Some comments on the New York Times story about Donald Trump’s tax returns

According to the New York Times the losses came

… through mismanagement of three Atlantic City casinos, his ill-fated foray into the airline business and his ill-timed purchase of the Plaza Hotel in Manhattan.

There is an issue here.

Donald Trump did not repay all the debt associated with those investments.

Either

the loss is a real loss and the Donald was really was out of pocket by $916 million (in which case he has legitimate NOLs)

or the loss was passed on to someone else by The Donald defaulting on debt – in which case Donald Trump should be assessed for income from debt forgiveness.

After all if the debt is forgiven it is not Donald Trump’s loss. The loss is borne by the person who lent Donald money and did not get it back.

.. Unless that is there is an avoidance scheme the New York Times has not worked out. Those schemes go by the name of “debt parking”.

.. Every tax system worth its salt has some rules on “effective debt forgiveness” to prevent debt parking. And – from my experience which is now over twenty years old – none of them work entirely.

.. Now if Donald really has all those tax losses its pretty clear that the debt must be parked somewhere.

.. There is a vehicle out there (say an offshore trust or other undisclosed related party effectively controlled by Donald Trump) – which owns over $900 million in debt and is not bothering to collect it.

I do not have the time or energy to find that vehicle. But it is there. Now that this blog has gone public journalists are going to look for it.

There is a Pulitzer prize for whoever finds it. Just give me a nod at the acceptance ceremony.

.. I think he had personal guarantees all over the Casino business, that’s why the banks were up to their necks with him, as they’d accepted guarantees he couldn’t fulfill. This forced them to do a deal with him, as he was in so much debt he probably could have caused some bank failures or at least ruined careers.

With personal guarantees the debt was essentially recourse and hence could be used as NOL.