How the Trumps bilked the IRS out of hundreds of millions in taxes on their real estate empire: NYT report

Fred Trump disguised gifts to his children to dodge 55% tax

National /
Oct.October 02, 2018 07:15 PM

President Donald Trump (Credit: Getty Images)

President Donald Trump and his family engaged in a series of elaborate schemes, some potentially illegal, over several years to avoid paying taxes on the late Fred Trump’s estate, according to a New York Times analysis of the family’s financial records.

The Times’ investigation also found that Donald Trump received at least $413 million in today’s dollars from his late father over several decades, undercutting his claim that he is a self-made man.

In one instance in 1987, the report said Fred Trump bought a stake in Donald Trump’s Upper East Side condo development, Trump Palace, worth $15.5 million.

Four years later, Fred Trump sold the stake for just $10,000, according to financial statements. Those statements do not indicate who the buyer of the stake was, but other records — including an affidavit from Donald Trump — show that it was sold to his son. The deal essentially equated a $15.49 million taxable gift, but Fred Trump never reported it to the IRS and did not pay taxes on it. That would have amounted to a 55-percent tax on gifts, or $8 million, according to the report.

In 1992, the Trumps set up the company All County Building & Supply Maintenance in an apparent bid to funnel money from Fred Trump to his children without having to pay the 55-percent gift tax, according to the Times. The four children, including Donald Trump, each owned 20 percent of the company, which would pay contractors and suppliers for building maintenance as an intermediary, according to the Times.

But All County charged Fred Trump’s business a drastically inflated price, records show. The difference between the inflated bills it sent to Fred Trump and those it paid to suppliers were the equivalent of substantial cash gifts, according to the Times, but Fred Trump never paid gift taxes on them.

The late Trump also used the inflated bills from All County to justify raising rents in rent-stabilized properties, pointing to supposedly costly capital improvements.

“All of this smells like a crime,” Adam Kaufmann, a partner at law firm Lewis Baach Kaufmann Middlemiss and former chief of investigations for the Manhattan District Attorney, told the Times. He said that although the statute of limitations has since passed, such actions would have called for an investigation into the defrauding of tenants and tax fraud.

And in the mid-1990s, the Trumps used friendly appraisals to lower the taxable value of Fred Trump’s properties when he moved them into a trust for the benefit of his children. The maneuver potentially saved President Trump’s family hundreds of millions of dollars in gift taxes, according to the Times.

The Trumps’ appraiser, Robert von Ancken, concluded at the time that a portfolio of 25 apartment complexes and other properties were worth $93.9 million. In his 1995 tax filings, Fred Trump put the value at $41.4 million, and the Internal Revenue Service settled on $57.1 million. The Trump children sold the properties for $737.9 million in 2004.

Donald Trump’s attorney Charles Harder told the Times that should the publication, “state or imply that President Trump participated in fraud, tax evasion or any other crime, it will be exposing itself to substantial liability and damages for defamation.” [NYT] — Konrad Putzier


Related Articles

arrow_forward_ios
Make Greenland Great Again? Trump wants to buy Arctic territory

Make Greenland Great Again? Trump wants to buy Arctic territory

Make Greenland Great Again? Trump wants to buy Arctic territory
Hamptons’ priciest summer rental to host MAGA extravaganza next month

Hamptons’ priciest summer rental to host MAGA extravaganza next month

Hamptons’ priciest summer rental to host MAGA extravaganza next month
Photo illustration of Sen. Brad Hoylman, who championed the pied-à-terre tax. (Getty)

Pied-à-terre tax revenue estimate slashed by 41%

Pied-à-terre tax revenue estimate slashed by 41%
 Robert Morse, executive chairman of Bridge Investment Group, one of the major Opportunity Zone investors focusing on real estate.  (Bridge, Stanford)

Opportunity Zone investments got a boost in 2020

Opportunity Zone investments got a boost in 2020
Kirk Goodrich, president of Monadnock Development, is opposed to the bill sponsored by Bran Lander. (Getty, Monadnock Development)

Council bill favoring nonprofits for affordable housing will hurt minority-led firms: developers

Council bill favoring nonprofits for affordable housing will hurt minority-led firms: developers
Sen. Charles Schumers aid President-elect Joe Biden agreed to assist NYC. (Getty)

NYC loses $2.5B in property taxes, gets $1B from FEMA

NYC loses $2.5B in property taxes, gets $1B from FEMA
President-elect Joe Biden's relief plan focuses on the coronavirus and opening schools. (Getty)

Biden’s $1.9T package would extend eviction ban, boost rent relief

Biden’s $1.9T package would extend eviction ban, boost rent relief
House republicans Kevin McCarthy, Blaine Luetkemeyer and Steve Scalise have all received more than $100,000 from real estate PAC donations. (Getty)

Real estate trade groups reconsider donations after Capitol unrest

Real estate trade groups reconsider donations after Capitol unrest
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...