Wasn't Trumps tax loss just to offset the income from the loans forgiven from the banks

vanity | 10/4/2016 | sharkhawk

[sharkhawk]

Simple question for other Freeper CPA's. Didn't Trump receive large loan write offs from the banks during the Atlantic City bankruptcy? Wouldn't those loan write offs count as income to Trump, and wouldn't the loss offset the income received from those loan write offs? So there would be no way that the 916 million was written off over 18 years? Why do you think Trump hasn't come out and said this? Does he just not want to go into his taxes?

[sharkhawk]

I must have worded this wrong, because that was my point. There was no carry forward of the loss, the loss offset the “income” received from the loan write offs.

[freeandfreezing]

I believe that it is the banks that receive those write-offs, not Trump, for they are the ones that suffered losses.

That would be correct. The original poster also misunderstands the difference between business losses, the effects of a bankruptcy, and what happens when a loan is forgiven.

When a loan is forgiven, the net amount forgiven is a gain to the debtor, and hence income. It is a matching loss to the creditor.

In bankruptcy, in general, the amount of debt discharged is not considered income, but it does represent a loss for the creditor. This makes sense from a public policy point of view. If discharged debt was considered income then the broke debtor would exit bankruptcy with a huge debt to the government, re-creating the same situation the bankruptcy was intended to cure.

Without knowing exactly what led to the losses reported by Trump it is hard to know what the source of the losses was.

The whole issue is ridiculous. Anyone who has net losses, either in a tax year, or a tax year where the losses can be carried forward (or back) doesn't owe taxes, because under our law we tax "income" not "losses"

[dynoman]

Trump said Turnberry in Scotland was built with cash flow - ZERO debt. It would not surprise me Trump is in a position to do that a lot now, build with cash flow and no debt.

[t4texas]

To the extent that a taxpayer is currently solvent, debt forgiveness does create taxable income. In the case of insolvency, however, that is not necessarily the case. This is because debt forgiveness creates income for tax purpose only to the extent that it makes the taxpayer solvent.

Example: Taxpayer A is currently insolvent in the amount of $100,000 and owes a debt of $150,000. If the entire debt of $150,000 is forgiven, then Taxpayer A would recognize $50,000 in income for tax purposes due to the fact that he or she would then be solvent to the extent of $50,000.

By definition bankruptcy proceedings typically involve an insolvent individual, corporation, etc. Depending on the facts and circumstances, there is usually some discharge, forgiveness, or reduction of debts owed by the bankruptcy estate. It is common knowledge that Donald Trump has gone through these proceedings multiple times and I expect this was the scenario as it relates to the question in your post.

[thorvaldr]

Nobody is saying that anything Trump did was illegal. If you don’t like the ridiculously complicated tax laws, change the ridiculously complicated tax laws. If he followed the law, you simply can not blame him for any of it.

[Redmen4ever]

I notice that lots of people take deductions and so forth. It is not only allowed. Congress, in working these so-called loopholes into the law, means to encourage certain things.

Bill Gates moved something like $50 billion of unrealized capital gains into a tax-exempt trust foundation. Ditto Warren Buffet. These people did what Congress wants them to do.

General Electric pays no federal income tax because it generates all the tax credits needed to off-set its tax liability. It is doing what Congress wants it to do.

The trouble is our tax code has become nothing but loopholes, leaving the ordinary taxpayers of the country stuck with the bill.

I supported Ted Cruz during the primary in part because he supported tax reform. Getting rid of almost all the deductions. Taxing income once, at the source, at a relatively low rate; and, replacing the S.S. tax with a VAT in part to protect American jobs and business, because it would tax imports the way other countries already tax our exports. Rand Paul had a very similar proposal. And, Jeff Sessions, a comparable proposal. The Bush administration and Paul Ryan had or have proposals that are kind of mid-way between the current mess and the proposals of Cruz, Paul and Sessions.

One of the reasons I am supporting Donald Trump is because he’s a Republican, and we Republicans know we need to overhaul our tax system, although we disagree among ourselves as to how much we would want to do if we had the votes, and how much we can do now with the votes we have.

Another reason is because Trump knows in his gut that the system is rigged against ordinary people, and used for the advantage of the rich and powerful, the multinational banks and corporations, in other words, just the way the Bushes and the Clintons and their donors want it.

[Raycpa]

The income from debt relief would decrease current year losses and carryover losses. So no, debt relief would not have any direct connection to the loss.

First, it is unclear what the deduction for 9 billion was for. A safe assumption is that it is carryover losses. Losses on real estate are not uncommon when the developer is accumulating properties and creating properties. The reason is depreciation. The owner can write off part of his investment each year and using certain component depreciation rules some parts of the building can be written off in as little as 3 years.

I assume these losses occurred over time as Trump accumulated his real estate portfolio. If he is consistently reinvesting his profits he may still have a YUGE loss carryforward for tax purposes. Once he slows down his investing the taxable income will come roaring in and use up those losses quickly.

From a tax planning aspect the amount of the loss he has could be a nightmare. There is a 20 year clock in which he needs to use it or lose it. If he continued generating (paper) losses from his real estate there is a real concern he might lose those benefits. I assume his subsequent tax planning included a plan to create profits on investments by selling low basis properties to generate taxable gains. It is also a waste of the benefit to drag out the use of the loss. Using a loss today has much more value than using the loss 20 years later.

I also assume the fact that he is under audit for most of the current years that this loss has been used up for some time. Otherwise the IRS has little to gain by adjusting his current years income. The tend not to waste resources.

[Dilbert San Diego]

But the bottom line, is that the tax returns of his businesses are filed separately from his personal tax returns. He does not included his businesses in his personal tax filings. That is the whole purpose of incorporating, to shield personal finances from liabilities of the business(es) ventures.

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This is an important point which is lost in all the noise on this Trump tax business.

Every business entity owned by Trump, and Trump personally, need to file tax returns.

If Trump were to fully release all tax returns, the liberals would cherry pick certain business entities which showed losses, or pick apart how certain Trump businesses are incorporated, or pick on some aspect of the business structures to make their half assed political statements.

I hope that some discussion of all of this occurs, namely, that there is a difference between Donald Trump’s personal tax returns for Trump as an individual, and tax returns for the various businesses he’s owner/part owner/partner in.

[Mollypitcher1]

The ONLY thing the democrats want to do with Trumps tax returns is to stir greed and envy that he makes a lot of money and shoulda paid more of it in taxes

No facts. No sane discussion, is warranted here - it is a no-win issue
We will be electing a president in just over 30 days and there are serious issues to discuss

Btw Trump surrogates should make this go viral
“ do you prefer a guy who lost $1 billion of his own money - or a woman who while Secretary of State, lost $6 billion of YOUR money? “
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Agreed! Furthermore, I and I’m sure many others DO NOT CARE ABOUT TRUMP’S TAXES one way or the other. The enormous list of crimes which are attributed to Clinton are the IMPORTANT things to talk about. Most should be concentrating on : “Where is the future of our country going?”
Benghazi alone should disqualify Hillary and put her in prison along with all her other cohorts in crime, Obama included!