Trump tax affairs 'stretched law beyond all recognition'
Published 02/11/2016 | 02:30
Donald Trump avoided paying potentially hundreds of millions of dollars in taxes in a way even his own lawyers considered questionable, according to a report.
The 'New York Times' said the manoeuvre may also explain how the Republican presidential candidate posted a one-year loss of more than $900m (€815m) a few years later, enabling him to avoid paying federal income taxes for perhaps 18 years.
According to one US tax expert quoted in the 'Times': "Whatever loophole existed was not 'exploited' here, but stretched beyond any recognition," said Steven M Rosenthal, a senior fellow at the non-partisan Tax Policy Centre, who helped draft tax legislation in the early 1990s.
The central issue is how billionaire property tycoon Mr Trump was able to cancel hundreds of millions of debt as his casino empire in Atlantic City went broke in the early 1990s.
Cancelled debt is generally treated as taxable income, meaning Mr Trump would have owed the Internal Revenue Service significant money on debt that his creditors forgave.
The newspaper said it obtained documents from 25 years ago showing Mr Trump essentially traded the debt relief for nearly worthless "partnership equity" to avoid any tax liability.
In practice, the strategy was almost identical to a tax move that was already outlawed, but differed in minor details.
Mr Trump's own lawyers advised him the IRS would be likely to find it improper if he were audited, the paper said, and Congress explicitly outlawed the manoeuvre in 2004.
Mr Trump's Democratic White House rival Hillary Clinton, then a New York senator, was among those who voted to close the loophole.
Hope Hicks, Mr Trump's spokeswoman, told the 'Times' that its reporting "suggests either a fundamental misunderstanding or an intentional misreading of the law".
She said Mr Trump did not think taxpayers "should file returns that resolve all doubt in favour of the IRS".
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Meanwhile, Mr Trump plunged into his final-week sprint to election day by unleashing a harsh new attack against Mrs Clinton in Michigan, a state that has not favoured a Republican for president in nearly 30 years.
His message was welcomed by supporters, but his location frustrated anxious Republicans who fear their nominee is riding his unorthodox political playbook too long - even as Mrs Clinton's developing email problems offer new political opportunity.
"Her election would mire our government and our country in a constitutional crisis that we cannot afford," Mr Trump declared in Grand Rapids, pointing to the FBI's renewed examination of Mrs Clinton's email practices as evidence the former secretary of state might face a criminal trial as president.
National polls show a tightening race but with more than 23 million ballots already cast through early voting, it is unclear whether Mr Trump has the time or capacity to dramatically improve his standing over the next week in states like Michigan, where few political professionals in either party expect a Republican victory on November 8.
Mrs Clinton, defending herself from the new FBI examination, focused on battleground Ohio, a state Mr Trump's team concedes he must win.
"There is no case here," she insisted. "Most people have decided a long time ago what they think about all this."
Amid the attacks and counter-attacks, the race for the White House remains at its core a test of a simple question: Will the conventional rules of modern-day campaigns apply to a 2016 election that has been anything but conventional?
For much of the year, Mrs Clinton has pounded the airwaves with advertising, assembled an expansive voter data file and constructed a nationwide political organisation that dwarfs her opponent's.
She and her allies in a dozen battleground states have more than 4,800 people knocking on doors, making phone calls and otherwise working to support her candidacy.
Mrs Clinton's numbers, as reported in recent campaign filings, tripled those of Mr Trump and the national and state Republican parties.
The New York businessman over the past year has largely ignored the key components of recent winning election campaigns, depending instead on massive rallies and free media coverage to drive his outsider candidacy.
On Monday, Mr Trump was appearing with running mate Mike Pence in Wisconsin, which has not backed a Republican for president since Ronald Reagan's re-election in 1984.
"It makes no sense to me," Republican pollster Frank Luntz said of Mr Trump's strategy.
But Michigan-based Republican operative Saul Anuzis described the state as "a creative opportunity" for Mr Trump.
"The demographics in Michigan are perfect for Trump," Mr Anuzis said of the state's large white working-class population. "That doesn't mean he'll necessarily win here."