How does anyone lose at least 26,537% of current years business income?
Before we are able to answer the #915 million dollar question, I would like you to understand why this IS such a big deal. First that is not a good business person, as he claims he is, in my books!
I want people to see exactly how Trump is not paying taxes and uses his bankruptcies to actually benefit him personally. I want you to be informed before you vote, I have lots of facts and backed up to articles and more. I worked in accounting for 20 years. I am not an expert in taxes but I have enough of a background to be able to try to understand how Trump can get away without paying taxes. We first have to go over basics of where the numbers come from on his return.
The image above is a copy of his IT-201, which is either a city or state tax return for 1995. The original can be found HERE. Of course line 15 jumps out at everyone. But there are a couple of things I wanted to point out:
- Wage income is only $6,108 – he did not have hardly any income from wages.
- Interest income – 7,386,825 – yes it is huge.
- Business Income – 3,427,,092 again he has a lot of companies that he must have liabilites for also.
- How does anyone lose at least 26537% of current years business income? Yes you read that number correctly! (-909,459,915 / 3,427,092) 26537%. At the current business income rate he could work for 265 years before it was all taken care of (they only allow 20 years).
So that you can understand where the numbers on the return go above is the instructions about how the numbers must match the Federal return for the same year. HERE are the instructions. So we know the same amounts on this form are the same as his federal return let’s find instructions for line 15.
So the main line is 15 so let’s take a look at where this comes from – see form Other Income. Again HERE are the instructions.
So that takes us to the Federal return. The form can be found HERE. Other income is line 21 on the Federal return.
There are other things that can go in line 21 per the instructions but this is the one that fits his situation the best. Find the full instructions HERE.
So as you read through the directions the one that most fits it the last one, Net Operating Loss – carry forward or cancelled debt. It can be carried back for up to 5 years and forward up to 20 years.
This is how it ties back to the bankruptcies his business filed. He was into the first bankruptcy personally more than any of the other times. He learned not to be personally involved.
In this article, they show how Trump changed his ownership of property and risk involved, over the years. From Forbes 4/29/2011
He did take a personal hit the first time around: he’d financed the construction of the Trump Taj Mahal with junk bonds and was unable to pay the high interest. His business was in the red, and so was he, to the tune of about $900 million in personal debt. By the mid-90s, he’d reduced most of that debt, selling his Trump Princess yacht, his Trump Shuttle airline, and his stake in a handful of other businesses. More importantly, he stopped guaranteeing debt with his own wealth. “The first bankruptcy was the only time his personal fortune was at stake,” said Ted Connolly, a Boston bankruptcy lawyer who used Trump as model for getting out of debt in his book The Road Out Of Debt: Bankruptcy and Other Solutions to Your Financial Problems. “He learned from it. He’s insulated.”
With each bankruptcy proceeding, Donald Trump’s stake in the casinos and hotels in Atlantic city that bear his name has decreased. In the first Trump Taj Mahal bankruptcy, he handed over 50% equity to bondholders in return for favorable interest rates. In 2004′s Chapter 11 filing, his stake was reduced to 25%. During wranglings with bondholders immediately before the 2009 bankruptcy, Trump resigned from the board of Trump Entertainment Resorts; his equity stake is now 5%, with another 5% in warrants.
Atlantic City lawyer Viscount doesn’t believe Donald Trump himself should be held accountable for any of his company’s bankruptcies — his creditors, he said, knew what they were getting themselves into when they lent Trump money over and over again. “They’re all big boys and girls,” he said. “They’ve all played this game before, in the insolvency space. The company that possessed his name filed bankruptcy because it was overleveraged. What does that tell you? People want to lend him money. He does grandiose things with it.” (If we are overleveraged, such as the housing crisis, we are stuck with it or file personal bankruptcy)
Icahn lawyer Weisfelner doesn’t place blame for these corporate bankruptcies with creditors, and questions whether Trump’s companies have used Chapter 11 the way its creators intended.
“There’s such a thing as good faith,” he said. “The purpose of bankruptcy laws is to protect companies, their customers and employees, to give them a second chance and to treat claim holders fairly. If bankruptcy is used instead to artificially elevate your equity interests above legitimate creditor claims and avoid obligations then you could argue that’s not what the laws were designed to do.”
According to Snopes HERE they put together a great list that comes closer to the number Trump deducted above, which would be a carry forward from around 1991.
Trump Taj Mahal (1991): The Trump Taj Mahal casino in Atlantic City opened in 1990, with Trump financing the completion of its construction with $675 million in junk bonds at 14% interest. By the following year the casino itself was in debt to the tune of $3 billion, while Trump himself owed some $900 million in personal liabilities.
In order to keep the Taj Mahal afloat, Trump struck a deal with his lenders in which he gave up half his ownership share and equity in the casino, sold his Trump Shuttle airline and his Trump Princess 220-foot yacht, and agreed to a bank-set limit on his personal spending in exchange for a lower interest rate and additional time to make his loan payments.
#2 and #3) Trump’s Castle and Trump Plaza Casinos (1992): Less than a year after the Taj Mahal bankruptcy Trump filed for Chapter 11 protection again for two more Atlantic City hotel-casinos, the Trump Plaza and Trump’s Castle, over their inability to make principal and interest payments on bonds. The Plaza ($550 million in debt) and the Castle ($338 million in debt) were competing against each other, as well as against the Taj Mahal, and Trump gave up a 50% share in exchange for more favorable terms on the debts.
#4) Trump Plaza Hotel (1992): Donald Trump filed for bankruptcy protection a third time in 1992 over the Trump Plaza Hotel on New York’s famous Fifth Avenue, overlooking Central Park in midtown Manhattan. Once again, Trump gave up a 49% stake in the property to secure more favorable terms from lenders on the luxury hotel’s debt of more than $550 million.
Mr Trump is allowed to take deductions from partnerships, limited-liability companies, and S corporations. Depending on the type of business, these also allow Trump not to be affected by the company’s bankruptcy status, but still take the losses against other income, for years to come.
According to this article on abcnews dated 4/21/2011 Trump is quoted:
“I’ve used the laws of this country to pare debt. … We’ll have the company. We’ll throw it into a chapter. We’ll negotiate with the banks. We’ll make a fantastic deal. You know, it’s like on ‘The Apprentice.’ It’s not personal. It’s just business,” Trump told ABC’s George Stephanopoulos.
John Pottow, a bankruptcy expert and law professor at the University of Michigan, said banks would often agree to lose millions in reorganizations like Trump’s to prevent the massive losses they would incur if they foreclosed on the property.
LoPucki said it was very unusual for anyone to have that many large businesses go through bankruptcy. Most of the debt Trump incurred was through bonds that were sold to the public.
“People knew who Donald Trump was and for that reason were willing to trust the bonds, and they got burned,” LoPucki said. “The people who invested with him or based on his name lost money, but he came out pretty well.”
Read the above line again – yes he came out fine after bankruptcy but not the people who invested in him, including banks. Just his companies could have been a big part of the banking problems the rest of us have had to face.
“Here’s a guy who’s failed so miserably so many times and it’s not as though he had to claw his way back after seven years in credit hell. He just said. ‘OK, this isn’t my problem anymore.’ For him, it’s just been a platform to the next money-making scheme,” said Dough Heller, the executive director of Consumer Watchdog.
You see, all four of Donald Trump’s bankruptcies were the Chapter 11 type. Each resulted from over-leveraged casino and hotel properties in Atlantic City.
He has admitted to being the King of Debt – this is how, this is how he takes our money, from taxes, or investments, and makes him richer. How will that translate to anything better for the United States, it won’t.
Believe me I understand a business person taking all the deductions available, but he has turned his debt into our problem. The real problem is the tax laws and he wants people like himself to pay less taxes? Who will make up the difference, you and I will.
HERE is another article on Trump’s bankruptcy:
Ted Connolly, a Boston Bankruptcy attorney who studied Trump for his book The Road Out of Debt: Bankruptcy and Other Solutions to Your Financial Problems, told TheStreet in an August interview that the first bankruptcy was a learning experience for Trump.
“The first business bankruptcy, he had a lot of personal liabilities, guarantees on the business debt, which would have wiped him out,” Connolly said. “What he did was leverage the amount of business debt to negotiate away his personal liability. And from that, he learned not to put his personal wealth at risk anymore. And so in the next three, he didn’t have any personal guarantees.”
Another article about how he brags about how well the companies come out of bankruptcies.
Donald Trump brags about how well his businesses have fared in bankruptcy. And in fact, no major U.S. company has filed for Chapter 11 more than Trump’s casino empire in the last 30 years.
Despite high profile examples, including General Motors(GM), Lehman Brothers and most of the nation’s major airlines, fewer than 20% of public companies with assets of $1 billion or more have filed for bankruptcy in the last 30 years, according to data from Bankruptcy.com and S&P Capital IQ.
Trump has never filed for personal bankruptcy. But he has filed four business bankruptcies, which Bankruptcy.com says makes Trump the top filer in recent decades. All of them were centered around casinos he used to own in Atlantic City. They were all Chapter 11 restructurings, which lets a company stay in business while shedding debt it owes to banks, employees and suppliers.(This is people just like us)
While searching I found an article that was scary. If Trump wants a property that you do not want to sell, he convinces (bribes) officials to condemn your property, then he goes in and buys it cheap. See the article HERE on The New American.
HERE on snopes is a list of Trump’s business projects that have failed.
GoTrump (online travel site)
Trump: The Game
Trump Ice (bottled water)
The New Jersey Generals (pro football team)
Tour de Trump (bicycle race)
Trump Network (nutritional supplements)
Trumped! (syndicated radio spot)
Before you vote this year remember what happened when Republicans could not get all the crap they wanted into the budget, interest rates rose, and our creditworthiness as a country went down. This effects each and everyone of us in different ways. If Trump has his way we will default on our debts and become a whole different country, that is not a good one! Trump is wrong for business and really wrong for the United States.
I realize everyone has a different political opinion than I do. I welcome your comments but please do not criticize my choices, I welcome a debate, but I do not want to hear “that is just main stream media”. These are facts. I will be writing another article on the other things I dislike about Trump.
Clearly there is not a perfect candidate during any campaign, but we do not need someone who along with all his other issues, is a terrible business person and the only changes he will make is to make himself better, not the rest of us in the real world!