Trump Tax Theory :Avoided paying taxes on nearly $1 billion
Basit Ahmad
Founder & Chief Strategist at Global Tax Grounds LLP # GTG provide Tax & Tariff, Treasury & Tech solutions together to make a Power Couple. Owner & Co-Founder ZBS Consulting
Donald Trump used an aggressive tax strategy that tax lawyers warned him could raise red flags to avoid paying taxes on hundreds of millions of dollars in income in the 1990s.
The tactic, involved losses from his Atlantic City casinos. As a real estate developer, Trump would have been allowed to use his losses to offset taxes he may have owed on other business income.
At the same time, his creditors forgave much of his debt on the properties when they went bankrupt. Forgiven debt is normally treated as income for tax purposes. Instead, the Times said Trump may have used a complicated maneuver in which his real estate partnership issued stock -- to erase the taxes owed on his forgiven debt.
The stock may not have been worth much, but for tax purposes, that didn't matter.
"This particular maneuver was about as close as a company could get to waving a magic wand and making taxes disappear," the Times said.