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How Trump Paid $0 in Income Tax in 2020

(A hill) — Donald Trump paid no income tax during the final year of his presidency, according to his tax returns, which have been turned over to a congressional committee and are due to be released within days.

Although he received nearly $11 million in interest from investments on top of his salary of nearly $400,000, Trump paid no income taxes because he also reported $16 million in losses from his real estate business . That loss put the former president nearly $5 million in the red for 2020.

This means that he had no taxable income and paid no income tax.

This pattern of high investment returns offset by high business losses continues in all the tax returns obtained and released by a House committee as part of a broader report on the presidential audit system of the IRS this week.

In 2019, Trump reported $20 million in investment income, offset by $16 million in real estate losses.

His investment income was offset by $11 million in business losses in 2018, $16 million in 2017 and more than $76 million in 2015.

All of these losses stem from one large loss of more than $105 million reported by the Joint Committee on Taxation in 2015, which was itself part of a $700 million loss dating back to 2009.

Tax experts say that by distributing these mega-straits, Trump has reduced his tax liability each year, ensuring that he never received an excessive bill from the IRS.

“Trump has not paid taxes for years. How does he do it? Through losses. Using the losses as a shelter,” Steve Rosenthal, a tax analyst at the Urban-Brookings Tax Policy Center who has testified to Congress on Trump’s taxes, said in an interview.

Other tax experts said it was wrong to describe Trump as a tax shelter user, arguing that he suffered real losses.

“His old losses are not ‘tax shelters.’ These were the losses he incurred, which are listed from year to year. If he never took the loss, he wouldn’t be able to take it,” Steve Goldburd, a tax attorney and partner at the Goldburd McCone law firm in New York, said in an interview.

Goldburd noted that while Trump did not pay income taxes in 2020, the former president paid his estimated taxes while repatriating some of his compensation from previous years.

“He consistently pays estimated taxes,” Goldburd said. “Three million [dollars] in 2020 plus $10.6 million in 2019. In 2019, it was $700,000 plus $9.8 million over the previous year.”

Goldburd said the losses in the real estate world that building owners like Trump face may not even be because the buildings are losing money, but because of maintenance costs that can be written off as depreciation.

“As a real estate professional, [Trump] has the right to assume these losses,” he said. “These losses could be from actual losses, but more likely from real estate depreciation expenses. These entities may not actually be losing money, but actually have depreciation that wipes out the partnership’s income.”

Trump is not accused of breaking the law by using his business losses to shield his income from tax liability.

But Trump’s approach to paying taxes, which he has likened to sports, along with accounting practices that exempt him from the tax burden most Americans face, are raising broader questions about the Internal Revenue Code.

“These problems are much bigger than Donald Trump. Trump’s income is likely similar to that of many other rich people who cheat on their taxes — hundreds of partnership interests, highly questionable deductions, and debts that can be shifted to wipe out tax liability,” Senate Finance Committee Chairman Ron Wyden (D- Ore.). said in a statement on Wednesday.

“Legislation is needed to simplify the Tax Code, especially in the field of partnership,” he said. “Ending the games that wealthy tax cheats play with their partnerships will be a priority going forward.”

Wyden has legislation he says would close partnership loopholes to simplify the tax code, but insiders warn of institutional forces in Washington that could mobilize to block initiatives like this.

“There are voters in every crevice,” Rosenthal said. “So often no one protects the interests of society. There’s just a whole bunch of constituent interests, and they can be bought off pretty easily.”

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How Trump Paid $0 in Income Tax in 2020

(A hill) — Donald Trump paid no income tax during the final year of his presidency, according to his tax returns, which have been turned over to a congressional committee and are due to be released within days.

Although he received nearly $11 million in interest from investments on top of his salary of nearly $400,000, Trump paid no income taxes because he also reported $16 million in losses from his real estate business . That loss put the former president nearly $5 million in the red for 2020.

This means that he had no taxable income and paid no income tax.

This pattern of high investment returns offset by high business losses continues in all the tax returns obtained and released by a House committee as part of a broader report on the presidential audit system of the IRS this week.

In 2019, Trump reported $20 million in investment income, offset by $16 million in real estate losses.

His investment income was offset by $11 million in business losses in 2018, $16 million in 2017 and more than $76 million in 2015.

All of these losses stem from one large loss of more than $105 million reported by the Joint Committee on Taxation in 2015, which was itself part of a $700 million loss dating back to 2009.

Tax experts say that by distributing these mega-straits, Trump has reduced his tax liability each year, ensuring that he never received an excessive bill from the IRS.

“Trump has not paid taxes for years. How does he do it? Through losses. Using the losses as a shelter,” Steve Rosenthal, a tax analyst at the Urban-Brookings Tax Policy Center who has testified to Congress on Trump’s taxes, said in an interview.

Other tax experts said it was wrong to describe Trump as a tax shelter user, arguing that he suffered real losses.

“His old losses are not ‘tax shelters.’ These were the losses he incurred, which are listed from year to year. If he never took the loss, he wouldn’t be able to take it,” Steve Goldburd, a tax attorney and partner at the Goldburd McCone law firm in New York, said in an interview.

Goldburd noted that while Trump did not pay income taxes in 2020, the former president paid his estimated taxes while repatriating some of his compensation from previous years.

“He consistently pays estimated taxes,” Goldburd said. “Three million [dollars] in 2020 plus $10.6 million in 2019. In 2019, it was $700,000 plus $9.8 million over the previous year.”

Goldburd said the losses in the real estate world that building owners like Trump face may not even be because the buildings are losing money, but because of maintenance costs that can be written off as depreciation.

“As a real estate professional, [Trump] has the right to assume these losses,” he said. “These losses could be from actual losses, but more likely from real estate depreciation expenses. These entities may not actually be losing money, but actually have depreciation that wipes out the partnership’s income.”

Trump is not accused of breaking the law by using his business losses to shield his income from tax liability.

But Trump’s approach to paying taxes, which he has likened to sports, along with accounting practices that exempt him from the tax burden most Americans face, are raising broader questions about the Internal Revenue Code.

“These problems are much bigger than Donald Trump. Trump’s income is likely similar to that of many other rich people who cheat on their taxes — hundreds of partnership interests, highly questionable deductions, and debts that can be shifted to wipe out tax liability,” Senate Finance Committee Chairman Ron Wyden (D- Ore.). said in a statement on Wednesday.

“Legislation is needed to simplify the Tax Code, especially in the field of partnership,” he said. “Ending the games that wealthy tax cheats play with their partnerships will be a priority going forward.”

Wyden has legislation he says would close partnership loopholes to simplify the tax code, but insiders warn of institutional forces in Washington that could mobilize to block initiatives like this.

“There are voters in every crevice,” Rosenthal said. “So often no one protects the interests of society. There’s just a whole bunch of constituent interests, and they can be bought off pretty easily.”

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