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jennys_mn
Veteran Advisor

Rudy Giuliani

says that Trump is a "genius" for his ability to evade taxes.  O.....K.....

 

So, are we to believe that Mr. Trump does his own taxes?  Because it doesn't take a genius when you have a bunch of money to hire tax attorneys, "Good people, the best..." etc, etc that we have heard over and over and over again.  Or, to use the money you have to lobby to get tax laws favorable to what ever taxes you want to evade.

 

And, since those taxes are still under audit, and have been for many years, it says to me that maybe it will be Mr.  Trump that will be wearing black and white horizontal stripes at some point, for tax evasion.  (Is it still to soon to start the, "Lock him up!!!" chant?) 

 

You Republicans on here say that it doesn't matter what Trumps taxes show.  I say it does....and maybe he was legal in everything he did...and maybe not.   Maybe that's why Trump wants to be President....maybe if he got enough power he could pardon himself, or at least fire all the people working on his taxes so that he won't go to jail.

 

You know, when I sold my farm, I paid a bundle in taxes.  But it was the year after I sold the farm, that I got hurt even more.   That was because all of that tax money I paid the year before, nearly a million dollars, I couldn't use as a tax deduction the next year because of the AMT (alternate minimum tax) requirements.  That is a tax that comes into play, when someone has a large amount of deductions balanced against a high income, like had happened to me at the farm sale.  

 

A form of the AMT goes all the way back to 1969.  Trumps tax form that was release was a State form, but states have AMT also.  For those not familiar, heres an outline of AMT:

 

INDIVIDUAL TAXES
Q.

What is the AMT?

A.

The individual alternative minimum tax (AMT) operates alongside the regular income tax. It requires many taxpayers to calculate their liability twice—once under the rules for the regular income tax and once under the AMT rules—and then pay the higher amount. Originally intended to prevent perceived abuses by a handful of the very rich, it now affects over 4 million filers.

In January 1969, Treasury Secretary Joseph W. Barr informed Congress that 155 taxpayers with incomes exceeding $200,000 had paid no federal income tax in 1966. The news created outrage. That year, members of Congress received more constituent letters about the 155 taxpayers than about the Vietnam War. Congress subsequently enacted an “add-on” minimum tax that households paid in addition to regular income tax. It applied to certain income items (“preferences”) that were taxed lightly or not at all under the regular income tax. The largest preference item was the portion of capital gains excluded from the regular income tax.

Congress enacted the modern alternative minimum tax (AMT) in 1979 to operate in tandem with the add-on minimum tax. The main preference items, including capital gains, moved from the add-on tax to the AMT. Congress finally repealed the add-on tax, effective in 1983.

The original minimum tax and the AMT affected fewer than 1 million taxpayers annually through the late 1990s. In 2001, Congress passed the Economic Growth and Tax Relief Reconciliation Act (EGTRRA), which substantially reduced regular income taxes but provided only temporary relief from the AMT. Over the following decade, Congress repeatedly passed legislation —often at the last possible moment—to temporarily “patch” the AMT by increasing the AMT exemption amount.

Although the patches prevented an AMT explosion, the number of taxpayers affected by the AMT continued to grow throughout the decade (figure 1) because (1) the regular income tax was indexed for inflation, but the AMT was not; and (2) Congress enacted substantial cuts to the regular income tax.

Figure 1 - Taxpayers Affected by the AMT, 1970-2025

The American Taxpayer Relief Act of 2012 (ATRA) enacted a permanent AMT fix by establishing a higher AMT exemption amount, indexing the AMT parameters for inflation, and allowing specified tax credits under the AMT. As a result, the number of AMT taxpayers fell from 4.6 million in 2012 to about 4.1 million in 2015. That number will grow modestly to 4.8 million by 2025.

STRUCTURE

After calculating their regular income tax, many middle- and upper-income taxpayers must add a number of AMT “preference items” to their taxable income, subtract an AMT exemption amount, and recalculate their tax using the AMT tax rate structure. AMT liability is the excess, if any, of this amount over the amount of tax owed under the regular income tax rules.

AMT preference items include the deduction for state and local taxes (62 percent of all preferences in 2012 according to Treasury data), personal exemptions (21 percent), the deduction for miscellaneous business expenses (9.5 percent), and the standard deduction (0.7 percent). The AMT also has special rules for the treatment of net operating losses and depreciation.

Because the AMT disallows the state and local tax deduction and dependent exemptions, families with children who live in high-tax states are among the most likely to owe AMT. Allowing the state and local tax deduction and dependent exemptions for AMT purposes would reduce the number of households affected by the AMT from 4.1 million to just 500,000 in 2015.

The AMT has two tax rates: the first $185,400 of income above the exemption is taxed at a 26-percent rate, and income above that amount is taxed at 28 percent. The AMT exemption begins to phase out at $119,200 for singles and heads of household, $158,900 for married couples filing jointly, and $79,450 for married couples filing separate returns. Because the exemption phases out at a 25-percent rate, it creates a top effective AMT tax rate of 35 percent (125 percent of 28 percent). All dollar values are for 2015 and are indexed annually for inflation (table 1).

Table 1 - Alternative Minimun Tax Parameters

Data Sources

Internal Revenue Code. 26 USC.

Urban-Brookings Tax Policy Center. Microsimulation Model, versions 0304-3, 0308-4, 1006-1, 0613-1, and 0515-1.

———. Table T15-0019. “Aggregate AMT Projections and Recent History, 1970–2025.”

———. Tax Facts. “Reconciling AMTI and Taxable Income for AMT Taxpayers in 2012.”

———. Tax Facts. “Historical Features on Individual Minimum Taxes.”

Harvey, Robert P. and Jerry Tempalski. “The Individual AMT: What it Matters.” National Tax Journal 50, no. 3 (1997): 453–74.

Further Reading

Burman, Leonard E. 2007. “The Alternative Minimum Tax: Assault on the Middle Class.” The Milken Institute Review, October.

 

 

 

Yes, New York had an AMT tax law on the books in 2005, but Trumps tax form was just a regular state tax from, not the AMT form.  

 

My point?  Many of the deductions, (which we don't know what they actually were) may have been covered by an AMT, or....was this part of what Trump had lobbied for to make real estate developers exemt from AMT?  Way more questions than answers.  Like I said, I just know from my personal experience, that the AMT wiped out many of my deductions the second year after the farm sale.  And most of my deductions the year of the sale, were very limited because of how much I showed for income.

 

And, another thing.  I know how ticked the people I worked with were when we got into a discussion about taxes at work, and I brought up the fact that I paid very little in taxes, because of owning and operating my farm on the side.  I can imagine how ticked off people will be when a self proclaimed multi billionaire pays less in taxes (percentage wise) than most other Americans.  

 

I also have to wonder....how many years could Trump have have these huge losses, and still been able to write them off, when generally, a business needs to show profitability in like 4 years out of 7, to be able to use those business loses against your personal income?  Yes, and I know all about the loopholes there, that you can look at startup costs, if the business is run as a business, and balancing inflation as part of your long term profitability goal.  But still...this amount of money lost...and he's able to (possibly) write off his income for a couple of decades, sounds fishy to me.  Besides, the loses were largely because of Casino activity.  Maybe, losses in owning a Casino should be just like the losses if someone gamble at the casino...the loss can only be as much as your winnings...

 

Keeping track of your winnings and losses

The IRS requires you to keep a diary of your winnings and losses as a prerequisite to deducting losses from your winnings. This includes:

  • lotteries
  • raffles
  • horse and dog races
  • casino games
  • poker games
  • and sports betting

Your diary must include:

  • the date and type of gambling you engage in
  • the name and address of the places where you gamble
  • the people you gambled with
  • and the amount you win and lose

Other documentation to prove your losses can include:

  • Form W-2G
  • Form 5754
  • wagering tickets
  • canceled checks or credit records
  • and receipts from the gambling facility

Limitations on loss deductions

The amount of gambling losses you can deduct can never exceed the winnings you report as income. For example, if you have $5,000 in winnings but $8,000 in losses, your deduction is limited to $5,000. You could not write off the remaining $3,000, or carry it forward to future years.

Reporting gambling losses

To report your gambling losses, you must be eligible to itemize your income tax deductions on Schedule A. You are eligible to itemize deductions if your gambling losses plus all other itemized expenses are greater than the standard deduction for your filing status. This means that if you claim the standard deduction, you are still obligated to report and pay tax on all winnings you earn during the year. However, you will not be able to deduct any of your losses.

Only gambling losses

The IRS does not permit you to simply subtract your losses from your winnings and report your net profit or loss. And if you have a particularly unlucky year, you cannot just deduct your losses without reporting any winnings. If the IRS allowed this, then it's essentially subsidizing taxpayer gambling.

The bottom line is that losing money at a casino or the race track does not by itself reduce your tax bill. You need to first owe tax on winnings before a loss deduction is available. Therefore, at best, deducting your losses allows you to avoid paying tax on your winnings, but nothing more.

 

Jen

 

 

37 Replies
jennys_mn
Veteran Advisor

Re: Rudy Giuliani

Trump before election.jpg

 

Trump Taxes.jpg

 

trump bankruptcy.jpg

AllenJwi
Senior Contributor

Re: Rudy Giuliani

Since you are so into proving Trumps failures just what is it that Hillary has done that in anyway could be taken as a success in her life?

northnd
Senior Contributor

Re: Rudy Giuliani

There are many ways to have sold your farm. Some better than others as far as taxes are concerned. Could have sold contract for deed, spread the payments out over several years, thereby reducing taxes. Could have even determined other income sources and taylored those contract for deed payments to almost eliminate taxes. That MAY be something like what Trump and literally thousands of large companies do. Course they have tax teams set up to handle this. It is the way it is done. Always has been and always will be.
hardnox
Advisor

Re: Rudy Giuliani

Irony is generally wasted here, but anyway.

 

Giuliani launched his political career as the US Attorney who prosecuted Leona Helmsley for tax evasion- as close of a Donald clone as you can find.

 

Observers have suggested that the case against her wasn't particularly strong but she was just such an unsympathetic defendant that getting a conviction was pretty easy.

 

She was tried in the court of NY tabloid opinion, and Rudy was a hero.

WCMO
Senior Advisor

Re: Rudy Giuliani

She married a man who eventually became President, and was subsequently able to convince enough New York voters to put her in the Senate, received a consolation Sec of State appointment, and rakes in some serious bucks in speaking fees.  Still, doesn't make me a fan.

jennys_mn
Veteran Advisor

Re: Rudy Giuliani

We looked at the contract for deed possibility. But in farming, it was too shakey of a deal. I didn't want the hassle of getting the farm back down the road, especially after having gone through losing my farm in the early 80's.

I decided to take my tax lumps, and be done with it. If I was actually living where my farm was, it may have been a different story.

The largest issue here, is getting lobbying efforts to create a real estate loophole that Trump has been able to use.

Trump says he alone knows how to fix the tax system. My guess is he might try to change it to make it even easier to continue to fleece the American people.

Jen
jennys_mn
Veteran Advisor

Re: Rudy Giuliani

Point is - it's not Trump that's the "genius". If Rudy wants to call what Trump did genius, then he should be saying it correct - that his tax attorney and lobbyists were the geniuses - not Trump....

Will Trump use his lawyers knowledge of the tax system to help the rest of us out here? Well, no, someone has to pay what government does - just not Trump.

Jen
AllenJwi
Senior Contributor

Re: Rudy Giuliani

Enough about Trump... What the hell has Clinton done for anyone?

r3020
Senior Advisor

Re: Rudy Giuliani

Proof Trump surrounds himself with smart people who can get the job done. Thank you Jen for posting that.