Right now the question a lot of economists and tax lawyers are talking about is how Donald Trump could have taken a nearly billion-dollar loss shown on his 1995 tax return and still manage to stay in business. Some competing theories are:
1) Trump used a quirk of the law regarding S corporations at the time to put a paper loss in value (depreciation of casinos that WERE worth $X and now are worth $X-$1billion) onto his own books.
2) It’s actually a fake loss wherein debts are written down (which would normally be income but not for real estate investors thanks to a tax break only investors get) and sold to a shell company overseas controlled by Donald Trump for pennies on the dollar, and then Donald paid himself back his debt over the next decades, counting it as an expense for his domestic income and funneling money tax fee into an offshore slush account. This one is actually illegal, but hard to detect and a lot of rich people have done it. Money laundering, y’all!
In any event, it makes Trump’s refusal to release his tax returns even more fishy. Note that an audit is no reason to release your tax returns. In fact, an audit *removes* a reason to release your tax returns — one reason to not release your tax returns is that you don’t want to be audited! So is Trump hiding the illegal money laundering scam in his tax returns? Or is there some other smoking gun there? I can only speculate, since Trump refuses to release them.
– Badtux the Taxing Penguin