounting and represent genuinely ailing businesses.
“Trump’s 2020 losses were not from net operating losses carried over. Rather, I think Trump’s 2020 losses were real, largely resulting from business losses he suffered at the start of the COVID pandemic. And that is why he paid zero taxes in 2020,” Steve Rosenthal of the Urban-Brookings Tax Policy Center wrote in an email to The Hill.
“Yes, Trump generated a lot of losses in 2009, including a $700 million loss from his ‘abandonment’ of a partnership interest, some of which he carried over to future years. And Trump, apparently, continued to carryover these losses through 2018. But, by 2019, Trump had used all his carryover losses — and Trump reported positive income,” he wrote.
More information on Trump’s 2020 tax return could be a window into whether he got out of paying taxes that year due to common accounting practices or failing businesses.
Information on foreign entities and bank accounts
Trump’s foreign entanglements were one of the dominant narratives of his presidency, particularly the FBI investigation into his relationship with Russia.
Any foreign bank accounts cited in Trump’s tax returns or payments made to foreign entities are sure to receive scrutiny and could provide further insight into Trump’s relationships abroad.
“I’m going to be looking for things like foreign ownership, foreign accounts, foreign ownership of Trump businesses, payments to foreigners,” Rosenthal said. “There’s bound to be some items that may yet pop out to external reviewers that [the JCT] missed.”
“Those of us who are interested in his relationship with Russia will be looking for any kind of confirmation of what Don [Trump] Jr. said in 2008 that Trump interests had received much of their money from Russian sources,” former CIA officer and journalist Frank Snepp said in an interview.
“Obviously we’re not going to see in the tax returns a line that says ‘Russian Assets,’ but a forensic analyst would be well advised to look for anything related to the emoluments clause,” he said.
Trump also oversaw some major changes of the status quo in the Middle East, including the Abraham Accords, whereby Israel normalized relations with several Arab nations.
“Everybody who is interested in whether or not he received any money from Saudi Arabia will be looking for indications of that kind of foreign input,” Snepp said.
The profitability breakdown of Trump’s companies
In addition to Trump’s individual tax returns, Democrats on the Ways and Means Committee also obtained the returns for eight of Trump’s businesses. While that’s only a small subset of Trump’s nearly 500 commercial entities, seeing which companies were most responsible for Trump’s losses will provide a clearer picture of his tax avoidance and general business practices.
The eight business returns fall into three categories, encompassing trademark LLCs, golf club businesses and two high-level holding companies.
“Those two upper-tier entities sit at the top of Trump’s LLC empire. The numbers all roll into those, and I’d like to see some aggregate numbers there,” Rosenthal said.
According to the JCT report, an IRS agent assigned to Trump’s 2018 business returns noted numerous suspicious losses claimed by Trump on his tax returns.
“With respect to 2018, the agent noted several ‘Large unusual questionable items’ (‘LUQs’) including a $12.1 million loss from the Trump Corporation … [and] $55.2 million loss for DJT Holdings,” The JCT report said.
The report also mentioned a “history of difficult negotiations between Mr. Trump’s counsel and IRS personnel.”
Unlike his real estate businesses, Trump’s trademark LLCs are expected to be profitable enterprises, bolstered by the publicity he gained during his reality television career on NBC’s “The Apprentice.”
Via The Hill