Trump’s Tax Returns Aren’t the Only Crucial Records Prosecutors Will Get


When New York prosecutors can finally examine former President Donald J. Trump’s tax returns, they will find a true guide to getting rich while losing millions of dollars and paying little to no income taxes.

However, whether they find evidence of criminal offenses also depends on other information not included in the actual returns.

The United States Supreme Court on Monday cleared the way for Manhattan District Attorney Cyrus R. Vance Jr. to receive eight years of Mr. Trump’s income tax return and other documents from his accountants. The decision ended a longstanding legal battle over prosecutors’ access to the information.

The New York Times more or less previewed what to expect last year as it received and analyzed decades of income tax data for Mr Trump and his companies. The tax records offer an unprecedented and very detailed look into the Byzantine world of Mr. Trump’s finances, which he has been bragging about for years and which he wants to keep secret.

The Times audit found the former president had reported hundreds of millions of dollars in business losses, spent years without paying federal taxes, and received a tax refund of $ 72.9 million prior to an Internal Revenue Service audit that he had requested a decade ago.

Among other things, the record found that Mr Trump had paid just $ 750 in federal income taxes in his first year as president and no income tax at all for 10 of the last 15 years. They also revealed that between 2010 and 2018 he had written off $ 26 million in “consulting fees” as business expenses, some of which were apparently paid to his older daughter Ivanka Trump when she was an employee of the Trump Organization.

The legitimacy of the charges that reduced Mr. Trump’s taxable income has since been the subject of Mr. Vance’s investigation and a separate civil investigation by New York Attorney General Letitia James. Ms. James and Mr. Vance are Democrats, and Mr. Trump has tried to portray the multiple investigation as politically motivated while denying any wrongdoing.

Mr. Vance’s office has issued subpoenas and interviews over the past few months investigating various financial matters, including whether the Trump Organization has misrepresented the value of assets in making loans or paying property taxes, as well paying $ 130,000 in hush money during the 2016 campaign to Stephanie Clifford, the pornographic film actress whose stage name is Stormy Daniels. Among those surveyed were employees of Deutsche Bank, one of Mr Trump’s largest lenders.

Despite all of its revelations, Mr Trump’s tax filings are also noteworthy for what they fail to show, including new details about the payment to Ms. Clifford, which was the first focus of Mr Vance’s investigation when it began two years ago.

The tax returns are self-reported accounting for income and expenses and often do not have the specificity required to know, for example, whether legal costs related to hush money payments have been claimed as a tax write-off or whether money has ever been paid from Russia moved by Mr. Trump’s bank accounts. The lack of this level of detail underscores the potential value of other records that Mr. Vance had access to with the Supreme Court decision on Monday.

In addition to filing tax returns, Mr. Trump’s accountants, Mazars USA, are also required to provide business records on which these returns are based and communicate with the Trump Organization. Such material could provide important context and background for decisions Mr Trump or his accountants made in preparing the tax return.

John D. Fort, a former chief of the IRS criminal investigation department, said tax returns are a useful tool for uncovering clues but could only be fully understood with additional financial information obtained elsewhere.

“It’s a very important personal financial document, but it’s only part of the puzzle,” said Fort, CPA and director of investigations at Kostelanetz & Fink in Washington. “What you find in the return must be continued with interviews and subpoenas.”

However, the Times’ investigation of Mr. Trump’s returns revealed a number of misleading claims and falsehoods he made about his wealth and business acumen.

Many of Mr. Trump’s claims to generous philanthropy fell apart when he examined his tax returns, raising questions about both the size of certain donations and the totality of his tax-deductible donations. For example, $ 119.3 million of the approximately $ 130 million in charitable deductions claimed since 2005 turned out to be the estimated value of no real estate pledges, sometimes after a planned project failed.

At least two of these land-based charity prints, one related to a golf course in Los Angeles and the other in a Westchester estate called Seven Springs, are known to be part of Ms. James’s civil investigation to see if appraisals are endorsed The tax depreciation was excessive.

In a broader sense, the tax filings showed how the public disclosures he filed as a candidate and then as president offered a skewed view of his overall finances by reporting glowing numbers for his golf courses, hotels, and other businesses on a gross revenue basis, which they achieved every year. The actual bottom line after losses and expenses was much grimmer: while Mr. Trump’s public filing showed revenue of $ 434.9 million in 2018, his tax returns reported losses totaling $ 47.4 million.

And such bad numbers were not an anomaly. Mr. Trump’s many golf courses, a core part of his business empire, posted losses of $ 315.6 million from 2000 to 2018, while the revenue from licensing his name to hotels and resorts was so good at the time of his entry into the White House how dry they were. Additionally, Mr. Trump has several hundred million dollars in loans, many of which he has personally guaranteed and which will mature over the next few years.

The Times investigation also revealed that he faces a potentially devastating IRS audit focused on the huge refund he requested in 2010, which covers all federal income taxes he paid through 2005 plus interest. Mr Trump repeatedly cited the ongoing audit as a reason he was unable to publish his tax returns after initially announcing it, despite nothing stopping him in the audit process.

Should an IRS ruling ultimately be against him, Mr. Trump could be forced to repay more than $ 100 million, taking into account interest and possible penalties, in addition to approximately $ 21.2 million in state and local tax refunds, which were based on the numbers in his federal records.

Russ Buettner and Susanne Craig contributed to the coverage.



Robert Dunfee