Monday, October 3, 2016
Ezra Klein wonders on vox.com.
If you sustain real capital losses, you can apply those losses to cancel out future income/profits and reduce your tax liability. But if your losses are canceled out by debt forgiveness, the debt forgiveness is counted as income. That cancels out the losses that would provide you with the tax benefit. In other words, you can't have your cake and eat it too.
But there are many ways to be crafty and end up with both - some of those may simply be aggressive and sleazy and others may be clearly illegal. Bigly. The most obvious way would be to create some new business entity which you technically continued to owe vast sums of money to but which never actually tried to collect - in other words, you 'park' your debt somewhere it will never be heard from again. Any place on the spectrum would go a long, long way to explaining both Trump's abject refusal to release his tax returns and almost perennial audits.
The question is: did Trump really lose almost $1 billion of his own capital in a single year? He definitely took a bath in Atlantic City. So maybe he did. But that number at least strains credulity, especially given how he was subsequently able to recover.
This may be just the first hint of something quite a bit bigger than a momentary political embarrassment.
Posted by Ballard Burgher at Monday, October 03, 2016