Trump 'Used Dubious Loophole to Avoid Tax'
'NYT' says Trump's own lawyers warned him about it
By Rob Quinn,  Newser Staff
Posted Nov 1, 2016 4:44 AM CDT
Updated Nov 1, 2016 6:42 AM CDT
The Trump Taj Mahal Casino Resort is seen in Atlantic City, NJ.   (AP Photo/Wayne Parry)
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(Newser) – Donald Trump didn't merely use loopholes to avoid tens of millions of dollars in federal taxes—he stretched them beyond recognition when he was strapped for cash in the early 1990s, tax experts tell the New York Times, which says it has uncovered some dubious dealings amid paperwork from Trump's Atlantic City casino bankruptcies. All three casinos, which were financed with debt, had filed for bankruptcy by 1992. In a move that Trump's own lawyers warned would probably be declared improper if he were audited by the IRS, according to the Times, Trump used a "stock-for-debt swap" to avoid paying taxes on hundreds of millions of dollars in canceled debt, which would otherwise have been taxed as if it were income.

The loophole Trump used to avoid a financial collapse closely resembled a tax-avoidance method that had already been outlawed for use by corporations, but Trump was able to use it because he owned his Atlantic City casinos through partnerships instead of corporations. The Times notes that although Trump has targeted Hillary Clinton for supposedly failing to close the tax loopholes he used, she was among the senators that voted to close the partnership loophole in 2004. In a statement, Trump spokeswoman Hope Hicks accused the Times of criticizing not just Trump, but all taxpayers who "try to comply with the dizzyingly complex and ambiguous tax laws without paying more tax than they owe." (The tax loophole may be linked to the nearly $1 billion loss Trump declared in 1995.)
 

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