In 1995, Donald Trump was in the midst of a spending spree. He had recently bought a 727 jet for personal use, added a skyscraper to his Manhattan real estate portfolio and snapped up properties in Telluride, Colo., and Palm Beach, Fla., financial records show.
That same year, he said he had negative $916 million in “federal adjusted gross income,” a claim that gave him the prospect of avoiding federal income taxes for years to come.
So how could he be thriving and avoiding taxes at the same time?
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The disclosure also raises new questions about the degree of Trump’s personal financial involvement in the Trump Organization’s first four bankruptcies. Though he has repeatedly drawn a distinction between the company’s bankruptcies and his personal finances, the tax documents indicate he may have used losses stemming from his bankruptcies to benefit his personal fortune.
The U.S. tax code allows filers to write off their losses, known as net operating losses, for the year they occurred, and apply them to tax claims for the two years before and as many as 15 years afterward.
Trump’s campaign said in a statement, “Mr. Trump is a highly skilled businessman who has a fiduciary responsibility to his business, his family and his employees to pay no more tax than legally required.”
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By 1990, his casinos, hotel and other assets had piled up more than $3 billion in debt, according to a confidential document produced at the time by Kenneth Leventhal & Co., which was retained by Trump during his financial crisis. Trump had personally guaranteed $832 million of that amount on the casinos alone, according to New Jersey Casino Control Commission documents.
In August 1990, unable to pay interest on his loans, Trump persuaded his bankers and bondholders to extend the terms of his loans and agree not to hold him personally responsible until 1995. Still, his three casinos, Trump’s Castle, Plaza and Taj Mahal, as well as his Plaza Hotel in New York, sought bankruptcy protection in 1991 and 1992.
In each of the casino bankruptcies, Trump gave up 50 percent of his equity to lenders, a stake that could have been worth more than $1 billion, according to a Washington Post review of the Leventhal accounting and regulatory documents.
In the early 1990s, Trump began telling a story that he included in an interview for a Fortune magazine piece, in The Post and in his book “Trump: The Art of the Comeback.” As he told it, Trump walks past a panhandler on the street near Trump Tower and stops to remark on his own plight.
“He’s a beggar, but he’s worth about $900 million more than me,” the book quoted Trump as saying.
The Full Story (October 3, 2016)
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