Trump's 1040 - $900,000,000.00 Loss?

[zeros]

I thought I saw on TV the loss on page one of his 1040. Shouldn't it be a -3,000 loss deductible. Would the loss on the casinos be a C corporation loss? Did he consider his stock worthless and deducted it. Comments?

[TAXNJ]

I thought I saw on TV the loss on page one of his 1040. Shouldn't it be a -3,000 loss deductible. Would the loss on the casinos be a C corporation loss? Did he consider his stock worthless and deducted it. Comments?

What you think you saw vs. what it maybe with only 1 page of the tax return does not give you all the info you need. You will have to understand what type of loss it was. The 3k you may be thinking is a capital loss vs. NOL.

So you might want to read up on the difference between the two type of losses for your answer.

[David1980]

It would have been an NOL, the federal AGI was -915,729,293. Part of the AGI was a -3,000 capital loss so there was probably a capital loss carryforward as well.

The NY times article I read only had three pages, all state forms. Page 1 of NY IT-201, page 1 of CT CT-1040 NR/PY, and page 1 of NJ 1040-NR. I agree that we don't have enough information to know all the info needed to understand the loss. For all we know the return was audited and the full amount disallowed. Or consumed by COD income the following year. Or ... a lot of potential options. For lack of a current Trump tax return release the news folks seem to have decided to make the best of what they could find.

[ATSMAN]

It would have been an NOL, the federal AGI was -915,729,293. Part of the AGI was a -3,000 capital loss so there was probably a capital loss carryforward as well.

The NY times article I read only had three pages, all state forms. Page 1 of NY IT-201, page 1 of CT CT-1040 NR/PY, and page 1 of NJ 1040-NR. I agree that we don't have enough information to know all the info needed to understand the loss. For all we know the return was audited and the full amount disallowed. Or consumed by COD income the following year. Or ... a lot of potential options. For lack of a current Trump tax return release the news folks seem to have decided to make the best of what they could find.

I am sure Mr. Trump has competent accountants but the mistake he made was being smug and saying that he is "smart" to pay less in taxes! It is all in the optics when you run as a politician instead of being a smart businessman. He could have handled it much better by explaining to the voters how our tax laws work giving a simple example. If he had NOL it would be total incompetence if he did not carry backwards or forwards to write off that loss under the code. If people don't like the current tax laws then vote for politicians who will change it! BTW I am an independent who is still undecided!

[kathyc2]

IRS doesn't have stats for 95 returns on site, but the 1996 total NOL claimed was 54B. So, one person had 2% of the total NOL of the entire country. Yowza!

[JohnH]

I'm thinking the "smart" person was actually the tax preparer.

[DaveO]

In my thinking Trump missed a great opportunity to segue into a discussion of taxpayers’ rights. How a person with top notch tax help can legally avoid taxes but the average guy is left to defend himself on a very un-level field. I would have talked about restoring 4th and 5th amendment rights to taxpayers in controversy with the IRS. After all shouldn’t a taxpayer under audit have the same rights as someone accused of murder?

[kathyc2]

I'm thinking the "smart" person was actually the tax preparer.

The preparer is making the interview rounds stating exactly that! LOL!

[TAXNJ]

IRS doesn't have stats for 95 returns on site, but the 1996 total NOL claimed was 54B. So, one person had 2% of the total NOL of the entire country. Yowza!

Same tax strategies that Warren Buffet uses along with many businesses. Question becomes, if you were in a position to take advantage of what is legal with the tax code, would you? Tough decision?

Some may ask why APPLE keeps its $181B Cash overseas!

There are many LEGAL tax strategies people and businesses use that many people are not aware of (but also entitled to). If you were in the same position what would you do? Again, tough decision?

Bottom line is if your client is entitled to a capital loss or a NOL, what do,you advise them to do? Take it or disregard it? This should be a no brainer with Tax Professinals.

Time to get back to answering Oroginal Poster's question.

[Rapid Robert]

I am sure Mr. Trump has competent accountants but the mistake he made was being smug and saying that he is "smart" to pay less in taxes!

Losing a billion dollars to save less than half of that in taxes does not sound very smart to me.

[TAXNJ]

Losing a billion dollars to save less than half of that in taxes does not sound very smart to me.

Will you share how you avoided your billion dollar loss?

[kathyc2]

Ethics questions

Not saying this is going to happen, but there is speculation from some corners of the internet that a 2015 return will be released not taking all deductions to make it look better for the public. Questions:

1) If the firm did this knowing the reason would they not be in violation of professional ethics?
2) If #1 is not a violation would amending later to claim deductions be a violation?
3) If a different firm later files an amended would they be in violation of ethics by knowing why deductions were not claimed on original return?

My opinion is that it would be similar to not claiming all deductions to make income look better for the purpose of getting a loan.

[JohnH]

The preparer is making the interview rounds stating exactly that! LOL!

Would that be a Circular 230 violation?

[TAXNJ]

Not saying this is going to happen, but there is speculation from some corners of the internet that a 2015 return will be released not taking all deductions to make it look better for the public. Questions:

1) If the firm did this knowing the reason would they not be in violation of professional ethics?
2) If #1 is not a violation would amending later to claim deductions be a violation?
3) If a different firm later files an amended would they be in violation of ethics by knowing why deductions were not claimed on original return?

My opinion is that it would be similar to not claiming all deductions to make income look better for the purpose of getting a loan.

Why speculate? There may be internet speculation that the preparer has destroyed the records. There may be internet speculation that the DOJ will give immunity.

From a tax perspective isn't it better to wait until the information is released to make professional comments? Then you may be able to answer your own questions.

[kathyc2]

Why speculate? There may be internet speculation that the preparer has destroyed the records. There may be internet speculation that the DOJ will give immunity.

From a tax perspective isn't it better to wait until the information is released to make professional comments? Then you may be able to answer your own questions.

You're trying your best to turn this partisan, but it's a legitimate ethics question. Especially #3. If we amend a return, what responsibility do we have to ascertain for what purposes the original return was used? I never really thought of it before, but in theory a person could take less expenses on original return for loan purposes and then come to one of us for an amended return to lower tax.