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Trump’s tax returns aren’t the only crucial files prosecutors will get

When New York prosecutors can finally review former President Donald J. Trump’s federal income tax returns, they’ll discover a real how-to guide to getting rich while losing millions of dollars and paying little to no tax on Income.

However, whether they find evidence of crimes will also depend on other information that is not in the actual statements.

The United States Supreme Court on Monday cleared the way for Manhattan District Attorney Cyrus R. Vance Jr. to obtain eight years of federal tax returns from Mr. Trump and other documents from his accountants. The ruling ended a long legal battle over prosecutors’ access to information.

Last year, The New York Times gave more or less a glimpse of what lies ahead for Mr. Vance, when it obtained and analyzed decades of tax data for Mr. Trump and his businesses. The tax records offer an unprecedented and highly detailed look into the Byzantine world of Mr. Trump’s finances, which he has simultaneously bragged about for years and sought to keep a secret.

The Times review showed the former president reported hundreds of millions of dollars in business losses, spent years without paying federal income tax, and was facing an Internal Revenue Service audit. ‘a $ 72.9 million tax refund he claimed ten years ago.

Among other things, records revealed that Mr. Trump had paid only $ 750 in federal taxes in his first year as president and no income tax in 10 of the previous 15 years. They also showed that he wrote off $ 26 million in “consulting fees” as a business expense between 2010 and 2018, some of which appears to have been paid to his eldest daughter, Ivanka Trump, while she was employee of the Trump organization.

The legitimacy of the fees, which reduced Mr. Trump’s taxable income, has since become a subject of Mr. Vance’s investigation, as well as a separate civil investigation by Letitia James, the New York attorney general. Ms James and Mr Vance are Democrats, and Mr Trump has sought to portray the multiple investigations as politically motivated, while denying any wrongdoing.

Mr Vance’s office has issued subpoenas and conducted interviews in recent months as it examined a variety of financial matters, including whether the Trump organization had distorted the value of assets when obtaining loans or the payment of property taxes, as well as the payment of $ 130,000 in silent money. during the 2016 campaign to Stephanie Clifford, the pornographic actress whose stage name is Stormy Daniels. Among those interviewed were employees of Deutsche Bank, one of Mr. Trump’s biggest lenders.

Despite all their disclosures, Mr Trump’s tax records are also noteworthy for what they do not show, including new details about the payment to Ms Clifford, who was the original subject of Mr Vance when she started two years ago.

Tax returns represent self-reported income and expense accounting, and often lack the specificity required to know, for example, whether legal fees related to discrete payments have been claimed as a tax waiver, or whether the money of Russia once scanned Mr. Trump’s bank accounts. The lack of that level of detail underscores the potential value of other documents Mr. Vance had access to with Monday’s Supreme Court ruling.

In addition to tax returns, Mr. Trump’s accountants, Mazars USA, are also required to produce business records on which those returns are based and communications with the Trump organization. Such documents could provide important context and context for the decisions Mr. Trump or his accountants have made when preparing the tax return.

John D. Fort, former head of the IRS’s criminal investigations division, said tax returns were a useful tool in uncovering leads, but could only be fully understood with additional financial information obtained elsewhere.

“It’s a very important personal financial document, but it’s only one piece of the puzzle,” said Mr. Fort, a CPA and director of investigations at Kostelanetz & Fink in Washington. “What you find in the statement should be followed by interviews and subpoenas.”

Yet the Times’ investigation into Mr. Trump’s returns uncovered a number of misleading claims and lies he spread about his wealth and business acumen.

Many claims of Mr. Trump’s generous philanthropy have collapsed when reviewing his tax returns, which has raised questions about the amount of some donations and the overall nature of his tax-deductible donations. For example, $ 119.3 million of the roughly $ 130 million in charitable deductions he had claimed since 2005 turned out to be the estimated value of pledges not to develop real estate, sometimes after the failure of a planned project.

At least two of these land-based charitable deductions, one linked to a golf course in Los Angeles and the other to an estate in Westchester called Seven Springs, are known to be part of Ms James’ civil investigation. , which examines whether valuations support tax write-offs have been inflated.

More generally, tax records have shown how the public disclosures he filed as candidate, and then as president, offered a distorted view of his overall finances by reporting glowing numbers for his golf courses, hotels and the like. companies based on the gross revenues they collected each year. . The actual bottom line, after losses and expenses, was much bleaker: In 2018, while Mr. Trump’s public filings showed income of $ 434.9 million, his tax returns reported a total of 47, $ 4 million in losses.

And such dire numbers were not an anomaly. Mr. Trump’s numerous golf courses, a vital component of his business empire, recorded losses of $ 315.6 million between 2000 and 2018, while revenues from licensing hotels in his name and resorts had all but dried up by the time he entered the White House. In addition, Mr. Trump has hundreds of millions of dollars in loans, much of which he has personally guaranteed, which will mature in the next few years.

The Times investigation also found he was facing a potentially devastating IRS audit focused on the huge refund he claimed in 2010, which covered all federal income taxes he paid. from 2005 to 2008, plus interest. Mr Trump has repeatedly cited the ongoing audit as the reason he couldn’t release his tax returns, having initially said he would, even though nothing in the audit process did. prevented from doing so.

If an IRS ruling were ultimately to go against him, Mr. Trump could be forced to repay more than $ 100 million, including interest and possible penalties, in addition to some $ 21.2 million in local and state tax refunds based on the numbers. in its federal documents.

Russ buettner and Susanne Craig contribution to reports.

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Blue and red economic files

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Has the economy performed better under Democratic or Republican presidents over the past century? The sensible answer may seem to be: it’s probably the same thing.

Presidents, after all, have limited control over the economy. They don’t have much influence over the millions of daily decisions, made by consumers and business leaders, that shape economic growth, jobs, incomes and stock prices. Over the course of a century, it seems logical that the economy has behaved the same under Democrats and Republicans.

But this is not the case.

The economy performed much better under the Democrats. The gap, as an academic article puts it, is “surprisingly large”. Here are the title numbers:

And here’s a ranking of presidents by average annual GDP growth:

The gap exists not only for GDP and employment, but also for income, productivity and stock prices. The gap also exists if you assume that a president’s policies affect the economy with a lag, and you don’t start his economic clock until months after he takes office. Virtually any reasonable examination of the data shows a great Democratic advantage.

My colleague Yaryna Serkez and I just published an article documenting the motive and potential reasons. A few possibilities are easy to dismiss. Nor is it about congressional control, or Democrats with larger budget deficits. (Republican presidents have run larger deficits in recent decades.)

Coincidence sure plays a role – but it’s highly unlikely to explain the whole gap, given its size, scale and duration. Yaryna’s and my piece explores some of the more plausible explanations:

  • Republican presidents have been slow to respond to recessions and other crises – Donald Trump and George Bushes are examples. (Herbert Hoover was too, and the gap between supporters would be even greater if the data went far enough to include it.)

  • Recent Democratic presidents have been more pragmatic, willing to listen to the evidence on when the economy would benefit from deficit reduction and when it needs government support for education, infrastructure, scientific research. and more.

  • Republican presidents for the past 40 years have pursued an economic policy above all others – tax cuts, heavily biased in favor of the rich – and there is little evidence that they are doing much for growth economic.

Our article has more details and graphics, as well as comments from conservative and liberal economists. Find it all here.

  • A winter storm is heading north, after dumping at least 16 inches of snow on New York City. (For the giant pandas at the National Zoo, it was fun.)

  • First-hand testimony accuses Derek Chauvin, the Minneapolis policeman who knelt around George Floyd’s neck last year, of using similar tactics on other inmates.

  • In a video talking about the Capitol Riot, Representative Alexandria Ocasio-Cortez said she was a survivor of a sexual assault. “When we go through trauma, the trauma gets worse,” she said.

  • Actor Evan Rachel Wood has accused rock star Marilyn Manson of abuse. Several other women have brought similar charges against Manson.

  • Five women accused Mickey Callaway, a former Mets manager, of unwanted sexual advances, The Athletic reports.

  • Singer Tony Bennett learned he had Alzheimer’s disease in 2016, his wife said.

A morning reading: “How can I tell my children that they could have 300 siblings?” The case of a Dutch serial sperm donor.

From the review: GM’s decision to stop manufacturing gasoline-powered vehicles by 2035 will put pressure on other automakers and force oil companies to diversify their operations, writes Jody Freeman, professor of law.

Lives lived: Jamie Tarses had an eye for television hits (“Friends”, “Mad About You”). At 32, she became president of entertainment at ABC, the first woman to become the best programmer in a network. Tarses died at the age of 56.

Dustin Diamond played Screech Powers, a geeky underdog of a gentle nature, on the NBC high school sitcom “Saved by the Bell” from 1989 to 1992. Diamond died at age 44.

Hal Holbrook carved out a career as an actor in television and film, but achieved his greatest success on stage, playing Mark Twain on a solo show for decades. Holbrook died at the age of 95.

What do Bob Dylan, Stevie Nicks, Shakira, DJ Calvin Harris and RZA of the Wu-Tang Clan have in common? They have all recently sold all or part of the rights to their music catalog for large payments. For these music publishing contracts, “there has never been a period as active as the last few months”, as Lucas Shaw and Thomas Seal write in Bloomberg Businessweek.

Why do artists choose to cash in? On the one hand, the pandemic has prevented them from touring, which represents a significant portion of their income. But musicians are also benefiting from a bull market.

It’s largely because of the popularity of streaming services like Spotify and projections that music revenues will continue to rise, told us Ben Sisario, who covers the music industry for The Times. More and more buyers are also flocking to the market, driving up prices. Ten years ago, a publishing catalog typically sold for around 10 times its annual revenue. In recent years, the multiple has increased from 14 to 22, depending on the songs included.

The rights to publish popular songs are attractive because they can provide a reliable income stream. In Dylan’s case, Universal Music is now paid every time his songs are sold, streamed, covered by another musician, or used in commercials and movies.

For more information, we recommend this episode of “Popcast” with Ben, which explains the fascinating history of song licensing and royalties.

The Spelling Bee pangrams of yesterday were alloy, boringly and suck. Today’s puzzle is above – or you can play it online.

Here are today’s mini crosswords, and a hint: B, in chemistry (five letters).


Thank you for spending part of your morning with The Times. See you tomorrow. – David

PS Groundhog Day, Punxsutawney’s annual tradition, will take place virtually today due to the pandemic. This 1910 Times story explained why you shouldn’t trust the rodent: “He came back on us for three years.”

You can see the first printed page of the day here.

Today’s episode of “The Daily” is about Biden’s climate agenda. On the last “Popcast”, the first real pop phenomenon of 2021.

Claire Moses, Melina Delkic, Ian Prasad Philbrick, Yaryna Serkez, Tom Wright-Piersanti and Sanam Yar have contributed to The Morning. You can join the team at themorning@nytimes.com.

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