In Search of the Perfect Investment

Donald Trump’s taxes (or more precisely lack of them) disturb me. I pay taxes. He doesn’t.

I have lost money on deals. But I never got the tax benefits Donald did.

When I lost money, my losses were taken as capital losses which could only be applied against my capital gains — not against my ordinary income. Trump seems to be able to apply all his capital losses against his ordinary income. I don’t know exactly how he does this, except that in reading of the $916 million, I found this:

Congress made this particular tax dodge possible by treating real estate professionals different from other taxpayers. Developers like Mr. Trump are allowed to use their real estate losses to offset income from activities unrelated to real estate. In Mr. Trump’s case that would include earnings from “The Apprentice” and money made from selling steaks and neckties. By contrast, under federal law, doctors, lawyers and others with real estate losses can use them to offset only real estate income.

 In all my readings of the Donald’s $916 million loss, this piece is best:

Normally, any part of a loan that is forgiven becomes taxable income, as millions of people who could not repay home mortgages or student loan debt have learned in recent years.

That’s where Section 108 comes in. Three years after Trump bested his bankers, Congress amended that section to let real-estate professionals avoid income taxes on debts that were canceled.

The technique is simple. The taxes due immediately because a debt is forgiven can be exchanged for relinquishing future real-estate tax deductions. Trump agreed to forgo his future right to take about $1 billion worth of depreciation on his casino hotels.

This exchange created a future problem for Trump. Real estate that cannot be depreciated is worth a lot less. Indeed, generous tax benefits drive real-estate investment. So while Trump escaped an immediate income-tax bill, the future tax benefits he gave up would mean that he would likely have to pay income taxes on his salary, fees for licensing his name, and other income.

To solve this problem, Trump sold stock for the first time in 1995. He founded Trump Hotels and Casino Resorts, which which then took ownership of his casino hotels.

In the first debate with Hillary Clinton, Trump did not dispute her statement that he pays no income taxes. Instead he said it shows he is smart.

That may be, but it also suggests the rest of us are chumps for paying our taxes while Trump enjoys all the benefits of the United States government – little things like individual liberty, the FBI, and a military to protect us – while bearing none of the burden. If we all did as Trump does, we would, to quote a line Trump employs often, not have our country anymore.

Just three pages of tax forms, years of assiduously following Trump and a deep knowledge of tax law allowed me to determine how he almost certainly arranged to escape income taxes for years while he stuck others with the bill. Now imagine what voters could learn if I had just one complete Trump tax return – or years of his Form 1040s and Schedules A through E. It would be possible then to evaluate his unverifiable claims that he is a modern Midas worth more than $10 billion.

A complete tax return for 1995 would also make it possible to determine if Trump followed the law, as a statement he issued asserts, or misreported figures to inflate his tax savings.

Trump has been found more than once to have used two sets of figures to short others and benefit himself.

Keep in mind that we know Trump engaged in sales tax fraud, as I detail in my book “The Making of Donald Trump.”

Earlier this year I revealed badges of fraud on Trump’s 1984 income-tax returns.

Under oath, his own tax lawyer and accountant disowned the return.

Then there’s Trump’s role in authorizing an alleged quarter-billion-dollar income-tax fraud on profits from the Trump SoHo in Manhattan. Hotel financing was said to involve an Icelandic firm associated with one of the many Russian oligarchs whom Trump has said have paid him tens of millions of dollars and are among his best customers.

Trump’s full tax returns would help us understand how deeply he is involved with the oligarchs, whose fortunes and even lives depend on maintaining friendship with Vladimir Putin, the murderous Russian autocrat whom Trump goes out of his way to praise at every opportunity. Trump’s full tax returns would also tell us about his debts to the Bank of China, owned by the communist rulers in Beijing, and his many deals with Middle East potentates and their retainers.

Knowing how much leverage these foreign power brokers have on Trump is highly relevant since he wants to become commander in chief and possess the powers of federal law enforcement.

What I distilled from just three pages of Trump tax documents – together with other reporting – provides Congress with ample reasons to investigate Trump’s finances, especially the way the tax code can be abused to cheat others and enjoy tax-free living.

Trump, who demands that Congress press investigations into his opponent over personal emails, surely could have no complaint about the use of federal tax dollars to investigate his finances. After all, while a federal investigation into Trump’s conduct will cost us some of our income-tax dollars, it wouldn’t cost Trump a penny.

Pulitzer Prize winner and recipient of an IRE medal and the George Polk Award, David Cay Johnston is author of five books. His new book, “The Making of Donald Trump,” was published on August 2, 2016. His next one will be “The Prosperity Tax: A New Federal Tax Code for the 21st Century Economy.” Johnston is a Distinguished Visiting Lecturer at Syracuse University College of Law and Whitman School of Management, and also writes for The Daily Beast and Tax Notes.

This essay first ran in The Daily Beast.

Pandas are cuddly, but not to each other. They muster about as much enthusiasm for sex as a human does for a root canal.

In part because of those lousy libidos, the world’s giant panda population is disturbingly small. A sign at the Chengdu Research Base of Giant Panda Breeding in Sichuan Province says that “saving the giant panda from extinction is of the utmost urgency” – but the urgency isn’t felt by the pandas.

Why are they so un-frisky? Chinese scientists have been studying that question for decades, with an eye toward fomenting fornication. (China owns all of the world’s pandas, including the few that have been born abroad to parents lent out for hefty fees to foreign zoos.)

Panda biology is part of the problem. Females enter estrus only once a year, for a very short time in the spring. They are receptive and fertile for just 24 to 72 hours. A male panda needs to make his move then, or wait for another whole year. “There is perhaps no mammal that is less often in the mood for sex than the female giant panda,” Scientific American said in a 2012 article.

Pandas are also picky: They only want to get down when they have really hit it off with a partner, and that rarely happens.

Captivity is a real mood-killer, too. According to the director of one research center in Sichuan, less than 5 percent of male pandas in captivity can naturally mate. Other researchers say captive female pandas are often unable to enter estrus normally.

In response, Chinese scientists have tried to alter the captive pandas’ habitats to better simulate life – and libido – in the wild.

And then there’s the innocence problem. Panda sex happens so infrequently that the act is almost never witnessed by other pandas, leaving them with very little notion of how to go about it, researchers say.

In hopes of cluing them in, scientists have taken to showing them “panda porn.”

Wonderful ad for a Glashutte watch:

It’s a dig at the new Apple Watch, which now has a GPS chip in it.

The Second Affair

A middle-aged couple had two beautiful daughters but always talked about having a son.

They decided to try one last time for the son they always wanted.

The wife got pregnant and delivered a healthy baby boy.

The joyful father rushed to the nursery to see his new son. He was horrified at the ugliest child he had ever seen.

He told his wife ‘There’s no way I can be the father of this baby. Look at the two beautiful daughters I fathered! Have you been fooling around behind my back?’

The wife smiled sweetly and replied ‘No, not this time!’

Harry Newton who increasingly fears a Donald Trump presidency for the reasons USA Today laid out and which I reproduced in last Friday’s blog. (Click here.) After I emailed my column out, I had some extra thoughts:

USA Today’s position is mine also. But USA Today said it more eloquently than I could.

I differ with them on one point: I think we all should vote for Hillary — even though she’s not perfect. We need to vote for Hillary as an insurance that Donald doesn’t become our President.

Trump as President would be a major disaster for my adopted country, and the country I lived in and loved for 50 years. (I came in 1967.) I’ve watched too many populist leaders become democratically elected and then proceed to destroy their country. Because of our “checks and balances,” (our three branches of government), an American President has (theoretically) less power than in countries like Iran, Venezuela, Cuba, Zimbabwe, Russia, Turkey, the Philippines, Burma, Saudi Arabia, Bahrain, Kuwait, Sudan, Belarus, Syria, etc. But an American President is commander in chief of our military. Using their military is how leaders in those countries cement their power, become dictators, destroy freedom and hurt their economies.

I’m worried. Trump is clearly unstable. Please read the USA Today piece again. Click here. And don’t vote for Donald.