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02 October 2016


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Allen Thomson

To the limited (close to zero) extent I understand this, it's a case of "The scandal is not what is illegal, it's what's legal.


"Typically, for federal returns, such net operating losses can be carried backward for two years to offset past income and then kept on a taxpayer’s books for 20 years going forward, though Mr. Trump’s losses could only qualify for a 15-year carryforward under the law at the time.

"Also, real-estate developers can generate losses more easily than other taxpayers. First, they can take deductions for depreciation of their property. Second, they deduct the interest when they borrow. And third, unlike investors in other businesses, they can use those losses to offset their other income."

I,e., it appears as if developers can, somewhat uniquely, use carried loses on real estate to offset not just future income-in-kind (real estate), but *any* income.

Anyway, it being October 2016, the legality of this probably takes second place to the optics.


Allen Thompson

Really? IMO fair is fair and I say again what was he supposed to do? Eat the loss? Are you a business person? Is there any proof or even indication that the $913 million loss was bogus? "Optics" is propaganda BS. pl


Col: "Survive to '95" was always the plan. It will be interesting to find out who actually leaked this particular return. For one interesting theory, see http://www.dangerandplay.com/2016/10/02/why-did-trump-leak-his-1995-tax-returns/

Survive to 95 is well documented. See https://twitter.com/piersmorgan/status/782628537245335552

Finally, as to Allen Thompson's "optics," if Trump dribbles out later returns showing massive income, it will make this "leak" look really, really shady.

Followed by, "Hillary where are you emails?"



what does "survive to 95" mean? pl

The Porkchop Express

So much for "optics."


"Simply put - pot, kettle, black."


Agree on the optics. If he would have gotten in front of this instead of the stonewalling on his tax returns, he could have dealt with it long ago and made it a non-issue. Tactical error there. My concern is that he just doesn't see that.

The MSM? What else is there to say? The are gleeful in their attempt to destroy him.


Col: When the real estate market crashed in about 1990, Trump said his plan was to survive to 1995. If he could make it until 1995, then he expected the market to rebound. And it--and he--did.

Eric Newhill

Sir, IMO, all that Trump did was legal and understandable. Survive to '95 was, indeed, a common strategy during the real estate/S&L collapse.

I am sure he carried those losses forward as allowed by law. Why wouldn't he?

This is just Hillary Clinton's team to trying to confuse simple voters. I suspect part of the smear is, "Successful businessman huh? Look how much he lost" as much as it is anything else.

The Trump team could handle this appropriately and come out of it ok. Or they could react badly and get damaged.

rakesh wahi

live by the media die by the media. whining is not allowed in Presidential politics. who asked him to hide his tax returns?



There are plenty of big players carrying tax losses forward and this one isn't sending jobs to Mexico (this time around):
At least they didn't get directly bailed out like WallStreet and GM.

Allen Thomson

> "Optics" is propaganda BS.

We're in the middle of an intense propaganda war for the next five weeks. How things play with the voters, who are being heavily propagandized from both sides, is what matters up to November 8. Pity that, of course.

We'll see. Obviously the Clinton campaign is going to lean heavily on the optics: not paying federal income taxes while being very rich probably doesn't look good to many voters no matter what the details of the tax code.

Allen Thomson

> Tactical error there.

I tend to agree. If this carried-losses thing is actually the reason he's not disclosing his tax returns, it seems like a mistake. Especially since, as everybody agrees, it's perfectly legal and is a standard tax strategy used by many of the better-off. On first glance, it looks bad to ordinary tax-payers and is being spun to look worse, but could have equally well have been spun in the opposite direction by the Trump campaign with a bit of forethought.

mike allen

1995 was a good economic year for me - the economy boomed, Dow Jones went over 4000 for the first time ever, my modest home gained mega-equity because of the real estate boom, granted that was not in Atlantic City.....but how did he lose a Billion $ in a casino where he put little of his own money? He borrowed most of it. He went to bankruptcy court over his casinos in NJ four times and each time got the bondholders to accept less and less money instead of taking a total loss. So he stiffed the lenders as much or more thn he stiffed the small contractors.

PS - I admire Libertarian foreign policy. But not so much their domestic and economic policies.

Stuart Wood

The optics are bad even though the write-offs are legal. After all, you get the tax rules your lobbyists pay for. Having owned farm land, the amount you can write off etc. would make those who cannot fill out a long form 1040 totally p***** off. Those who cannot do the long form 1040 are the majority of the voters.

Allen Thomson

P.S.: Perhaps my use of "optics" was obscure. What I meant was


2. (used with a plural verb) the way a situation, action, event, etc., is perceived by the public or by a particular group of people:

[Example]: The optics on this issue are pretty good for the Democrats.

[Example]: Administrators worry about the bad optics of hiring new staff during a budget crisis.


Stuart Wood

"After all, you get the tax rules your lobbyists pay for." Did your lobbyists write the tax code? Did you create your tax advantages? pl

Jonathan House

possibly ignorant question and possible answers

Question: Was there an actual loss Trump had to eat

Possible answers:
1. Yes
2. No. The loss - some/all - discharged by the bankruptcy but nevertheless carried forward as a loss against future income for tax purposes.

If (2) is approximately accurate, perhaps it would seem less strange if one analogized the loss by bankruptcy to loss by depreciation - e.g. I took depreciation on my office furniture and my computer which, according the rules, went to zero some years ago but I am still using the furniture and the old computer. If the analogy holds, Trump is 'still using' the loss although he may not be out of pocket. I actually paid for my furniture and computer and couldn't value them for depreciation at more than I paid. From the little I know (from patients) about real estate on a big scale, the money lost by Trump was not calculated on the basis of how much he invested but on the value of his investment calculated in the interesting ways that are the rule in such real-estate ventures in which using paper losses for tax purposes are just one of the hedges available. All quite legal, but perhaps it diminishes pity (or the schadenfreude) one might otherwise have.


mike allen

When you set up a business you seek to borrow both initial capitalization and operating costs money. Banks are eager to lend you the money but you still owe them the money with interest. If revenues are not sufficient to cover costs, then you go in "the hole" big time and quickly. that is how he could lose that much money. Been there, done that. pl


Jonathan House

"No. The loss - some/all - discharged by the bankruptcy but nevertheless carried forward as a loss against future income for tax purposes." IMO that would be a federal criminal matter. Is there any proof or evidence of that? BTW your depreciation argument is irrelevant. We are not talking about depreciation in his taxes. I have an eleven year old Escalade that belongs to my single proprietor consultant business. It was long ago depreciated to zero but I continue to use it. So what! pl

mike allen

That is way over my head. I'll take your word for it. But I think that argument is way over the head of the average voter as well as mine. In any case he still used it to stiff both his lenders and his contractors. I don't believe you did that.

Swami Bhut Jolokia

It's titillating news but there's a lot we don't know, because Trump has refused to make his returns public. In my mind the biggest question is whether or not his reported loss was real i.e. he (his businesses) actually incurred losses.

If the loss was real, he can carry the loss forward and mitigate future income taxes. if not, for example the 'losses' were a result of debt forgiveness then they not losses in the view of the IRS. And there are schemes in between. See, for example, http://brontecapital.blogspot.com/2016/10/some-comments-on-new-york-times-story.html

So the bottom line is: we don't have enough information to come to any conclusion.



"If the loss was real, he can carry the loss forward and mitigate future income taxes. if not, for example the 'losses' were a result of debt forgiveness then they not losses in the view of the IRS." this would clearly be criminal fraud. Do you think the IRS likes him, especially now? pl

michael brenner

The man is not now a financial wheeler dealer who skirts the corrupt laws of the land. He is offering himself to be President of the United States. So he should own up to the unfairness and bias of existing tax policies and pledge to correct them if elected.

I suggest that all those unhappy with Hillary just stay home or vote for some marginal party candidate. I frankly don't se the point in eliding the awful truth that one of our parties has nominated a psychopathic, crypto-fascist to be its Presidential candidate - Or that between 55 and 60 million Americans will vote for him.

The Twisted Genius

There is absolutely nothing illegal about Trump not owing/paying federal taxes in this way. If there was, the IRS would have found it in one of its audits of Trump's tax returns. Most US citizens would probably do the same if they could. If we could all manage to do this, we could starve the Borg into impotence. No taxes would mean no NSA/FBI to spy on us and no military machine to engage in foreign adventures. We also wouldn't have all those bothersome veterans lining up for their gimme-dats. (I only dare say this here because I am one of those bothersome veterans.)

I don't have a problem with the poor legally not paying taxes. I do have a problem with Trump not paying taxes while he bellows about how much he cares about the troops and the veterans. If he stuck to bragging about being a savvy businessman interested only in maximizing his wealth, I still wouldn't like him, but I wouldn't find him as two-faced as he now appears.


mike allen

They were not my businesses nor my money. I was simply a well-paid janissary running things. I know how these things work having arranged them. Having been pursued by banks large and small, public and private, state governments begging you to let them give you massive tax advantages, recruiting and training for free for your work force, giant electric companies offering concessionary rates for a promise of long tern contracts, US members of Congress offering helpful write-ins for infrastructure in appropriation and other bills, I have some idea how creation of capital works. BTW, almost all the various banks' reps contacted me privately to offer kick backs if my principals could be persuaded to take their money. Did I stain myself and my honor? I did not, but as I was told a number of times, "you are not a businessman." pl

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