Donald Trump’s tax returns, long the subject of speculation and a bitter legal battle, are set to be made public. After releasing a summary of the IRS’ efforts to audit the former president last week, along with some details of his income in recent years, the House Ways and Means Committee released it early Friday..
Another question is whether Americans will learn more from income. Trump’s finances are known to be complicated, with the IRS himself complaining about the difficulty of auditing every company he has earned income from.
This is where tax experts say they plan to focus.
What does the income really show about his finances?
It may be difficult to judge Trump based on his vast business empire. According to House researchers, the former president is financially connected to more than 400 separate entities, including trusts, limited liability companies and partnerships.
However, only seven of these were examined in a report by the Ways and Means Committee earlier this month. While earnings releases on Friday could name these companies and list a profit or loss for each, experts said further details would be scarce.
“When he comes back, there’s going to be a white paper table in the back — it’s probably five or 10 pages long — that’s going to list all these companies,” said Bruce Dubinsky, a forensic accountant and founder of Dubinsky Consulting.
“We don’t know what they are [entities] are doing. You’re going to see a line, the amount for that year – could be income, could be loss. Well, we’ll need those LLC or S corporation returns to see what’s going on?”
Such a large number of companies may give up some evidence of Trump’s income, losses or wealth, giving a false picture of his tax status. The IRS highlighted the complexity of conducting a detailed examination of Trump’s income and tax liability.
“With more than 400 flow-through returns reported on Form 1040, it was not possible to obtain the available resources to examine all potential issues,” says an IRS memo cited in the Ways and Means report.
Dubinsky, like all tax pros interviewed for this story, noted that he had no specific insight into Trump’s income, and based his assessment strictly on his knowledge of the tax code and Trump’s finances.
But a preliminary review of Trump’s 2020 tax returns released by a House committee on Friday shows modest income gains and losses that any major real estate developer would report, Dubinsky said.
By contrast, the releases show Trump paid $573,000 to prepare his personal 1040 form in 2015 alone, underscoring the enormous tax-preparation costs of such complex returns.
How Much Money Has Trump Made Being a Celebrity?
The Report Trump paid no federal income taxes in 2020, the final year of his presidency, according to the Joint Committee on Taxation. The former president paid only $750 in income tax in 2017. He paid $1.1 million in net federal income taxes in 2018 and 2019.
Although Trump made his money early in his career mainly from his family’s real estate empire, over time he cashed in on his popularity, earning hundreds of millions from his best-selling “Art of the Deal” and other books and from NBC. TV hit “The Apprentice”
“I’m going to look at the Schedule Cs, see if there’s publishing, book deals, any of that kind of stuff,” Dubinsky said. “Did he receive royalties from ‘The Apprentice’? If so, royalties will be reported when they come back.”
According to the New York Times, “The Apprentice” only Earned Trump $200 million between 2005 and 2018. If he continues to earn royalties while in office, he won’t be chief. Former President Barack Obama also benefited from a much smaller release. During his time in office, Forbes calculated that Obama earned twice as much from book royalties as his presidential salary.
AThe former president said his income shows “how proudly I have succeeded”.
“Democrats should never have done it, the Supreme Court should never have approved it, and it’s going to lead to terrible things for a lot of people,” Trump said.
How much does Trump donate?
E. Martin Davidoff, founder and managing partner of Davidoff Tax Law, said the president-turned-businessman’s philanthropic activities are sure to generate considerable interest.
“I look at his personal income with interest — I’ve never seen a billionaire’s tax return,” Davidoff said. “What does he deduct? How much does he give to charity? That would be an interesting thing because it could be a very large deduction.”
Davidoff expects to see some limited information on the types of charitable contributions.
“You know whether it’s cash or property because there are two separate forms and two separate line items for Schedule E to do that,” he said. “If he’s given appreciated stock, if he’s given real estate, it’s going to be listed—it needs detail.”
Tax experts said it was unclear where Trump directed his charitable contributions. Although many people list charitable beneficiaries on their returns, it is not required. Meanwhile, many billionaires create a charitable trust or a private foundation to hide the details of their giving.
Another unanswered question now is whether Trump correctly reported the value of all his donations, tax advocates said. One issue brought up by the Ways and Means Committee was whether a type of exemption called a security easement that Trump reported was worth $21 million was actually worth that much.
“The IRS allows that deduction, but the IRS may question its value. And we won’t know the outcome until the audits are done,” Dubinsky said.
How profitable is it to be a real estate developer?
Previously published excerpts of Trump’s income focused on the years he reported it times Trump “appears to have lost more money than almost any individual American taxpayer,” he concluded.. In the 1980s and 90s, the
Trump’s longtime accountant also recently testified In the Trump Organization The real estate developer reported losses every year on its tax returns for a decade, including nearly $700 million in 2009 and $200 million in 2010.
Many have questioned the rationale of allowing a self-proclaimed billionaire to avoid income tax liability, with one columnist calling it “A national disgraceBut it reflects tax advocates’ questions about the tax code, which provides many ways for wealthy Americans, including real estate moguls, to legally tax their income.
“The obvious question is, how does a guy pay so little in taxes when he’s so wealthy? By design, real estate generates income,” Davidoff said.
“If I own real estate and have positive cash flow, the depreciation on that real estate shelters some of that income,” he added. “The obvious question people have is why is he paying so little? That’s the tax laws.”
For example, depreciation is a synthetic calculation designed to account for how assets such as buildings lose value over time. Dubinsky illustrated it with an example of a developer building a $50 million project.
“One-thirtieth of that building is written off every year,” Dubinsky said. “If I don’t have income from that building in the first year, if I have operating expenses, now I’m at a loss. [And] I have all the interest I pay.”
These tax breaks – deliberately designed to encourage real estate projects – are for most people where work is their main source of income.
“The average person doesn’t do that,” Dubinsky said. “They get a W-2 for $85,000. And they say, ‘Well, I’m paying taxes on $85,000. Why doesn’t this guy who makes billions or is said to be worth billions pay his fair share?’ I mean, I hate to come back. But unfortunately that’s the way the tax code is designed.”
— The Associated Press contributed to this story