If there’s one thing Donald Trump has always excelled at when it comes to his business career, it’s taking on massive amounts of debt he used to further his real estate empire. Over the decades, Trump borrowed billions of dollars to finance his construction projects. Some of them panned out and made money. Many, however, were gigantic failures and left him on the brink of financial collapse.
But one of those loans Trump has claimed on his taxes for years appears to have been little more than a ruse he’s leveraged in order to avoid paying taxes, according to a blockbuster report from Mother Jones:
“According to tax and financial experts, the loan, which Trump has never fully explained, might be part of a controversial tax avoidance scheme known as debt parking. A Mother Jones investigation has uncovered information that raises questions about the very existence of this loan, presenting the possibility that this debt was concocted as a ploy to evade income taxes—a move that could constitute tax fraud.”
Could that be one of the main reasons Trump doesn’t want anyone to see his taxes? And could he be under audit as he claims because the IRS is investigating whether or not they want to bring fraud charges against him and the Trump Organization?
The $50 million loan is alleged to have been used for a project located in Chicago:
“Trump claims he bought a debt related to his Chicago venture, but neither of the two loans associated with this property appear to have been purchased. The Deutsche Bank loan was refinanced. The Fortress debt, according to sources with knowledge of the transaction, was canceled. And this raises a question: Did Trump create a bogus loan to evade a whopping tax bill on about $48 million of income?”
Trump has steadfastly refused to reveal who he bought the loan from, and the Trump Organization said it would not answer questions about the business deal in question.
Under IRS rules, if a debt is forgiven, it counts as taxable income. For example: If a lender accepts a payment of $50 million on a $100 million debt and forgives the rest, the person who was excused from that repayment has to list the write-off as taxable income. The tax rate could be as high as 39 percent. Unless of course, you park the debt. Here’s how that works:
“Big-time borrowers have devised a tactic to forestall paying taxes in cases in which they’re able to buy back their debt at a discount. They purchase the debt through a corporation, parking the loan within this entity to temporarily avoid realizing income.”
The bottom line: If Trump parked the debt and didn’t count it as income, he has committed tax fraud, and that’s exactly what the House Ways and Means Committee is looking into.
Also, Trump could be on the hook in New York, where he lives and his business is located. Even if the IRS refuses to seek a prosecution, authorities in New York can and most likely will. As New York Attorney General Letitia James has noted when asked about the possibility of tax fraud:
“My office takes any allegations of significant tax fraud seriously. No one is above the law—not even the president of the United States.”
Time for the Trump the grifter to pay the piper for his many crimes.