Former President Donald J. Trump Faces Potential $100 Million Tax Bill Over Dubious Accounting Maneuver
Former President Donald J. Trump is facing a potential tax bill of more than $100 million after using a dubious accounting maneuver to claim improper tax breaks from his troubled Chicago tower, according to an Internal Revenue Service inquiry uncovered by The New York Times and ProPublica.
The 92-story, glass-sheathed skyscraper along the Chicago River, which is the tallest and last major construction project by Mr. Trump, has been a vast money loser due to cost overruns and the Great Recession. When Mr. Trump sought to reap tax benefits from his losses, the I.R.S. argued that he went too far and essentially wrote off the same losses twice.
The first write-off came in 2008 when Mr. Trump claimed his investment in the tower was “worthless” due to his debt on the project, resulting in reported losses as high as $651 million for the year. In 2010, Mr. Trump executed a maneuver to claim $168 million in additional losses over the next decade by shifting the ownership structure of the tower into a new partnership.
The I.R.S. undertook a high-level legal review of Mr. Trump’s case during his presidency, and the revision sought by the agency could result in a tax bill of more than $100 million, plus interest and potential penalties.
Mr. Trump’s tax records have been a subject of intense speculation since the 2016 presidential campaign, and the recent revelations about his Chicago tower add another layer to his ongoing financial challenges. In addition to the potential tax bill, Mr. Trump has been ordered to pay millions in defamation and civil fraud cases, and he is currently facing a criminal trial in Manhattan.
The outcome of Mr. Trump’s dispute with the I.R.S. could set a precedent for wealthy individuals seeking tax benefits through partnerships, as the laws governing partnerships are complex and often exploited by lawyers pushing boundaries for their clients.
Overall, Mr. Trump’s Chicago accounting maneuvers have raised questions among tax experts and could have significant implications for his financial future. The audit battle with the I.R.S. highlights the challenges of enforcing tax laws in the face of aggressive tax strategies employed by high-profile individuals like Mr. Trump.
