How the dynamic entrepreneurs of our rural economy probably handled it back in the 90s.
"According to a Tuesday column by Lee Sheppard in the tax industry publication Tax Notes, Trump may have benefited greatly in the 1990s from a tax loophole related to forgiven debts — a loophole that would have allowed him to deduct business losses on his personal income tax return, even if those losses were actually borne by banks that loaned Trump money and never got it back.
People often use "loophole" to refer to tax deductions they don't like, but this one was a loophole in the true sense of the word: a tax break created by legislative accident."
I am not at all an expert on this, but form years I wondered how the farmers in the 80`s that got their debts written off, how they weren`t liable for income taxes on their $600,000 write-off. I mean if their debt won`t have crushed them, their tax obligation certainly would. This Chapter 12 deal must be something in it where your assets are written down to "market value" determined by a judge, I suppose and that loss/gain just goes up into the ethos with no taxes owed.
If I blame Trump for this, I also have to kick everyother Bigshot farmer in the balls that I meet on the street, because many of them also took advantage of Chapter 12 or variations of it...and most of them are held up as financial gods in the community.
Saw that last night at another site.
Makes a bit of sense from some of the cases we worked with. Other than the insolvency requirement thing. That doesn't square with how numerous cases that came across the desk, as that would have required liquidation.
The lingering evidence seems to show that the writedowns simply weren't considered. Deedbacks and certain Chapter bankruptcies and other "in the light of day" workouts, however, ran full speed head long into the tax system.
Had a short conversation recently with a gentleman who worked for the FCS for years. He offered that this go round things will be much different, and despite reports of their being a much better general equity situation out there, the credit community doesn't have the tools it had at the end of the last century. Said that the creation of all of the regional arms was part of decoupling the old system from Treaury, that structure having been what made all of the "evaporation" (his word) possible. Accounts currently are tied in to the greater world of financialization and are subject to responses in mark-up and taxation that were not in place during the previous crisis. Said it's back to like it was in the 20's and 30's when "you could lose an entire farm over a pair of mules".
My sense of it is that despite nobody being real happy, we're a good ways from anything approaching a systemic crisis.
Whether we go closer to that will be driven by unknowables such as world weather and economy.
I have been thinking aobut the Atlantic piece that GTO put up a couple of days ago. There's a very real possibility that if that becomes the case the cavalry may run up a box canyon- cause being a political lockup over the separation of nutrition and farm programs.
I know that being associated with food stamps is anathema for many anti-socialist socialists, but they might have to get over it. Although my guess is that the forces they've helped unleash are now running on their own.
One of the weaknesses that I spotted in the Atlantic piece was the raw statistical piece that 2% of the population farms. As far as output, that number probably represents the entirety of commercial farmers, their employees and people employed in directly related busiesses- equip dealerships, elevators, fert plants, e-plants.
Again I don't know but my sense of it is that even in some of the most agricultural districts, the large majority who aren't among those- who have watched a huge chunk of poop go through the goose and out the backside over the last 10 years are going to be less than committed to rescue.
I know more than one person that have the business philosophy of getting upside down as quick as possible, siphon off as much as they can, squirrel it away with a trusted relative(s), go bankrupt and live like a king. Donald has said he likes to use other peoples money............. that's it in a nutshell. I guess one mans parasite is one mans genius.
That's why he is effectively blackballed by all the major US banks.
I'm certain that more than a few loan officers; careers have been ended by him. So much for a faceless victim.
Apparently GS does work with him although they just take fees to broker outside loans.
Now there are the Smartest Guys in the Room i.e., the quickest to spot larceny in the hearts of others and pick out the mark at the table.
I don`t I know and I`m sure most people especially of the Democrat persuasion understand this, I don`t understand it because I`ve never took the big bets and had the occasional big loses, Democrats don`t understand it because to them April 15th means "Getting money back from the government!!!".
But isn`t this like a cattle feeder that let`s say makes $100,000 pretty much each year, then one year his cattle get sick and the market goes down and he loses $1 million that year. Now would any of us be so small that we would begrudge him declaring a portion of his loses each year for a number of years until he gets on his feet?. Well, I suppose Trump built a casino the didn`t work out and incurred loses of $900 million and is taking those deductions out over 18years. If this is the case, I don`t see what`s wrong with it, because to just say "Well you lost $1 billion, you can take it off this year but not in subsequent years...sorry Charlie!!!".