Daily Beast: Why Donald Trump May Never Pay Federal Income Tax Again, by David Cay Johnston:
The alleged billionaire, last known to have paid up in 1977, may not have to until 2042—if then.
Donald Trump can enjoy income tax-free living for the rest of his life, my new analysis of his tax documents shows, adding to the reasons the Republican nominee for president should make his tax returns public before voting ends next Tuesday.
Thanks to a diligent team of New York Times reporters, we learned Halloween night that Trump’s top-notch tax advisers warned in 1991 that his extremely aggressive tax strategy to convert nearly a billion dollars of taxable income into tax losses would likely be rejected in an IRS audit. But, as we shall see, there was little risk Trump would be audited (doubly ironic, given how he’d used supposed audits to justify becoming the first post-Watergate presidential candidate who hasn’t released tax returns).
The documents in The Times confirm what I told readers a month ago about how Trump transformed taxable income into tax avoidance on a grand scale. Since then, numerous tax practitioners and professors have written their own essays applying the same line of analysis first published in my Oct. 3 column, headlined “Art of the Steal.”
That column drew on three pages of 1995 state tax return summary sheets leaked to The Times and the New York Daily News. In its initial report, The Times said that Trump could use $916 million of net operating losses or NOLs shown on those documents to eliminate income taxes for up to 19 years.
What I can now report is that Trump is not restricted to using or losing his tax losses over 19 years but can offset income for as long as he lives. Based on his 1995 income, Trump could enjoy 47 years of income-tax-free living. That would cover Trump until 2042, when he would turn 96.
But even that understates the situation. As a real estate owner Trump can acquire still more tax losses under liberal rules set by Congress—rules Trump lobbied for—that apply only to full-time managers of their own investment real estate. This means Trump could enjoy a much larger income than the $19 million he reported on his 1995 Connecticut nonresident tax form in future years and still pay no income taxes.
Because of the documents in the latest Times report, it is now beyond question that Trump benefitted from an opinion by Justice Clarence Thomas in a 2001 Supreme Court case infamous in tax circles because it approved the creation of tax losses out of thin air. [Gitlitz v. Commissioner, 531 U.S. 206 (2001)]
New York Times editorial, Avoiding Taxes, Trump-Style:
Donald Trump’s claim that he was smart for figuring out how not to pay federal income taxes was obnoxious when he said it, at least for the millions of Americans who pay their fair share. Now we learn that he was able to avoid some of those taxes decades ago with a tactic that is illegal now and was highly dubious even then. ...
The latest disclosures about Mr. Trump’s taxes also further undercut the argument that he is uniquely qualified to fix what he has called a rigged system. Why would a man who has spent most of his professional life avoiding the shared responsibility of taxes all of a sudden care about helping others, especially those less fortunate?