Wednesday, September 28, 2016

It’s How They Got Capone

This story didn’t get much notice when it was reported on Monday because there was some other shiny object that we were all occupied with, but this could be big news.

Donald Trump’s charitable foundation has received approximately $2.3 million from companies that owed money to Trump or one of his businesses but were instructed to pay Trump’s tax-exempt foundation instead, according to people familiar with the transactions.

In cases where he diverted his own income to his foundation, tax experts said, Trump would still likely be required to pay taxes on the income. Trump has refused to release his personal tax returns. His campaign said he paid income tax on one of the donations, but did not respond to questions about the others.

That gift was a $400,000 payment from Comedy Central, which owed Trump an appearance fee for his 2011 “roast.”

Then there were payments totaling nearly $1.9 million from a man in New York City who sells sought-after tickets and one-of-a-kind experiences to wealthy clients.


Previously, The Post reported that the Trump Foundation appears to have violated laws against “self-dealing,” which prohibit nonprofit leaders from using charity money to help themselves. In particular, Trump appeared to use $258,000 from the charity to help settle lawsuits involving a golf course and an oceanside club. Trump also spent charity money to buy two portraits of himself, including one that he hung in the bar of one of his golf resorts in Florida.

“This is so bizarre, this laundry list of issues,” said Marc Owens, the longtime head of the Internal Revenue Service office that oversees nonprofit organizations who is now in private practice. “It’s the first time I’ve ever seen this, and I’ve been doing this for 25 years in the IRS, and 40 years total.”

The laws governing the diversion of income into a foundation were written, in part, to stop charity leaders from funneling income that should be taxed into a charity and then using that money to benefit themselves. Such violations can bring monetary penalties, the loss of tax-exempt status, and even criminal charges in extreme cases.

Now you know why Donald Trump is not going to release his tax returns.

Notorious gangster Al Capone, basically the godfather of organized crime in the 1920’s, ended up in jail not on charges of racketeering, murder, and other crimes, but for tax evasion.

4 barks and woofs on “It’s How They Got Capone

  1. I have a problem with all this. Will the IRS and their cops go after him soon? While he’s running for President? Here’s another reason HRC must win the election – not only for the Supreme Court but for snatching this jerk off his perch.

    • I’d guess the Republicans have successfully spooked the IRS with their invented scandal over investigating political non-profits. They are going to be too scared of being accused of playing partisan politics to go after him.

      Refs successfully worked.

  2. at best, we’re probably talking negligence, absent a minimum of 3 years worth of these types of transactions. to get to fraud, you need to show intent and knowledge. because Trump would obviously be a “big fish”, the IRS would love to get him for criminal fraud, but it’s not as easy as so many people seem to think it is, including Mr. Owens.

    clearly, the “self-dealing” and “assignment of income” are problematic. however, if Trump neither reported the income and the charitable contributions on his return, the difference in tax liability would probably not amount to all that much. as for the legal fees, paid out of Foundation funds, if whichever company it was for didn’t report them as an expense (which they shouldn’t have anyway, because it was a violation of public policy they resulted from, non-deductible for tax purposes.), but did report them as income, it’s just the self-dealing we’re talking about. again, unless this kind of thing is ongoing, year after year, he (and the foundation) is looking at negligence penalties, along with the additional tax and interest. it isn’t going to put him in jail.

    I know this, because I’m both a cpa, and an LB&I Revenue Agent, with 32 years in the field. I’ve actually examined people and entities like Mr. Trump, and much, much bigger ones. the thing about tax law is that congress tends to write ambiguous laws, so they can get re-elected, leaving it to the rest of us to try and figure out exactly what they meant. it’s why their are volumes of tax court cases, and many cpa’s and lawyers making a living out of it.

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