Let’s see now, a former US senator who knows how Congress passes tax laws, shouts unnecessarily (microphones notwithstanding), counting on the ignorance of her audience.
“Duplicitous” is the apt description of this fiery rhetoric she delivers, as if Trump has done something wrong, sinister, diabolic, & deplorable with his taxes, when she knows better. But she knows it just works; why not stir up angry emotions?
The billion-dollar loss on Trump’s 1995 tax return is a real loss of money, & perfectly legal. Using past business losses to offset future profits is a given & it makes perfect sense. This law has been in effect, with periodic modifications, since the Great Depression of the 1930’s.
Every tax law must come from Congress & be signed by the president. Every one of Donald Trump’s tax returns has been scrupulously audited & accepted by the IRS. Anything they may have found that does not comply with the law, they adjusted to conform. Nothing was allowed that was not legal; no law was broken.
Few people know the complexity of the tax laws congress passed. But, most people know that they can deduct mortgage interest, medical expenses, and certain other personal expenses. No one I know forgoes those deductions, or refuses to accept tax credits. I believe it is pernicious, irresponsible & wildly ignorant to brand approved behavior as evil & elitist
Businesses are not always profitable, (i.e. Sales – Costs = Profit/Loss). Even if some years are bad, others must be good; otherwise the business fails. The government allows business to look at their profits & losses over several years. For example:
Joe & Mary Remodeling Co experiences a loss in 2008 during the financial & real estate crash.
2008 – Income was $ 150,000 and employees, suppliers, equipment, outgo was $250,000, a loss of $100,000. This included the business share of payroll taxes, (employers match the Social Security & Medicare taxes withheld from paychecks). Joe & Mary had to borrow $100,000 to keep their doors open. They also had to borrow money for living expenses that year.
- The $100,000 loss is “carried forward.”
- Joe & Mary owe $100,000 +.
Things get worse in 2009; they cut expenses to $100,000, but income was only $75,000, a loss of $25,000, which they borrow. They also borrow enough for personal living expense.
- The $25,000 loss is added to the previous year’s $100,000 and $125,000 is “carried forward.”
- Joe & Mary owe $125,000++
Things brighten in 2010; income is $125,000 with expenses of $75,000, a profit of $50,000.
The tax law allows them to use $50,000 of the “carried forward” losses from 2008 ($100,000) and 2009 ($25,000) to offset the 2010 profit.
- $50,000 is subtracted for the $125,000 loss “carried forward.”
- The remaining $75,000 of their losses is “carried forward.”
You can read the IRS instructions & explanations here: https://www.irs.gov/pub/irs-pdf/p536.pdf
Bankruptcy & Unpaid Debts
Joe & Mary still owe the money they borrowed ($125,000 plus living expenses)
If Joe & Mary could not repay the debts, & claimed bankruptcy, the amount of debt not paid is deducted from the amount of loss they could “carry forward.” https://www.irs.gov/taxtopics/tc431.html
Donald Trump’ s Billion-Dollar Loss in 1995
The amount of loss in the real estate business can include deductions for both cash expenses & “depreciation” of the buildings. The tax law has strict rules on how much a person can “depreciate” all kinds of business assets. If depreciation is part of the loss, & the building is later sold or repossessed, the depreciation is “recaptured,” which means added back into income & subtracted from the loss “carried forward.”
All in all, without more information, no one can tell what happened to that billion-dollar loss. If Trump’s properties went into bankruptcy, those losses could have been cancelled by the rules for “recapture,” and debt reduction.
You can bet that the IRS audits every tax return Donald Trump files. Someone should audit Hillary Clinton’s knowledge of tax law, & ethical portrayal.