The Eleven Facts You Should Know About Trump's Fortune
Donald Trump built a business empire and won the presidency of the United States by proclaiming that he is a person who managed to become a billionaire thanks to his own efforts, and has long insisted that his father, the legendary New York builder Fred Trump, practically did not give him any financial aid. "I built what I built myself," the president has said repeatedly.
However, an investigation by The New York Times has revealed that Donald Trump received the current equivalent of at least $ 413 million from his father's real estate empire. In addition, much of that money came to Donald Trump through dubious tax strategies that he was involved in during the 1990s, including cases of blatant fraud, The New York Times discovered.
In all, the president's parents transferred more than $ 1 billion to their children, which would have required them to pay taxes of at least $ 550 million due to the 55 percent gift and inheritance rate that was in effect at the time. . Aided by a variety of tax schemes, the Trumps paid 52.2 million, or about 5 percent, their tax returns show.
The US president declined comment requests for this story for several weeks.
An attorney for Trump, Charles J. Harder, offered a written statement. “There was no fraud or tax evasion on the part of anyone. The facts on which The New York Times bases its false accusations are extremely imprecise, ”he said. "President Trump had almost no involvement with these issues," he continued, saying that the president had delegated those tasks to relatives and tax professionals. "The matters were handled by other members of the Trump family who were not experts and therefore completely depended on the aforementioned certified professionals to ensure that the law was fully complied with."
In a statement from the Trump family, the president's brother, Robert Trump, said: "All appropriate tax returns for gifts and state taxes were filed and required taxes were paid."
Since Donald Trump first refused to release his income tax returns, his campaign and later his presidency have been full of questions about the extent and sources of his fortune, questions that have only intensified with the investigation by the Russian plot. This new journalistic work from The New York Times reveals little about his recent business dealings. But the investigation - based on a vast body of confidential tax returns and financial records, and the thirteen thousand plus words of one of the longest investigative articles published in The New York Times - offers the first comprehensive examination of inherited fortune and wealth. of the tax schemes that guaranteed Trump a life surrounded by luxury.
These are some of the main points of the investigation:
Trumps' tax maneuvers show pattern of deception, tax experts say
The line between legal tax avoidance and illegal tax evasion is often blurred, and tricks abound to avoid paying taxes that have been accepted by the courts or the Internal Revenue Service (IRS) itself; the wealthiest Americans rarely pay anything close to the full tax burden. The Trumps' tax maneuvers received little resistance from the IRS, The New York Times found.
Nonetheless, tax experts briefed on the Times' findings said the Trumps appeared to have done more than exploit loopholes. They said the conduct described here represented a pattern of deception and confusion that repeatedly prevented the IRS from taxing large transfers of wealth from Fred Trump to his children.
Donald Trump started reaping wealth from his father's real estate empire ever since he started walking
In Donald Trump's version of how he became a millionaire, he was the master negotiator who broke free from his father's "tiny" real estate operation in Brooklyn and Queens, and built a $ 10 billion empire that would put the Trump surname in hotels, skyscrapers, casinos and golf courses around the world.
Nonetheless, The New York Times investigation clarifies that at every stage in Trump's life, his finances are intrinsically intertwined with, and dependent on, his father's wealth. At 3 years of age he was earning the current equivalent of $ 200,000 a year from his father's empire. He was a millionaire at 8 years old. In his 40s and 50s, he was making more than $ 5 million a year.
There was a clear pattern to this generosity: When Donald started expensive new projects, Fred Trump increased his help. In the late 1970s, when Donald Trump came to gleaming Manhattan neighborhoods — turning the old Commodore Hotel near Grand Central Terminal into a Grand Hyatt — his father took out numerous loans. When Donald made his first forays into Atlantic City casinos a few years later, his father created a plan to suddenly increase the flow of attendance.
That 'little loan' of a million dollars was actually at least 60.7 million, and most never paid it back
In Trump's books and television shows and in the campaign, a central figure in his mythology has been this: As he began to build his own empire, the only financial help he got from his father was a loan from a a million dollars. Not only that: "I had to pay him with interest," the current president has said.
But The New York Times found that, in fact, Fred Trump loaned his son at least $ 60.7 million, which is equivalent to $ 140 million today. Most of that money was never paid, records show.
Fred Trump wove a safety net that saved his son from one bad investment after another
As the 1980s ended, Donald Trump's biggest bets began to explode - Trump Shuttle (an airline), the Plaza Hotel, the Atlantic City casinos. However, as he was shipwrecked from one financial disaster to another, partnerships and family companies dramatically increased his payments.
Between 1989 and 1992, four of the entities Fred Trump created paid his son the current equivalent of $ 8.3 million. And when Donald Trump begged bankers for an emergency line of credit, he used as collateral the share of shares that his father had given him in a group of residential buildings.
Tax records also reveal that at the most difficult time in Trump's financial troubles, in 1990, his father withdrew an extraordinary amount - nearly $ 50 million - from his empire. Although The New York Times could find no evidence that Fred Trump made any significant debt payments, charitable donations or personal expenses, there are indications that he wished to have cash on hand to rescue his son if necessary.
That's what happened at Trump's Castle when a bonus payment of 18.4 million was due in December 1990. Fred Trump sent a trusted accountant to Atlantic City with checks to buy 3.5 million in casino chips without placing a bet. some. With this strategy - an illegal loan under New Jersey gambling laws, which resulted in a civil penalty of $ 65,000 - Donald Trump narrowly avoided defaulting on his bonds.
The Trumps turned a $ 11 million debt into a legally questionable deduction
By 1987, Donald Trump's debt on loans from his father had grown to at least $ 11 million. If Fred Trump had simply forgiven the debt, his son would have owed millions of dollars in income tax. They found another solution: one that apparently constitutes both an unreported multi-million dollar donation and an illegal tax deduction.
That December, records show, Fred Trump spent $ 15.5 million to buy the equivalent of 7.5 percent of the shares of Trump Palace, his son's condo tower on Manhattan's Upper East Side. Four years later, according to tax returns and financial records, Fred Trump sold those shares for just $ 10,000. The buyer, other documents indicate, was his son.
According to tax experts, with the successful sales of the Trump Palace condos, selling 15.5 million stock to your son for a small portion of the value is a multi-million dollar gift under IRS rules. However, Fred Trump's tax returns show no such donation to Donald Trump. What they do reveal is that he used the transaction to declare a huge deduction. That apparently violates federal tax law that prohibits deducting any loss from the sale or exchange of property between family members.
In total, Fred Trump avoided paying about $ 8 million in gift tax and $ 5 million in income tax for the transaction.
Father and son decided to create the myth of the self-made billionaire
In all, the Times documented 295 different sources of income that Fred Trump created over five decades to channel resources to his son.
But the partnership between Donald Trump and his father went beyond seeking and preserving wealth. They also teamed up on a more ambitious project: creating the myth of Donald J. Trump, the self-made billionaire. If Fred Trump was the silent partner who helped finance the accumulation of wealth, it was Donald Trump who turned it into a seductive narrative.
A symbol of that dynamic is the Trump Tower, the icon that established Donald Trump as a major actor in New York. Fred Trump's money helped build it. His son recognized and exploited his iconic power in both The Apprentice and his presidential campaign.
Donald Trump tried to change his father's will when he was ill, sparking a family crisis
In December 1990, Donald Trump sent his father a document that left him angry and alarmed. It was a codicil that sought to make various changes to Fred Trump's will. Among them: strengthening the provisions that established Donald Trump as the sole executor of his estate. But amid Trump's financial turmoil - this happened in the month of the $ 3.5 million bailout of Trump's Castle - Fred Trump feared this document would put his life's work at risk. He feared that his son could use the empire as collateral to save his own failed businesses, according to statements collected years later during a family dispute.
Fred Trump rejected the move and refused to sign the codicil. But the episode sparked a family judgment: Fred Trump was getting old and sickly. Without quick intervention he could die and leave behind a vast estate: not just his real estate empire, but also tens of millions of dollars in cash, vulnerable to 55 percent inheritance tax.
So, with Donald Trump playing a central role, the family formulated a plan that included unorthodox tax strategies that experts told this newspaper were legally dubious and, in some cases, appeared to be fraudulent.
The Trumps created a company to get money out of the empire
The first major component was creating a company called All County Building Supply & Maintenance. On paper, All County was Fred Trump's purchasing agent, purchasing everything from furnaces to cleaning supplies. But All County was, in fact, a company that existed only on paper: documents and interviews show that it was a vehicle to extract money from Fred Trump's empire simply by marking purchases already made by his employees. Those millions in purchases, which were like tax-free giveaways, then went to the owners of All County: Donald Trump, his siblings and a cousin of his.
Lee-Ford Tritt, a leading tax law expert at the University of Florida, said Trump's use of All County was "highly suspicious" and could constitute tax fraud. "It certainly looks like a gift in disguise," he said.
All County also turned out to be inconvenient for Fred Trump's tenants. The company used the altered bills to justify rent increases in regulated buildings, documents show.
Harder, the president's attorney, challenged the Times reports: "If the Times declares or implies that President Trump participated in fraud, tax evasion or any other crime, he will expose himself to substantial liability and defamation damages."
Trump's parents evaded hundreds of millions of dollars in gift taxes by undervaluing the assets they would pass on
With the cash coming out of Fred Trump's empire, the Trumps began transferring some of the property to Donald Trump and his siblings. The instrument they created to do that was a retained annuity trust, also known as a GRAT.
The purpose of a GRAT is to transfer wealth through various family generations without paying 55 percent of the estate tax. Trump's parents had to pay gift taxes based on a crucial number: the market value of Fred Trump's empire. But the Times found evidence that they dodged hundreds of millions of dollars in gift taxes by filing tax returns that underestimated assets placed in two GRATs, one for each parent.
Fred Trump's 1995 tax return stated that the twenty-five apartment complexes and other properties in the trusts were worth just $ 41.4 million. The implausibility of this statement would be cleared up in 2004, when banks valued the same real estate at nearly $ 900 million.
"They play around with valuations in an extreme way," said Tritt, the tax law expert, who was briefed on the findings from the Times. "There are dramatic fluctuations depending on your purpose."
Harder, the president's attorney, said: "All estate matters were handled by licensed attorneys, licensed intellectual property attorneys and licensed real estate appraisers who strictly adhered to all laws and rules."
After the death of Fred Trump, the most valuable asset of his empire was an IOU from Donald Trump
When Fred Trump died in June 1999 at the age of 93, most of his empire was nowhere to be found in his estate, demonstrating the success of the tax strategies devised by the Trumps in the early 1990s. the nineties. The largest item on his tax return was a $ 10.3 million IOU from Donald Trump, money his son appears to have borrowed the year before his death. As for the remnants of the empire left in Fred Trump's estate, the tax return cited assessments that once again underestimated his market values.
As executors for his father, Donald, Maryanne, and Robert Trump were legally responsible for the accuracy of his tax return. They were required not only to provide the IRS with a complete accounting of the value of his estate assets, but also to disclose all the taxable gifts that Fred Trump had made during his lifetime. Tax experts say that if they knew something was wrong and did not disclose it, they could have violated tax law.
Harder, the president's attorney, defended the tax returns filed by the Trumps. "The tax returns and tax positions that the Times attacks were now examined in real time by the relevant tax authorities," he said. "These issues have been resolved for more than a decade."
Donald Trump had a stroke of luck when the empire was sold, but he probably didn't sell well
In 2003, once again in financial trouble, Donald Trump began to engineer the sale of the empire that Fred Trump dreamed would always remain in the hands of the family. The sale, completed in 2004, brought him the biggest profit he ever made from his father: his share was $ 177.3 million, about $ 236.2 million today.
But it turned out that, at the time, the banks valued the empire at hundreds of millions of dollars more than the asking price. Donald Trump, a master negotiator, sold his father's legacy cheap.
