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Trump’s Tax Law Echoed Through His Finances During White House Years

Funviralpark 2 years ago 0 5

The tax legislation Donald Trump signed into law in late 2017 was reflected in his finances in the years that followed, limiting his tax benefits and opening up opportunities for tax planning.

Like many other taxpayers in high-tax states such as New York, Trump has been affected by the $10,000 cap on state and local tax deductions. That’s imposed by the broader tax law he defended. For example, when he was in the White House in 2018, he reported that he paid over $10 million in state and local taxes, but he was only able to deduct $10,000. The House Ways and Means Committee released Trump’s six-year tax returns on Friday.

Trump can now take advantage of an exception to the cap that his administration has blessed and that President Biden hasn’t withdrawn. You can use the laws of New York and other states that allow you to take breaks equivalent to

President Donald Trump’s six-year tax returns have been released.


Photo:

John Elswick/Associated Press

“Days after the November 2020 general election, the Trump administration chose to allow state-level pass-through entity tax workarounds,” said Daniel Hemel, a law professor at New York University. “It turns out that Trump, a pass-through owner with a heavy state income tax burden, was well positioned to benefit greatly from that choice going forward.”

It’s not easy to fully determine the impact that cap will have on his tax liability. In 2018, the year he reported positive income, Trump was subject to an alternative minimum tax. This is the parallel tax system that has affected him in other years as well. Those rules already severely limited or denied the benefits of state and local tax deductions, even before the 2017 law created his $10,000 cap.

Generally, the 2017 tax law has reduced tax rates and removed or limited various deductions. The full account of Trump’s influence is hard to decipher right away, but all of his returns from 2015 to 2020, which were made public after a lengthy legal battle between House Democrats and the former president, included the law. fingerprints remain.

The 2017 tax law is a core feature of the U.S. tax system that has allowed Trump to accumulate considerable wealth despite frequently reporting negative tax income and paying very little income tax. did not change the In a six-year tax return released Friday, Trump and his wife, Melania Trump, reported negative adjusted gross income of $53.2 million, of which they paid less than $750 in income taxes for three years. did.

“Donald Trump took big deductions, big debts, big losses, but rarely paid big taxes,” said Lloyd Trump, senior member of the Ways and Means Commission. Rep. Doggett (D-Tex.) said. “He wasn’t paying the taxes that the most modest wage earners pay. At one point, he was absolutely nothing.”

Donald Trump reportedly paid less than $750 in federal income taxes for three out of six years.


Photo:

Mandel Gunn/Agence France Press/Getty Images

Trump, who is running for president in the 2024 election, achieved these low income and tax figures by reporting significant net operating losses in his businesses, sometimes through deductions for depreciation. .

This is not uncommon, especially in the real estate business. It can be a marker of a person’s mixed success and failure in business. Earnings show his success, Trump said on Friday, adding, “How are we going to use depreciation and various other tax deductions as an incentive to create thousands of jobs and grand structures and businesses? Did you do it?” was shown.

Trump, who reported losses that exceeded gains, carried those losses forward into future years as long as he was allowed to. He then used those losses to absorb interest, speaking engagements, and income from profitable businesses so that his gains and losses were offset. This is a normal function of the income tax system, which attempts to tax profits throughout the business cycle, including the ups and downs from year to year.

But Trump’s claims of those losses and tax cuts on his tax return doesn’t mean he can keep them.

As of December 15, the Internal Revenue Service was conducting an audit for the tax years 2015-2019 and several years earlier, according to a letter from the agency. As long as the audit is open, the IRS can demand documents, dispute numbers on the return, and question whether Trump is eligible for the deductions or deductions claimed. . Tax officials may also question whether Trump followed rules in tax law that limit when taxpayers can use losses to offset income.

In a report released in December, the bipartisan Congressional Joint Taxation Committee outlined a series of questions IRS agents could ask. That includes scrutinizing some of Trump’s claimed deductions to see if they’re legitimate, such as whether they reflect personal expenses rather than business expenses.

Trump took advantage of certain tax cuts approved by Congress. 2015 includes his $21.1 million deduction for a conservation easement that prevented development of a property in Westchester County, New York, and his $26.3 million deduction for the restoration of a historic building in 2016. was

The 2017 tax law eliminated most other itemized deductions. For example, Trump reported $1.3 million in tax preparation costs and about $40,000 in other deductions in 2016, which may have been capped because of the alternative minimum tax. In 2018, he was unable to deduct individual tax preparation expenses and had $7,156 in other itemized deductions other than state taxes, charitable contributions, and investment interest.

The tax code has created a new 20% deduction for privately held businesses, and recent changes to the bill were designed to help real estate investors. Taxpayers can only take the deduction if they are reporting a profit after adding up all their businesses. In 2018, 2019 and 2020, Mr. Trump claimed no deductions under this provision.

And Trump tax filers may have missed thousands of dollars in 2020 stimulus packages for the Trumps and their son Barron, according to Atlanta accountant Jay Starkman. is.

“Their income has been too high for the past few years for the IRS to pay them automatically, so they would have had to claim them when they filed their returns,” Starkman said. “However, Trump’s 2020 tax returns did not claim the tax credits they were entitled to.”

The email address for Richard Rubin is [email protected].

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