When prosecutors in New York finally investigate the federal tax returns of former President Donald J. Trump, they will find a real guide to getting rich while losing millions of dollars and paying little or no income tax.
However, whether they find evidence of crimes will also depend on other information not found in the actual returns.
The United States Supreme Court on Monday opened the way for Manhattan’s attorney Cyrus R. Vance Jr. to file eight years of the federal income tax returns and other records of Mr. Trump to obtain from his accountants. The ruling limited a lengthy legal battle over prosecutors’ access to the information.
The New York Times last year more or less gave a preview of what happened to Mr. Vance waits, when he returns decades of income tax data for Mr. Trump and his companies acquired and analyzed. The tax records offer an unprecedented and very detailed look at the Byzantine world of Mr. Trump’s finances, which he has been bragging about for years and trying to keep secret.
The Times’ investigation revealed that the former president reported hundreds of millions of dollars in business losses, spent years without paying federal income tax and had an Internal Revenue Service audit of a $ 72.9 million tax refund he made a decade ago claimed.
The records revealed, among other things, that Mr. In his first year as president, Trump paid only $ 750 in federal income taxes and no income taxes at all in ten of the previous 15 years. They also showed that between 2010 and 2018, he wrote off $ 26 million in ‘consulting fees’ as a business expense, some of which was apparently paid to his older daughter, Ivanka Trump, while she was a salary of the Trump Organization.
The legality of the fees, which have reduced Trump’s taxable income, has since been the subject of Mr. Vance’s investigation, as well as a separate civil investigation by Letitia James, the attorney general in New York. Mrs. James and Mr. Vance is a Democrat, and Mr. Trump has tried to portray the multiple queries as politically motivated, while denying any wrongdoing.
Mr. Vance’s office has issued summonses and interviews over the past few months as it investigates a variety of financial matters, including whether the Trump organization misrepresented the value of assets while obtaining loans or paying property taxes, as well as the payment. of $ 130,000 in silent money. during the 2016 campaign to Stephanie Clifford, the pornographic film actress with the stage name Stormy Daniels. Among the interviews were employees of Deutsche Bank, one of Mr. Trump’s biggest money lenders, added.
Despite all their revelations, the tax records of Mr. Trump also noted for what they do not show, including any new details about the payment to Ms. Clifford, who was the first focal point of the investigation of Mr. Vance when it started two years ago.
The tax returns represent a self-reported accounting of income and expenses, and they often lack the required specificity to know, for example, if legal costs related to payments are claimed as amortization, or if money from Russia is ever claimed by Mr. Trump’s bank accounts are moving. The absence of the degree of detail underscores the potential value of other records to which Mr. Vance gained access with the Supreme Court ruling Monday.
In addition to the tax returns, Mr. Trump’s accountants, Mazars USA, also set business records on which the returns are based, and communicate with the Trump organization. Such material can provide important context and background for decisions that Mr. Trump or his accountants took while preparing to file taxes.
John D. Fort, a former head of the IRS Division of Criminal Investigation, said tax returns are a useful tool for discovering clues, but can only be understood with additional financial information obtained elsewhere.
“This is a very important personal financial document, but it’s just one piece of the puzzle,” said Mr Fort, a CPA and director of investigations with Kostelanetz & Fink in Washington. “What you find in the return should be followed up with interviews and subpoenas.”
Yet The Times’ investigation into Mr. Trump’s proceeds expose a number of misleading allegations and lies he has spread about his wealth and business acumen.
Numerous claims from mr. Trump on generous philanthropy has fallen apart after examining his tax returns, which has raised questions about the amount of certain donations and the general nature of his tax-deductible donation. For example, $ 119.3 million of the approximately $ 130 million in charitable deductions he has claimed since 2005 appears to be the estimated value of promises not to develop real estate, sometimes after a planned project has expired.
It is known that at least two of these rural charitable deductions, one related to a golf course in Los Angeles, and the other a Westchester estate called Seven Springs, are part of the civil investigation by Ms. James, who is investigating whether ratings that support the tax write-offs have been inflated.
More generally, the tax records showed how the disclosures he submitted as a candidate and then as president presented a distorted picture of his overall finances by reporting glowing figures for his golf courses, hotels and other businesses based on gross income which they collected every year. . The actual conclusion, after losses and expenses, was gloomier: In 2018, while Mr. Trump’s public filing showed $ 434.9 million in revenue, declaring his tax returns a total of $ 47.4 million in losses.
And such awful numbers were not an anomaly. Mr. Trump’s many golf courses, a core component of his business empire, reported losses of $ 315.6 million from 2000 to 2018, while revenues from licensing his name to hotels and resorts nearly dried up when he entered the White House. In addition, Mr. Trump has hundreds of millions of dollars in loans, many of which he personally guaranteed, which will be due in the next few years.
The Times’ investigation also found that he was facing a potentially devastating IRS audit, focusing on the large repayment he demanded in 2010, which covers all the federal income tax he paid from 2005 to 2008, plus interest. Mr. Trump has repeatedly cited the ongoing audit as the reason he could not release his tax returns, after initially saying he would do so, although nothing about the audit process prevented him from doing so.
Should an IRS decision eventually go against him, Trump could be forced to repay more than $ 100 million, taking into account interest and possible fines, in addition to about $ 21.2 million in state and local tax refunds that based on the figures in its federal documents.
Russ Buettner and Susanne Craig contribution made.