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Newly Uncovered Tax Documents Could Be Big Trouble for the Trump Organization (1 Viewer)

TU Curmudgeon

TU Curmudgeon

B.A. (Sarc), LLb. (Lex Sarcasus), PhD (Sarc.)
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From The New York Magazine

Newly Uncovered Tax Documents Could Be Big Trouble for the Trump Organization
​

The Trump Organization fudged financial figures related to the profitability of some of its buildings in a move resulting in allegations of fraud, according to new tax documents obtained by ProPublica. The documents support previous claims that Trump lies to lenders and tax officials, while also suggesting that potential fraud was committed while Trump was in the White House.

In one instance, the Trump Organization reported different occupancy rates for his building at 40 Wall Street depending on the audience. When trying to convince a lender to give him a loan, Trump reported higher figures. When reporting the occupancy to property-tax officials, the number was lower.

Other discrepancies surfaced when comparing the documents submitted to lenders to those submitted for tax purposes. For example, ProPublica says that at 40 Wall Street, “insurance costs in 2017 were listed as $744,521 in tax documents and $457,414 in loan records.”
There are also discrepancies in the numbers reported for the Trump International Hotel and Tower:

Trump’s company told New York City tax officials it made about $822,000 renting space to commercial tenants there in 2017, records show. The company told loan officials it took in $1.67 million that year — more than twice as much. In eight years of data ProPublica examined for the Columbus Circle property, Trump’s company reported gross income to tax authorities that was typically only about 81% of what it reported to the lender.
​

COMMENT:-

And someone is going to surprised to learn that "some juniour clerk at one of Mr. Trump's accounting firms 'accidentally fumbled some figures'"?

Not me.
​
 
WOW! That is as dishonest as valuing a vehicle at $4K for trade in purposes and then valuing it at $6K on the used car lot.
 
ttwtt78640 said:
WOW! That is as dishonest as valuing a vehicle at $4K for trade in purposes and then valuing it at $6K on the used car lot.
Click to expand...

It's actually a bit more like selling the $4,000 car for $6,000 and then reporting that you actually sold it for $4,500 on your tax return but telling the bank that you sold it for $7,500 when asking for a loan.

Given a very good accountant (whose advice you actually follow) you can actually do something approximating that quite legally.

And, as we all know, in the United States of America (because it is a country where the rule of law prevails), if there is no specific law that directly prohibits someone from doing some absolutely clearly delineated thing, then it is just peachy-keen for them to do it. Right?
 
TU Curmudgeon said:
It's actually a bit more like selling the $4,000 car for $6,000 and then reporting that you actually sold it for $4,500 on your tax return but telling the bank that you sold it for $7,500 when asking for a loan.

Given a very good accountant (whose advice you actually follow) you can actually do something approximating that quite legally.

And, as we all know, in the United States of America (because it is a country where the rule of law prevails), if there is no specific law that directly prohibits someone from doing some absolutely clearly delineated thing, then it is just peachy-keen for them to do it. Right?
Click to expand...

My favorite sign, along those lines, is "We buy junk and sell antiques". ;)
 
ttwtt78640 said:
WOW! That is as dishonest as valuing a vehicle at $4K for trade in purposes and then valuing it at $6K on the used car lot.
Click to expand...

It's not at all like that... :roll:

It is as dishonest as claiming you paid a worker $50,000 for purposes of your tax return, paying him $50,000, and then only claiming you paid him $20,000 when you submit financials to your bank to get a loan, and thereby falsely inflate your profits by $30,000. That's a crime, or can be!

It's one reason why when I worked on valuations and business purchases and sales, if we were on the buying side we didn't trust financial statements from the seller, and demanded to see tax returns. Sometimes there was a good excuse for differences, such as the owner running through a bunch of personal expenses for tax purposes, and we could then eliminate them for the valuation because they were actually personal expenses, but if not we went with the tax return....
 
TU Curmudgeon said:
It's actually a bit more like selling the $4,000 car for $6,000 and then reporting that you actually sold it for $4,500 on your tax return but telling the bank that you sold it for $7,500 when asking for a loan.

Given a very good accountant (whose advice you actually follow) you can actually do something approximating that quite legally.

And, as we all know, in the United States of America (because it is a country where the rule of law prevails), if there is no specific law that directly prohibits someone from doing some absolutely clearly delineated thing, then it is just peachy-keen for them to do it. Right?
Click to expand...

The bank is going to go by the documented income on your tax returns. You can tell them anything you want, but it won't mean ****.
 
ttwtt78640 said:
WOW! That is as dishonest as valuing a vehicle at $4K for trade in purposes and then valuing it at $6K on the used car lot.
Click to expand...

It's more like paying $4,000 cash for a used car and showing the price on the bill of sale as $2,000 to avoid sales taxes.
 
apdst said:
It's more like paying $4,000 cash for a used car and showing the price on the bill of sale as $2,000 to avoid sales taxes.
Click to expand...

And even that is a crime. And considering the amount of money involved in Trump's deals, it's a felony. But we all know that crimes by the POTUS doesn't concern Trump slurpers.
 
apdst said:
It's more like paying $4,000 cash for a used car and showing the price on the bill of sale as $2,000 to avoid sales taxes.
Click to expand...

Tax fraud

The Revenuers always get their man. They got Capone on tax fraud, they got Wesley Snipes, will they get Donald J Trump
 
rocket88 said:
Well considering the documentation in question, that shouldn't be too hard.
Click to expand...

You haven't seen the whole picture, so you probably shouldn't get too excited, again.
 
TU Curmudgeon said:
From The New York Magazine

Newly Uncovered Tax Documents Could Be Big Trouble for the Trump Organization
​

The Trump Organization fudged financial figures related to the profitability of some of its buildings in a move resulting in allegations of fraud, according to new tax documents obtained by ProPublica. The documents support previous claims that Trump lies to lenders and tax officials, while also suggesting that potential fraud was committed while Trump was in the White House.

In one instance, the Trump Organization reported different occupancy rates for his building at 40 Wall Street depending on the audience. When trying to convince a lender to give him a loan, Trump reported higher figures. When reporting the occupancy to property-tax officials, the number was lower.

Other discrepancies surfaced when comparing the documents submitted to lenders to those submitted for tax purposes. For example, ProPublica says that at 40 Wall Street, “insurance costs in 2017 were listed as $744,521 in tax documents and $457,414 in loan records.”
There are also discrepancies in the numbers reported for the Trump International Hotel and Tower:

Trump’s company told New York City tax officials it made about $822,000 renting space to commercial tenants there in 2017, records show. The company told loan officials it took in $1.67 million that year — more than twice as much. In eight years of data ProPublica examined for the Columbus Circle property, Trump’s company reported gross income to tax authorities that was typically only about 81% of what it reported to the lender.
​

COMMENT:-

And someone is going to surprised to learn that "some juniour clerk at one of Mr. Trump's accounting firms 'accidentally fumbled some figures'"?

Not me.
​
Click to expand...

According to Business Insider, one of the filings in question happened in 2017, after he took office.
 
ttwtt78640 said:
My favorite sign, along those lines, is "We buy junk and sell antiques". ;)
Click to expand...

Thank you for my smile of the morning.

Sort of reminds me of "We pay highest prices for stuff we buy. We charge lowest prices for stuff we sell. How we stay in business? We lucky.".
 
TU Curmudgeon said:
Thank you for my smile of the morning.

Sort of reminds me of "We pay highest prices for stuff we buy. We charge lowest prices for stuff we sell. How we stay in business? We lucky.".
Click to expand...

IIRC, that sign is (or at least was) on a store in Pipe Creek, TX (Bandera County). A nearby gas station had a pet rest area with a single section of split rail fence and a fire plug with a sign between them with two arrows labeled city dogs and country dogs.
 
JasperL said:
It's not at all like that... :roll:

It is as dishonest as claiming you paid a worker $50,000 for purposes of your tax return, paying him $50,000, and then only claiming you paid him $20,000 when you submit financials to your bank to get a loan, and thereby falsely inflate your profits by $30,000. That's a crime, or can be!

It's one reason why when I worked on valuations and business purchases and sales, if we were on the buying side we didn't trust financial statements from the seller, and demanded to see tax returns. Sometimes there was a good excuse for differences, such as the owner running through a bunch of personal expenses for tax purposes, and we could then eliminate them for the valuation because they were actually personal expenses, but if not we went with the tax return....
Click to expand...

I have absolutely no doubt that Mr. Trump has a "legal opinion" to the effect that I am right and you are wrong. I am also quite sure that Mr. Trump paid a quite high price for that "legal opinion" while he can get my curmudgeonly one and yours based on actual practical business experience for free. I am also quite sure that Mr. Trump will almost invariably place greater emphasis on a "legal opinion" that he pays a lot of money for (and which accords with what he wants to believe) than he will on one that he can get for a whole lot less money (especially when it does NOT accord with what he wants to believe).

BTW, it appears that our different views stem from the fact that you are approaching the situation from a practical, financial, business, point of view while I am approaching it from a legal point of view (where the "practical, financial, and business" aspect greatly depends on whether or not the client can afford the lawyer's retainer and fees).

PS - I did read an analysis earlier today which indicated that Mr. Trump just might be faced with


"Mr. Trump, we see that the valuation you put on your buildings for tax purposes is much lower than what you wrote on your loan applications. If you lied to the lenders, we will charge you with bank fraud. However, if you lied to the tax authorities, we will charge you with tax fraud. Which would you prefer?"
[SOURCE]
​

Which could lead to an interesting situation where he was charged with BOTH "A" and "B" and the only way that he could "beat the rap" on "A" would be to provide the evidence that proved "B" and the only way that he could "beat the rap" on "B" would be to provide the evidence that proved "A".

I don't think that it could happen to a nicer guy.
 
apdst said:
The bank is going to go by the documented income on your tax returns. You can tell them anything you want, but it won't mean ****.
Click to expand...

The bank will do no such thing (if you are a company). The bank will almost always go by your (last five) audited annual financial statements.
 
TU Curmudgeon said:
The bank will do no such thing (if you are a company). The bank will almost always go by your (last five) audited annual financial statements.
Click to expand...

Yeah, they will do exactly that. Here in the states, they will, anyway. I don't know what kinda ****ed up system y'all got in Canada.
 
apdst said:
It's more like paying $4,000 cash for a used car and showing the price on the bill of sale as $2,000 to avoid sales taxes.
Click to expand...

All perfectly legal as long as the $4,000 was divided between [a] $2,000 in order to convince the seller to consider selling a car that they didn't want to sell and $2,000 to purchase the car.

PS - The tax people hardly ever ask you to produce the cheque that you wrote in order to prove how much you paid for the car if you paid by cheque so "paying cash" really doesn't enter into the picture.
 
apdst said:
There's the burden of proof.
Click to expand...

Did you know that the IRS has the ability to introduce "imputed income" based on expenses and/or increase in asset ownership and, if it does, then it is up to the taxpayer to prove that they did NOT receive that income?
 
Can you guys pick out the posters who are honest?
 
TU Curmudgeon said:
Did you know that the IRS has the ability to introduce "imputed income" based on expenses and/or increase in asset ownership and, if it does, then it is up to the taxpayer to prove that they did NOT receive that income?
Click to expand...

You might be thinking of something else...

Inputed income is the addition of the value of cash/non-cash compensation to an employees’ taxable wages in order to properly withhold income and employment taxes from the wages. Imputed income is taxable to the assignee (unless specifically exempt). Because it is delivered for the performance of services (related to employment) it must be included in the assignee's Form W-2 to accurately reflect the assignee's taxable wage-related income.

Imputed income is reported on Form W-2. Imputed income is not subject to the federal income tax withholding rules. Employees may choose to have federal income tax withheld on the imputed income or pay what may be due when filing their federal income tax return. Tax penalties may apply if the employee has not withheld enough federal income taxes on the imputed income. Imputed income is subject to withholding for FICA tax purposes. Imputed income is also often relevant to determinations of support payments in divorce.

Imputed Income Law and Legal Definition | USLegal, Inc.
Click to expand...
 
TU Curmudgeon said:
The bank will do no such thing (if you are a company). The bank will almost always go by your (last five) audited annual financial statements.
Click to expand...

Yeah, but the key word there in the U.S. is "audited" which is a CPA attesting to their accuracy, in accordance with GAAP. If they are merely "compiled" financial statements, we more or less ignored them in favor of tax returns. If you're a CPA, the client prepares the "compiled" financials, and you put them in the proper form and that's pretty much it. There are no procedures done to check the accuracy, at all. So from Trump.... :roll:

You'd think for the kind of money at stake, the lenders would require audited financials, but I've come to expect that when it comes to banks incompetence is often the rule, and from what I've read lenders did accept compiled financials for Trump, for some crazy reason.

FWIW, a 'review' is in between but I don't know why anyone gets a review. It's not enough to give someone any real assurance, and it's more expensive than a compilation. To me the reader needs assurance, or not, and if they do, an audit is the only way to get it.
 
TU Curmudgeon said:
It's actually a bit more like selling the $4,000 car for $6,000 and then reporting that you actually sold it for $4,500 on your tax return but telling the bank that you sold it for $7,500 when asking for a loan.

Given a very good accountant (whose advice you actually follow) you can actually do something approximating that quite legally.

And, as we all know, in the United States of America (because it is a country where the rule of law prevails), if there is no specific law that directly prohibits someone from doing some absolutely clearly delineated thing, then it is just peachy-keen for them to do it. Right?
Click to expand...

The point about an accountant is a good one - I'm sure that he had accountants fill out the information and supply figures they could support with documentation.

It's not unusual for there to be differences in value of property - particularly with regards to taxes. The taxing entity has specific rules on how to calculate valuation, and it is often different than general accounting principles, especially with regards to depreciation. I would expect the Trump organization - like any organization - to follow the rules and use the method most favorable to them.
 
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