Red flags: Tax experts say Trump loans to children shown on tax returns raise eyebrows

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According to a report from Politico, the non-partisan Joint Committee on Taxation is already studying Donald Trump’s tax returns that were finally returned after the Supreme Court rejected the former president’s efforts to keep them secret and they raised of five “red flags” so far.

A report from Politico’s Brian Faler states that the House Ways and Means Committee that pushed for access to Trump’s tax documents has returned the documents in an effort to understand and disentangle complex claims made by those former president’s accountant.

So far, Faler’s report, there are five lines of inquiry recommended that could lead to deeper investigation and more questions about Trump’s financial picture.

According to the report, the documents have been examined by tax experts since late last month, and there are now questions being raised in a report from the JCT.

At the top of the list is Trump’s use of massive business losses that allow him to pay “little or no taxes between 2015 and 2020.”

According to Politico’s report, “Businesses are taxed on their profits, so if they can show that their profits are covered by their expenses, they can wipe out their bills with the IRS,” before adding, “Without those losses, Trump’s taxes would look fundamentally different .In 2016, for example, when he paid just $750 in federal income taxes, he reported $30 million in profits but also $60 million in losses. “

Asked by Politico’s Faler “The big question is whether those losses are legitimate,” said Steve Rosenthal of the Tax Policy Center, “This is the elephant in the room.”

Loans to Trump’s children are also being questioned.

“Trump reportedly received hundreds of thousands of dollars in interest payments on loans he gave to Ivanka Trump, Donald Trump, Jr. and Eric Trump. That raises eyebrows because it could be a way to avoid taxes on the gift. If he gave the money directly to his children, it would likely be subject to a stiff 40 percent tax. The gift tax is designed to prevent people from escaping the estate tax by giving of money to their children, for example, while they are alive,” the report said, before adding, “Calling that money a loan would avoid the gift tax while also allowing his children to deduct from their own taxes the interest they paid him.”

The former president’s penchant for mixing expenses was also mentioned in the report saying, “In 2016, for example, the filing for DT Endeavor I LLC (aviation) reported total income of $680,886 and expenses which also totaled $680,886. A filing for Melania Trump (modeling) said it totaled $3,848 and reported the same amount of expenses. A filing for Donald J. Trump (speaking) report $50,000 in gross income and $46,162 in travel expenses. Aside from the improbability of income and expenses being exactly equal, this raises the question of whether a person would bother with a business where their expenses consumed every dollar they made.”

According to the JTC, “Audits of closely held entities often find personal expenditures that are improperly deducted as business expenses.”

The other two lines of inquiry involve the conservation of land used for tax breaks and taxes paid abroad with the report saying, “Trump did not pay substantial US taxes on returns that were examined Only $1.8 million over six years. But in 2018, he claimed a foreign tax credit for paying $1.3 million to other governments. People can claim credit for paying levies elsewhere , something designed to prevent people from paying taxes twice on the same dollar. The question here is whether those are legit. The IRS Should be asking to see the receipts, JCT said.”

You can read more here.

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