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Fri Aug 11, 2017, 12:37 PM

This ***** real estate deal looks awfully like criminal tax fraud

Retweeted by the co-author, Bridget Crawford: https://twitter.com/ProfBCrawford

Is it cooler to be in print? Yes. @ProfBCrawford and my article on Trumps Gift Tax problem via @washingtonpost

This Trump real estate deal looks awfully like criminal tax fraud

Two tax lawyers break down the presidentís sale of two condos to his son.

By David Herzig and Bridget Crawford August 4



President Trump clearly doesnít want to release his income tax returns to the public. Members of the public and commentators have progressed through stages of outrage, speculation and acceptance that theyíll never see the goods, while others have made attempts to pry the documents free (such as proposed legislation in New York and other states that would require presidential candidates to release their returns). But Trumpís most pressing tax problem may come from somewhere else entirely: a pre-election transfer of property to a company controlled by his son that could run afoul of the IRS.

According to a recent story by ProPublica and the Real Deal, in April 2016, a limited liability company managed by Trump sold two condominium apartments to a limited liability company managed by Eric Trump. They were on the 13th and 14th floors of a 14-story, full-service, doorman building at 100 Central Park South in Manhattan. This is a prime Midtown neighborhood, yet the sale price for each condo was just $350,000. Although the condition and square footage of apartments 13G and 14G are not readily known, a popular real estate website shows that G-line apartments on both the fifth and eighth floors are one-bedroom, one-bath units of just over 500 square feet. Two years before the Trump transaction, apartment 5G sold for $690,000. Maybe the two units in question were in terrible shape, but two months before the sale to Eric Trumpís LLC, they were advertised for $790,000 (on the 13th floor) and $800,000 (on the 14th floor), according to ProPublica.

{Sitting presidents canít be prosecuted. Probably.}

If a sale between a parent and child is for fair market value, it does not trigger a gift tax. But if a parent sells two expensive condominiums to his son at a highly discounted price, for example, then the parent makes a taxable gift in part. In that case, the seller must pay a gift tax of up to 40 percent. (In this case, that might have run the president somewhere in the neighborhood of $350,000.)

Since Trump did not cast the transactions as gifts for state and local tax purposes, it is almost certain that he did not do so for federal gift tax purposes, either. In our combined 40 years of experience as tax lawyers, we are unaware of a situation in which a taxpayer would report a transaction as a fair market value between strangers on the state level (and thus incur real estate taxes) but treat it as a gift at the federal level (and thus incur an additional tax). Itís fair to infer that Trump didnít follow the rules.

Twitter: @professortax

David Herzig, the Michael and Dianne Swygert Research Fellow at Valparaiso University School of Law, is currently a visiting professor at Loyola Los Angeles School of Law. Follow @professortax

Bridget Crawford is a professor of law at the Elisabeth Haub School of Law at Pace University. Follow @ProfBCrawford

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Reply This ***** real estate deal looks awfully like criminal tax fraud (Original post)
mahatmakanejeeves Aug 2017 OP
Not Ruth Aug 2017 #1
Hassin Bin Sober Aug 2017 #3
Enorgnoz Aug 2017 #2

Response to mahatmakanejeeves (Original post)

Fri Aug 11, 2017, 12:56 PM

1. Is that how gift tax works?


Very informative

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Response to Not Ruth (Reply #1)

Fri Aug 11, 2017, 10:28 PM

3. Yep, rich people like to fund their deadbeat children's lifestyle and not pay taxes.

I run in to it from time to time in the mortgage business.

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Response to mahatmakanejeeves (Original post)

Fri Aug 11, 2017, 01:17 PM

2. Can you imagine if HRC didn't release her tax returns?

It continues to baffle me how so many voters could be so convinced that she was corrupt based on how she made her money, but don't even care to see how this fool makes (or keeps) his money. Most middle/lower-class Republicans don't even see tax evasion as theft from the treasury, as theft from the American People - just smart business.

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