Trump's tax dodge wasn't 'smart'—it was a billion dollar cheat

By Mark Sumner
Tuesday Nov 01, 2016 · 8:01 AM EDT

The ‘proof’ that Donald Trump is a business genius? He lost a billion dollars and survived to buy more gaudy crap than anyone this side of Tsar Nicholas. Only, as it turns out, that billion dollar loss doesn’t prove that Trump is a wily comeback artist. It proves that he’s one of the biggest tax cheats in history.

Donald J. Trump proudly acknowledges he did not pay a dime in federal income taxes for years on end. He insists he merely exploited tax loopholes legally available to any billionaire — loopholes he says Hillary Clinton failed to close during her years in the United States Senate. ...

But newly obtained documents show that in the early 1990s, as he scrambled to stave off financial ruin, Mr. Trump avoided reporting hundreds of millions of dollars in taxable income by using a tax avoidance maneuver so legally dubious his own lawyers advised him that the Internal Revenue Service would most likely declare it improper if he were audited.
When Trump’s incredibly foolish scheme to park three casinos in Atlantic City failed, partners and banks walked away from hundreds of millions in investments and loans. When they forgave Trump’s debt, all of that forgiveness should have shown up in Trump’s taxes, dollar for dollar, not as loss, but as income.

Only Donald Trump didn’t report it as income. At the same time investors were hurrying to get away from their unfortunate brush with Trump, Donald Trump was reporting their forgiveness as his personal loss.

“Whatever loophole existed was not ‘exploited’ here, but stretched beyond any recognition,” said Steven M. Rosenthal, a senior fellow at the nonpartisan Tax Policy Center who helped draft tax legislation in the early 1990s.
Donald Trump used that phantom loss to avoid paying any taxes for the next 18 years.

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http://www.dailykos.com/stories/2016/11/1/1589473/-Trump-s-tax-dodge-wasn-t-smart-it-was-a-billion-dollar-cheat