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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 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 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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