Tax Return Tuesday #9 - Trump Tax Returns

Happy tax return Tuesday! Over the holiday weekend, the long-awaited Trump tax returns were made public...

I can’t pass up on the perfect opportunity to highlight some of our Tuesday tax return tips for family lawyers.

As expected, a review of the tax returns leads to more questions than answers because many of Trump’s investments are held in passthrough entities (partnerships, SCorps, trusts and LLCs).

In the 2020 tax return, you will see hundreds of line items of income for tax purposes being “passed through” to Trump. These are net figures, and since we don’t have the tax returns, or books and records for each of those entities, we cannot tell what specific income and expenses comprise the totals for each passthrough company.

The reason Trump had a loss of $4.8 million in 2020 is because of the $15.6M loss from passthrough entities. But since we don’t have the information on actual distributions and the entities themselves, this $15.6M is inconclusive in determining what Trump’s TRUE income is. Remember, income doesn't equal cash flow.

The $15.6M loss is a tax purposes figure, which is impacted by depreciation and other charges. Real estate investors and developers often fund their lifestyle with distributions (often financed by debt), which is not considered income for tax purposes.