Trump Voters Don't Seem To Mind That He's A Swindler—Or Just Write All The Examples Off As Fake News

Trump Cheated The US Out Of $100 Million On Just One Project

Normally we talk about what it will take to persuade conservative-leaning and moderate swing voters to recognize what Trump is and abandon him and his MAGA Movement. But is there anything that would get the quintessential MAGAt to abandon Trump? You know, lower middle-class, rural white QAnon losers who actually believe that the 2020 election was stolen, that COVID is a bioweapon from China, and that the J-6 riot was the work of Antifa. You know what I mean, the people who feel like they’re being displaced by communities of color, by feminists and gays and by immigrants… and who hate educated people the way Pol Pot did in Cambodia. Anyway, the answer is “no.” Nothing is going to move them away from Trump or their MAGA identities. They are aggressively delusional and we’re stuck with them.

Yesterday, normal people were aghast and mortified if they read the ProPublica report on the latest Trump IRS audit. It isn’t the kind of thing that a MAGAt would both spending 2 seconds on— “fake news.” Señor T “used a dubious accounting maneuver to claim improper tax breaks from his troubled Chicago tower, according to an IRS inquiry uncovered by ProPublica and the New York Times. Losing a yearslong audit battle over the claim could mean a tax bill of more than $100 million.”

Oil-rich Baku is a cesspool of corruption— a perfect milieu for the Trump crime family. He built a 33 story Trump Tower there that I visited in 2016. It was in a weird part of town with no foot traffic at all. And it wasn’t easy to get to by car either. It opened and closed very quickly and was a colossal flop. His shady Azerbaijani partners burned it down for the insurance money. He did something similar in Chicago, a skyscraper with no foot traffic, hard to get to and a colossal failure. Instead of burning it down, though, he just cheated the IRS and his investors… quintessential Donald J. Trump.

The 92-story, glass-sheathed skyscraper along the Chicago River is the tallest and, at least for now, the last major construction project by Trump. Through a combination of cost overruns and the bad luck of opening in the teeth of the Great Recession, it was also a vast money loser.

But when Trump sought to reap tax benefits from his losses, the IRS has argued, he went too far and in effect wrote off the same losses twice.

The first write-off came on Trump’s tax return for 2008. With sales lagging far behind projections, he claimed that his investment in the condo-hotel tower met the tax code definition of “worthless,” because his debt on the project meant he would never see a profit. That move resulted in Trump reporting losses as high as $651 million for the year, ProPublica and The Times found.

There is no indication the IRS challenged that initial claim, though that lack of scrutiny surprised tax experts consulted for this article. But in 2010, Trump and his tax advisers sought to extract further benefits from the Chicago project, executing a maneuver that would draw years of inquiry from the IRS. First, he shifted the company that owned the tower into a new partnership. Because he controlled both companies, it was like moving coins from one pocket to another. Then he used the shift as justification to declare $168 million in additional losses over the next decade.

The issues around Trump’s case were novel enough that, during his presidency, the IRS undertook a high-level legal review before pursuing it. ProPublica and The Times, in consultation with tax experts, calculated that the revision sought by the IRS would create a new tax bill of more than $100 million, plus interest and potential penalties.

Trump’s tax records have been a matter of intense speculation since the 2016 presidential campaign, when he defied decades of precedent and refused to release his returns, citing a long-running audit. A first, partial revelation of the substance of the audit came in 2020, when the Times reported that the IRS was disputing a $72.9 million tax refund that Trump had claimed starting in 2010. That refund, which appeared to be based on Trump’s reporting of vast losses from his long-failing casinos, equaled every dollar of federal income tax he had paid during his first flush of television riches, from 2005 through 2008, plus interest.

The reporting by ProPublica and The Times about the Chicago tower reveals a second component of Trump’s quarrel with the IRS. This account was pieced together from a collection of public documents, including filings from the New York attorney general’s suit against Trump in 2022, a passing reference to the audit in a congressional report that same year and an obscure 2019 IRS memorandum that explored the legitimacy of the accounting maneuver. The memorandum did not identify Trump, but the documents, along with tax records previously obtained by The Times and additional reporting, indicated that the former president was the focus of the inquiry.

…The outcome of Trump’s dispute could set a precedent for wealthy people seeking tax benefits from the laws governing partnerships. Those laws are notoriously complex, riddled with uncertainty and under constant assault by lawyers pushing boundaries for their clients. The IRS has inadvertently further invited aggressive positions by rarely auditing partnership tax returns.

…Beyond the two episodes under audit, reporting by The Times in recent years has found that, across his business career, Trump has often used what experts described as highly aggressive— and at times, legally suspect— accounting maneuvers to avoid paying taxes. To the six tax experts consulted for this article, Trump’s Chicago accounting maneuvers appeared to be questionable and unlikely to withstand scrutiny.

“I think he ripped off the tax system,” said Walter Schwidetzky, a law professor at the University of Baltimore and an expert on partnership taxation.

…[As the project turned into a financial disaster] Trump defaulted on his loans and sued his lenders, characterizing the financial crisis as the kind of catastrophe, like a flood or hurricane, covered by the “force majeure” clause of his loan agreement with Deutsche Bank. That, he said, entitled him to an indefinite delay in repaying his loans. Trump went so far as to blame the bank and its peers for “creating the current financial crisis.” He demanded $3 billion in damages.

…If the IRS prevails, Trump’s tax returns would look very different, especially those from 2011 to 2017. During those years, he reported $184 million in income from “The Apprentice” and agreements to license his name, along with $219 million from canceled debts. But he paid only $643,431 in income taxes thanks to huge losses on his businesses, including the Chicago tower. The revisions sought by the IRS would require amending his tax returns to remove $146 million in losses and add as much as $218 million in income from condominium sales. That shift of up to $364 million could swing those years out of the red and well into positive territory, creating a tax bill that could easily exceed $100 million.

The only public sign of the Chicago audit came in December 2022, when a congressional Joint Committee on Taxation report on IRS efforts to audit Trump made an unexplained reference to the section of tax law at issue in the Chicago case. It confirmed that the audit was still underway and could affect Trump’s tax returns from several years.

That the IRS did not initiate an audit of the 2008 worthlessness deduction puzzled the experts in partnership taxation. Many assumed the understaffed IRS simply had not realized what Trump had done until the deadline to investigate it had passed.

“I think the government recognized that they screwed up,” and then audited the merger transaction to make up for it, Jackel said.

The agency’s difficulty in keeping up with Trump’s maneuvers, experts said, showed that this gray area of tax law was too easy to exploit.

“Congress needs to radically change the rules for the worthlessness deduction,” Schwidetzky said.