Trump’s tax returns released by House Democrats: live updates

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2 years ago

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The top tax-writing committee in Congress released former President Donald Trump’s tax returns to the general public Friday morning, ending a years-long battle and shedding light on a complicated labyrinth of businesses and holdings typical of billionaires but rarely seen in detail by the public.

The release included six years of tax returns for the time he was president and campaigned for the presidency, from 2015 to 2020. Thousands of pages across dozens of files included personal returns filed by him and wife Melania and business returns for a handful of entities, including DJT Holdings and DJT Managing Member LLC.

The returns span nearly 6,000 pages, including more than 2,700 pages of individual returns from Trump and his wife, Melania, and more than 3,000 pages in returns for Trump’s business entities.

A key Congressional committee that reviewed the returns before their release raised questions about hundreds of millions of dollars in deductions and credits that reduced how much Trump and his related companies would have needed to pay in taxes. They also questioned interest income from loans made to his children and unusual accounting calculations.

The Joint Committee on Taxation, staffed with tax experts, found Trump only paid $1.1 million in federal income taxes during the first three years of his presidency and paid no federal tax in 2020 – the year that he claimed a loss of $4.8 million.

Read the documents:Donald Trump’s tax returns released

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Trump blasted Democrats for releasing his tax returns, arguing the premise that it would guide tax law changes is baseless. He said in a video statement that the release is an “outrageous abuse of power” and urged House Republicans taking over the chamber in January to obtain President Joe Biden’s taxes and release them.

Trump said his returns show “show only that I’ve had tremendous success.”

“I spent my entire life building a truly great company. Over the years I’ve employed 1000s and 1000s of people, I build towering skyscrapers standing tall above the greatest cities of the planet,” he said. “Most politicians only know how to kill jobs, I have actually created them, but by the thousands.”

One prominent tax lawyer, Martin Press of the Florida-based Gunster law firm, urged caution in reviewing Trump’s newly released returns, saying they need to be viewed in the proper context that includes his business records and other details.

“An income tax return is merely that,” Press told USA TODAY. “It determines what is income and how it is taxed. It is not designed as a balance sheet showing historical or current values of assets. Trump’s tax returns must be read in conjunction with his prior FEC (Federal Election Commission) filings that would indicate values of assets as submitted by Donald Trump.”

‘Regrettable stain’ on Ways and Means Committee

Rep. Kevin Brady, R-Texas, the top Republican on the House Ways and Means Committee, accused Democratic committee leaders of unleashing a “dangerous new political weapon.”

“This is a regrettable stain on the Ways and Means Committee and Congress, and will make American politics even more divisive and disheartening,” he said in a statement Friday. “In the long run, Democrats will come to regret it.”

Here are some of the major issues the Joint Committee on Taxation previously raised.

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Businesses expenses zeroing out taxes

Many businesses for which Trump and his wife filed taxes from 2015 through 2020 made no money. Often, they reported only expenses, or they reported income that was almost entirely offset by the reported expenses, effectively zeroing out any taxes owed.

The filings raise questions about “whether these were valid trade or business activities” or “costs derived from personal activities or hobbies,” the committee experts wrote.

Donald J. Trump’s speaking business reported income of $50,000 in 2015 and travel expenses of $46,162.
In 2016, DT Endeavor I LLC — Trump’s private aviation company — reported income of $680,886 and expenses of $680,886. The same for DJT Aerospace LLC, another aviation company, which reported gross income of $376,493 and total expenses of $376,493 in 2016.
In 2019, a business filing for “Melania Trump (modeling)” reported gross income of $3,848 and expenses of $3,438.
In 2020, another filing reported as “Donald J. Trump (management services)” reported gross income of $87,442 and expenses of $87,442.

Some filings also reported losses with large discrepancies between gross income and expenses. For example, in 2018, DJT Endeavor I reported gross income of $38,392 and expenses of $312,773, meaning the company operated at a net loss of $274,381. In 2019, another aviation company, DJT Operations II LLC reported no gross income at all while there were expenses of $7,382.

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Loans to Ivanka Trump, Eric Trump, and Donald Trump Jr.

Donald and Melania Trump reported roughly $300,000 in interest income from 2015 through 2020 from loans to his children. From 2015 through 2019, the income was $51,000 per year. In 2020, it fell to $46,000.

The congressional tax experts said the transactions raise a “question of whether the loans were bona fide arm’s length transactions” or whether they were “disguised gifts” that could have triggered a gift tax and made them unable to deduct the interest expenses.

A $21 million charitable contribution?

The 2015 return for Trump and his wife includes a $21.1 million charitable contribution for the donation of a conservation easement to the North American Land Trust. The 159-acre strip of land near his Seven Springs estate in Westchester County, New York, may have been overvalued in an appraisal, IRS auditors had noted in their review of Trump’s returns.

Their notes also raised the possibility of reducing the allowed deduction amount by more than $10 million and assessing a penalty. The full deduction was not taken in 2015 but was part of a carry-forward amount eligible for deducting in future years. The matter is still under review. IRS agents had been set to meet with appraisers in November.

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Carrying over millions in losses

The 2015 return shows $105 million in losses carried over from previous years. In 2016, the carryover was $73.4 million, and in 2017 and 2018, it was $45 million and $23 million. The tax experts noted the losses should be verified. Such operating losses incurred before 2018 can “generally be carried forward 20 years,” the experts noted.

Hotel expenses

A tax filing in 2015 for one of Trump’s business entities, DJT Holdings LLC, includes a deduction for $13.9 million in hotel expenses – part of $24.9 million in deductions overall. In 2016, it reported the same amount of $13.9 million in hotel expenses of $22.2 million total in deductions. The 2020 return included $7.2 million in hotel expenses – part of $10.1 million overall.

The congressional tax experts noted it’s worth examining “the nature and reasonableness of these costs” and whether they included personal expenses, rather than business costs.

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Expense discrepancies between financial statements and tax returns

There was a large difference between management expenses for one of Trump’s businesses in 2020 and public financial reports.

The business reported roughly $400,000 in management expenses in the financial reports. But in Trump’s tax returns, it reported more than $950,000 in management expenses — a difference of around $550,000.

“DJT Holdings Managing Member”

The filings for DJT Holdings Managing Member LLC appear to be mostly flow-throughs – losses or transactions from other entities – and yet the LLC reported nearly $7,000 in deductions and negative earnings of $1.5 million in 2015.

“We would recommend requesting an explanation of these items,” the congressional reviewers noted, since the entity “does not appear to be engaged in an active operating trade or business during 2015.”

A $26.3 million rehab credit

The Trumps’ tax return in 2016 included a historic rehabilitation credit of $26.3 million. Such credits can be taken when a qualified building is rehabbed and placed in service, but rules for such tax breaks are stringent, leading congressional experts to recommend further examination.

Real estate companies discharged as much as $141 million in debt

The committee questioned how two real estate companies used a Great Recession-era law to help the businesses ease the tax burden on up to $141 million of forgiven debt.

The report pointed to a total of $28.2 million that DJT Holdings LLC and DJT Holdings Managing Member LLC claimed each year as income on their 2016, 2017, and 2018 forms 1040.