Haven't we learned anything from the quick takes on stories like the Covington Catholic School kids, Ferguson's "hand's up, don't shoot" falsehood that was debunked by the WaPO and NYT, Jussie Smollett's faking his racist, anti-gay attack, and many other news reports that were later proved wrong?
Wait for other, non-NYT analysts to weigh in on the President's taxes, a subject more complicated than the above topics.
Understanding the income taxes of a man who controls $billions of real estate requires many hours of study of source documents by accountants and lawyers to present a "fair" picture of his finances (fairness about the tax code is something very different).
Just because you do your own tax return doesn't mean you can have a decent understanding of how the tax returns of "hundreds of companies" (NYT's words) are prepared. It's like me reading a few sci-fi books and discussing time travel and black holes with a theoretical physicist.
Regarding my own background, I worked 24/7 during the busy season in the Tax Department of a Big Eight accounting firm over 40 years ago. It was the first time I was exposed to how very wealthy families build a network of interlocking entities to organize their businesses.
Those who work on Donald Trump's taxes likely refer to a chart depicting the ownership, cash flows, and goods-and-services flows among the entities. Trump accountants, because of the heavy emphasis on real estate, should be familiar with at-risk rules, the difference between recourse vs nonrecourse debt, the tax attributes of C corporations, S corporations, partnerships (limited and general), and single-owner LLCs.
They also should be acquainted with issues such as controlled groups, consolidated returns (where going from 79% to 80% corporate ownership has important ramifications), fiscal year vs calendar year elections, inside basis vs. outside basis of pass-through entities, foreign tax credits, NOL carryforwards and carrybacks (different for individuals vs corporations), and entity formation and liquidations, to name a few.
These complicated arrangements are often created for reasons other than income taxes. 1) Certain structures minimize estate taxes; 2) In businesses with high-value assets, each asset and its related debt are housed in separate entities for their legal protection; 3) These entities are billed for management fees and administrative expenses by other entities. Who owns the management companies? That's worthy of a separate discussion.
After spending hundreds, maybe thousands of hours, looking over the documents, the NY Times doesn't headline a meaningful finding, such as an in-depth assessment of the financial health of Trump Consolidated. Instead it leads off with
Donald J. Trump paid $750 in federal income taxes the year he won the presidency. In his first year in the White House, he paid another $750.To the Times it doesn't matter if the "hundreds of companies" Donald Trump controls have paid millions in taxes. It doesn't matter if he paid millions in tax years other than 2016 and 2017.
He had paid no income taxes at all in 10 of the previous 15 years — largely because he reported losing much more money than he made.
His accountants, as they were supposed to, used their knowledge of the tax code to minimize the taxes on Form 1040. Undisclosed are how much taxes were paid on Forms 1065, 1120, 1041, and others.
If the President is re-elected, I hope that he appoints a public-relations tax accountant to make sure he pays some individual income taxes each year. For example, one of his companies could declare a special distribution or sell a minor asset for a gain. There are countless ways to be tax-positive if your name is Donald Trump. He just has to remember to do it.
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