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Subject: I can't believe I'm defending Trump! rss

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Ben Foy
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Yesterday's big news was Trump declaring $900M+ in losses on his taxes and potentially not paying taxes for 18 years. Assuming Trump really did suffer $900M+ in losses, it is much ado about nothing.

Lets look at an example, Sine Industries lost $100K for a shareholder in 2012 and 2014 but earned $100K in 2013 and 2015. Over those 4 years, Sine Industries made a net profit of $0, should the shareholder pay taxes?

According to tax law as I understand it, the shareholder in the above example can subtract his losses in 2012 and 2014 from his gains in 2013 and 2015. That's all Trump did. He subtracted the 1995 losses from future gains. I'm not sure what is controversial about that.
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Sam I am
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So if I lose my job can I write the loss off on my future tax returns?
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J
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It's a big deal for a few reasons

1. he refuses to release his tax returns

2. he claims that he will fix our broken tax system, yet his tax plan doesn't deal with this tax dodge

3. He's used bankruptcies to escape debt, but hurt shareholders, creditors, employees and contractors

4. this dodge is legal, but it pisses regular people that may have lost their house, job, etc that he can get out if paying taxes but they can't.

he could have made this a strength: release the tax returns, highlight all the various tax dodges, develop a tax plan that gets rid of them all. Bam!
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Richard Keiser

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BFoy wrote:
Yesterday's big news was Trump declaring $900M+ in losses on his taxes and potentially not paying taxes for 18 years. Assuming Trump really did suffer $900M+ in losses, it is much ado about nothing.

Lets look at an example, Sine Industries lost $100K for a shareholder in 2012 and 2014 but earned $100K in 2013 and 2015. Over those 4 years, Sine Industries made a net profit of $0, should the shareholder pay taxes?

According to tax law as I understand it, the shareholder in the above example can subtract his losses in 2012 and 2014 from his gains in 2013 and 2015. That's all Trump did. He subtracted the 1995 losses from future gains. I'm not sure what is controversial about that.


I love when poor people justify the financial acts of someone that lives 1,000,000x better than they do. This is exactly how Repubes have maintained their base so well, because they are rubes that just like to be exploited.
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Wendell
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BFoy wrote:
Yesterday's big news was Trump declaring $900M+ in losses on his taxes and potentially not paying taxes for 18 years. Assuming Trump really did suffer $900M+ in losses, it is much ado about nothing.

Lets look at an example, Sine Industries lost $100K for a shareholder in 2012 and 2014 but earned $100K in 2013 and 2015. Over those 4 years, Sine Industries made a net profit of $0, should the shareholder pay taxes?

According to tax law as I understand it, the shareholder in the above example can subtract his losses in 2012 and 2014 from his gains in 2013 and 2015. That's all Trump did. He subtracted the 1995 losses from future gains. I'm not sure what is controversial about that.


I don't think anybody is saying what Trump did (might have done) is illegal.

But Trump has no record as a politician for anybody to assess or look at. So his qualifications, such as they are, are based on his alleged brilliance as a businessman.

Losing a billion dollars in a year does not seem to be the mark of a brilliant businessman. Especially when losing on casinos!
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David desJardins
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BFoy wrote:
Yesterday's big news was Trump declaring $900M+ in losses on his taxes and potentially not paying taxes for 18 years. Assuming Trump really did suffer $900M+ in losses, it is much ado about nothing.


Of course he didn't really suffer $900M in losses. He probably didn't even have that much, to lose. Real estate provides all sorts of ways to generate paper losses even when you're actually making money.
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Wendell
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DaviddesJ wrote:
BFoy wrote:
Yesterday's big news was Trump declaring $900M+ in losses on his taxes and potentially not paying taxes for 18 years. Assuming Trump really did suffer $900M+ in losses, it is much ado about nothing.


Of course he didn't really suffer $900M in losses. He probably didn't even have that much, to lose. Real estate provides all sorts of ways to generate paper losses even when you're actually making money.


Yep. And curiously, Trump hasn't touched on changing any of THOSE provisions in his (alleged) plan to (allegedly) make the tax system more fair.
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David desJardins
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wifwendell wrote:
Yep. And curiously, Trump hasn't touched on changing any of THOSE provisions in his (alleged) plan to (allegedly) make the tax system more fair.


He's alluded to some changes---to his benefit.

Of course, if you're paying zero then it's not clear how much more benefit you can get.
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jeremy cobert
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darthhugo wrote:
I love when poor people justify the financial acts of someone that lives 1,000,000x better than they do. This is exactly how Repubes have maintained their base so well, because they are rubes that just like to be exploited.


And I love it when you rich Americans vilify someone more successful then you will ever be out of jealousy, even though you live comfortably in the worlds 1% and it is simply waiting for you to get your own slice of the pie.

#first_world_problems
 
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rcbevco wrote:
So if I lose my job can I write the loss off on my future tax returns?

Want a tax break like Trump’s? Good luck with that
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David desJardins
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jeremycobert wrote:
And I love it when you rich Americans vilify someone more successful then you will ever be out of jealousy


Seems to me there's much better reasons to be upset about Donald Trump getting rich(er) off of the benefits of the US system without paying taxes to support it than just jealousy.
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Ben Foy
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darthhugo wrote:
I love when poor people justify the financial acts of someone that lives 1,000,000x better than they do.


Poor??? Hardly. I live a comfortable life and I like to think my board gaming habit means I live better than Trump.
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Daniel Eig
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What I find interesting is that this isn't the worst thing Trump expects us to find in his tax return. If it was... he would've released it after the state taxes were leaked and contained the damage.

The most charitable reason would that that there are... questionable... tax shelters or "creative" accounting that are grey areas he hopes the IRS won't notice (and doesn't want the media pointing out for them to find).
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Ben Foy
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jmilum wrote:
It's a big deal for a few reasons

1. he refuses to release his tax returns

2. he claims that he will fix our broken tax system, yet his tax plan doesn't deal with this tax dodge

3. He's used bankruptcies to escape debt, but hurt shareholders, creditors, employees and contractors

4. this dodge is legal, but it pisses regular people that may have lost their house, job, etc that he can get out if paying taxes but they can't.

he could have made this a strength: release the tax returns, highlight all the various tax dodges, develop a tax plan that gets rid of them all. Bam!


I agree with almost everything you've said. When I mentioned defending Trump, it didn't mean I suddenly lost track of reality. What you call a tax dodge, I consider a reasonable deduction. But I only support the deduction for actual losses.
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Ben Foy
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wifwendell wrote:
BFoy wrote:
Yesterday's big news was Trump declaring $900M+ in losses on his taxes and potentially not paying taxes for 18 years. Assuming Trump really did suffer $900M+ in losses, it is much ado about nothing.

Lets look at an example, Sine Industries lost $100K for a shareholder in 2012 and 2014 but earned $100K in 2013 and 2015. Over those 4 years, Sine Industries made a net profit of $0, should the shareholder pay taxes?

According to tax law as I understand it, the shareholder in the above example can subtract his losses in 2012 and 2014 from his gains in 2013 and 2015. That's all Trump did. He subtracted the 1995 losses from future gains. I'm not sure what is controversial about that.


I don't think anybody is saying what Trump did (might have done) is illegal.

But Trump has no record as a politician for anybody to assess or look at. So his qualifications, such as they are, are based on his alleged brilliance as a businessman.

Losing a billion dollars in a year does not seem to be the mark of a brilliant businessman. Especially when losing on casinos!


You can listen to what he is saying and tell he isn't brilliant.
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Daniel C
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He's just taking advantage of the loop holes and he has said it before. And if you look at Hillary, she did the SAME EXACT THING! She's no better.
 
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David desJardins
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ZeWildStar wrote:
And if you look at Hillary, she did the SAME EXACT THING!


I hope you're joking. Never can tell with the internets. She released her tax returns and her taxes are not zero. Not even close.
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Daniel C
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DaviddesJ wrote:
ZeWildStar wrote:
And if you look at Hillary, she did the SAME EXACT THING!


I hope you're joking. Never can tell with the internets. She released her tax returns and her taxes are not zero. Not even close.


She also took losses as a deduction on her tax forms, in the realm of 650k, make that almost 700k.
 
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David desJardins
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ZeWildStar wrote:
She also took losses as a deduction on her tax forms, in the realm of 650k, make that almost 700k.


You're confused about the difference between k and M?
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Michael Carter
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Is this any different from when he gloated during the primaries about buying politicians?
 
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Eric Knauer
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Informative piece by Bloomberg

https://www.bloomberg.com/view/articles/2016-10-03/trump-s-1...

Quote:
...A few sensible people tried to explain that while the story might have well show that Trump was a bad businessman, it didn’t really show any sort of interesting tax shenanigans. And since we had long known that Trump lost a bunch of money in Atlantic City, a story that has been amply and ably covered by folks like our own Tim O’Brien, it didn’t even really offer much news.

Why did people see scandalous tax avoidance in this case? At issue is the “net operating loss,” an accounting term that means basically what it sounds like: When you net out your expenses against the money you took in, it turns out that you lost a bunch of money. However, in tax law, this has a special meaning, because these NOLs can be offset against money earned in other years. You can use a “carryforward” to offset the losses against income made in future years (as many as 15 future years, under the federal tax law of 1995). You can also use a “carryback” to offset those losses against income you made in past years (three in 1995, which when added to the 15-year carryforward term, gives us the 18 years the Times refers to).

To judge from the reaction on Twitter, this struck many people as a nefarious bit of chicanery. And to be fair, they were probably helped along in this belief by the New York Times description of it, which made it sound like some arcane loophole wedged into our tax code at the behest of the United Association of Rich People and Their Lobbyists. They called it “a tax provision that is particularly prized by America’s dynastic families, which, like the Trumps, hold their wealth inside byzantine networks of partnerships, limited liability companies and S corporations.”

Every tax or financial professional I have heard from about the New York Times piece found this characterization rather bizarre. The Times could have just as truthfully written that the provision was “particularly prized by America’s small businesses, farmers and authors,” many of whom depend on the NOL to ensure that they do not end up paying extraordinary marginal tax rates -- possibly exceeding 100 percent -- on income that may not fit itself neatly into the regular rotation of the earth around the sun.

Take a simple example, offered to me by Joe Kristan, a CPA who writes one of my favorite tax blogs.1 A meatpacking business loses a million dollars in one year, and then the next year it makes a million and a half. Without the ability to carry forward the losses from year one, then over the two years, it would pay perhaps $600,000 worth of state and federal income taxes, on $500,000 worth of actual money that it could spend to pay those taxes.

And did this scenario correspond to real-world clients of his firm? Absolutely, he said; it’s common in commodity businesses, where prices can fluctuate wildly from year to year.

“If someone has a $20 million gain in one year and a $10 million loss in the second year, that person should be treated the same as someone who had $5 million in each of the two years,” says Alan Viard, a tax specialist at the American Enterprise Institute, who like all the other experts, seemed somewhat surprised that this was not obvious.

“There are definitely tax provisions narrowly targeted to various industries that you could take issue with,” says Ron Kovacev, a tax partner at Steptoe and Johnson. “The NOL is not one of them.”

I mean, the Times story is true as far as it goes: Losing $900 million dollars may save you $315 million or so on future or past taxes. But astute readers will have noticed that it is not actually smart financial strategy to lose $900 million in order to get out of paying $315 million to the IRS. Most of us would rather have the other $585 million than a tax bill of $0.

Of course, it would be lovely if you could generate a year’s worth of huge losses in your wildly overleveraged real-estate empire, and then somehow get out of paying your debts, which would leave you a lovely write-off against your suddenly much higher income. The theory that Trump somehow managed to do just that was circulating widely on Twitter yesterday, thanks to a blog post by John Hempton, the chief investment officer of Bronte Capital. The idea seems to be that Trump could have bought his debt for pennies on the dollar, and then parked it in a third-party offshore firm that never collected on it. This theory seemed to have a lot of credibility among folks on social media. Among the tax professionals I spoke to, it had none: the IRS would treat this sort of structure just as it would if a third party had forgiven the debt.

“Look,” says Kovacev, “you put a $900 million loss on your tax return, that’s audit bait. The IRS is going to look into it. The notion that you could just move the money and the IRS wouldn’t ask questions?” There was a sort of incredulous pause before he finally said: “That’s hard to fathom.”

But are there perhaps ways to generate paper losses that could inflate the size of your NOLs? Well, the tax law surrounding real estate development is an arcane and wonderful thing, and it offers more scope for, let us say, artistic interpretation of your income picture than most industries. Those rules gave Trump more scope to, for example, delay paying taxes on any debt forgiveness he got, than he would have if he’d been a manufacturer of stereo equipment.

But ultimately if he got substantial forgiveness, he’d probably eventually have to pay taxes on it, clawing back a lot of the benefit of the NOLs. As Kristan put it: “You have to die to eventually get out of the taxes. And few people are willing to take that step.”

Rich people do manage their income to minimize their taxes, and some of the means they use to do so should probably be written out of the tax code. But the wealthy individual who manages to make a lot of money while paying absolutely no taxes on it is more a creature of myth than reality. That myth, like many myths, has some basis in fact: It used to be eminently possible to do, thanks to loopholes in the tax code that allowed people to take advantage of real estate losses, among other things. Those loopholes, however, were mostly closed by that notorious liberal crusader Ronald Reagan, during the 1986 tax reform package.

If Trump managed to pay no taxes for years, the most likely way he did this was by losing sums much vaster than the unpaid taxes. This is fair, it is right, it is good tax policy. There are many valid indictments of Trump as a candidate and as a businessman. But on the charge of unseemly tax avoidance, if this is all the evidence we have, then the grand jury would have to return … no bill.

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David desJardins
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But ultimately if he got substantial forgiveness, he’d probably eventually have to pay taxes on it, clawing back a lot of the benefit of the NOLs. As Kristan put it: “You have to die to eventually get out of the taxes. And few people are willing to take that step.”

It turns out that "eventually" isn't really that important, because everyone dies eventually. All you have to do is realize your losses now, and push your gains off into the future, and keep doing it forever. And this idea that the IRS would catch you if you weren't completely kosher is complete nonsense. The IRS doesn't have the resources to go after everyone with complex returns, they can enforce the tax law against the little guys who get W-2's, but if you are a real estate mogul there's almost infinite shenanigans you can play.
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Richard Keiser

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jeremycobert wrote:
darthhugo wrote:
I love when poor people justify the financial acts of someone that lives 1,000,000x better than they do. This is exactly how Repubes have maintained their base so well, because they are rubes that just like to be exploited.


And I love it when you rich Americans vilify someone more successful then you will ever be out of jealousy, even though you live comfortably in the worlds 1% and it is simply waiting for you to get your own slice of the pie.

#first_world_problems


Shit... I vilify him, because he is a fucking idiot. I provide that same response for all idiots, across the socio-economic spectrum.
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eknauer wrote:
Informative piece by Bloomberg
Quote:
...some arcane loophole wedged into our tax code...

Fair is fair. If businesses get this sort of treatment, so should ordinary working people. Do they get to carry forward losses? No.

Think of someone who lost his job in the Great Recession. If he takes money out of his IRA, he has to pay penalties. If he takes a loan, he has to pay interest. No way does he get to carry those costs forward into his new job and deduct them, nor is he allowed to restore his IRA to what it would have been without the loan sharks playing in the money pool.
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Richard Keiser

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BFoy wrote:
darthhugo wrote:
I love when poor people justify the financial acts of someone that lives 1,000,000x better than they do.


Poor??? Hardly. I live a comfortable life and I like to think my board gaming habit means I live better than Trump.


Those in the gaming hobby aren't scraping by... it is the majority of his base that have no understanding that they will be the first fodder into the cannon, because they are a lost demographic.
 
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