Some Important Lessons From Trump's Tax Returns

Donald J. Trump, a former president who fought for years to keep his tax returns secret, gave nothing to charity in 2020, and his own tax code may have cost him. Here is an ongoing list of observations.

Following through on their promise to release six years' worth of former President Donald J. Trump's tax returns, Democrats on the House Ways and Means Committee did so, providing the American public with new information about his business dealings and evoking threats of retaliation from congressional Republicans.

Thousands of pages of tax records, including individual returns for Mr. Trump and his wife, Melania, as well as company returns for several of the hundreds of businesses that make up the real estate mogul's vast commercial empire, were made public on Friday morning.

Top-line information from the returns, which was made public by the committee this month, revealed that Mr. Trump paid $1.1 million in federal income taxes over the course of his first three years in office, with just $750 of that amount coming from his first year in office, 2017. As his income decreased and his business losses grew in 2020, he paid no taxes.

The docs provide fresh information that wasn't made public in those earlier disclosures. Reporters with the New York Times are searching the text for important insights. This is an ongoing list.

Trump didn't give to any causes in 2020.

When running for president in 2015, Mr. Trump pledged that he would not accept "even one dollar" of the position's $400,000 salary. If I'm elected president, I'm entirely giving up my income, he declared.

Mr. Trump said that during his first three years in office, he gave away a fifth of his income. However, the records reveal that Mr. Trump reported no charity contributions for 2020, his final full year in office.

The pandemic recession quickly hit in 2020, and Mr. Trump claimed significant corporate losses but no federal tax burden.

Earlier years, beginning with the National Park Service in 2017, White House officials made a point of highlighting which government departments were getting the funding. According to Mr. Trump's tax returns, which were made public on Friday, he declared charitable contributions of almost $1.9 million in 2017 and just over $500,000 in both 2018 and 2019.

Trump didn't want a complete refund during a difficult business year.

Nearly $16 million in company losses that Mr. Trump recorded in 2020 swamped his other earnings and prevented him from owing any federal income taxes. But according to the tax records, he paid the federal government close to $14 million in taxes during the course of the year.

He may have received a sizable income tax return from the government as a result of those payments, similar to the ones that many individuals discover when they go to submit their taxes each March. In Mr. Trump's situation, he declined to accept the complete refund that was offered to him. He requested a refund of slightly under $5.5 million, after which he told the IRS to add an additional $8 million to his anticipated taxes for 2021.

He may have paid a price for his own tax law.

The tax bill that Mr. Trump signed in late 2017 and that became effective the following year had several features that probably afforded him a financial advantage, such as the lowering of the alternative minimum tax for high incomes.

But one component in particular significantly decreased the amount of state and local tax deductions Mr. Trump could claim in 2018 and beyond: the restrictions Republicans set on these deductions.

In high-tax cities and states like New York, the so-called SALT deduction disproportionately hurt wealthier earners, including Mr. Trump. He claimed to have paid $8.4 million in state and local taxes in 2019. Only $10,000 of those taxes were eligible for a tax deduction on his federal income tax return because of the SALT limitations incorporated into his tax law.

Other provisions of the law that were helpful to richer taxpayers like Mr. Trump could have reduced such losses, at least in part.

The returns feature Fred Trump as a silent actor.

The long-deceased father of Mr. Trump, Fred Trump, still has an impact on his son's financial situation.

The former president reported taxable income of more than $24 million and paid $1 million in federal taxes in 2018, virtually the whole amount he paid as president, after a decade in which he claimed no taxable income.

The sale of an investment Mr. Trump's father made in the 1970s—a Brooklyn housing development called Starrett City—which became a part of his inheritance—appeared to have generated more than $14 million in gains, according to previous reporting by The Times—which appeared to be the source of Mr. Trump's income.

The new records, however, demonstrate that the impact of his inheritance in 2018 was significantly greater: Mr. Trump reported $25.7 million in gains from the sales of commercial properties that he and his siblings either inherited directly or obtained through trusts, including the sale of Starrett City.

The tax itemization reveals that the sales of Mr. Trump's self-owned commercial assets were unsuccessful, which reduced his net proceeds and somewhat decreased his tax liability.

That included a total of $1 million in real estate sold by DJT Holdings LLC and 40 Wall Street, his Lower Manhattan office building, at a loss. He lost another $1 million by saving his son Donald Trump Jr. from a failing prefabricated home company.

According to his tax records, Mr. Trump also got tens of thousands of dollars in dividends from trusts that were created for him when he was a young adult when he was in the White House.

In 2020, a new tax business entered the picture.

For many years, Mr. Trump's taxes and the taxes of his enterprises were prepared by the accounting firm Mazars USA. The former president's taxes had long named Donald Bender, a veteran Mazars employee, as his accountant.

This year, the company officially severed connections with Mr. Trump and his companies, stating that it could no longer stand behind a decade's worth of annual financial statements it had produced for the Trump Organization.

But it turns out that as as early as 2020, Mazars and Mr. Trump had started to distance themselves from one another. According to Mr. Trump's tax returns from that year, his taxes were prepared by the Texas-based accounting company BKM Sowan Horan.

Retaliation is being threatened by Republicans.

The documents' release on Friday sparked a fresh round of attacks on Capitol Hill between Democrats and Republicans, including threats of increasing and politically motivated future leaks of personal tax data.

Democrats justified the action as necessary monitoring of a president who defied decades of tradition by withholding his tax returns.

The recent conviction of Trump's family firm for felony tax fraud, according to Representative Don Beyer, a Democrat from Virginia and member of the Ways and Means Committee, "Trump acted as though he had something to conceal," Beyer stated in a news release. "As the public will now be able to see, Trump used shady or ill-supported deductions and a variety of other tax avoidance techniques as justification to pay little to no federal income tax in some of the years under consideration."

But Republicans, who took control of the House in November, cautioned Democrats that they had taken a risky step and that public pressure might persuade the new majority to reveal returns from President Biden's family or a variety of other private individuals.

According to Representative Kevin Brady of Texas, the top Republican on the Ways and Means Committee, "going forward, all future chairs of both the House Ways and Means Committee and the Senate Finance Committee will have nearly unlimited power to target and make public the tax returns of private citizens, political rivals, business and labour leaders, or even the Supreme Court justices themselves."

Late Friday morning, Mr. Trump added his voice with a statement through email.

Late Friday morning, Mr. Trump added his voice with an email statement that also hinted at possible reprisal.

He stated, "It's going to result in horrific things for so many people. The Democrats should have never done it, the Supreme Court should have never allowed it." "The huge American split is about to get much worse. Everything has been weaponized by the Radical Left Democrats, but keep in mind that this is a hazardous two-way street!