Damned idiot

The full details are not available on Trump’s tax returns. They show instead that his company once paid $747,622 to an unnamed consultant for hotel projects in Hawaii and Vancouver. Payments to consultants can be legitimate business expenses, and there’s nothing unusual about deducting something like that. But in this case, the consultant appears to have been his daughter, whose own public financial disclosures show receipt of $747,622.

This is the kind of thing the IRS could easily overlook because it requires checking two different forms, realizing that the numbers match, and then seeing that the $747,622 payment was almost certainly to Ivanka. There’s nothing wrong with giving your daughter a six-figure gift if you are rich enough to do so. But when you receive gifts of this size, you need to pay a gift tax on them. If you structure your gift as a consulting fee, it passes to your heir untaxed. Taking what’s really a gift and pretending it’s a business expense is against the law.

Jeez, don’t these people know how tax works? A consulting fee is income, which will be taxed under the usual tax system for income.

Ivanka pays tax on that. Just like the architect of the building pays tax on his income from it.

Jeez, they’re really reaching, aren’t they?

28 thoughts on “Damned idiot”

  1. Dennis, CPA to the Gods

    The full details are not available on Trump’s tax returns. They show instead that his company once paid $747,622 to an unnamed consultant for hotel projects in Hawaii and Vancouver. Payments to consultants can be legitimate business expenses, and there’s nothing unusual about deducting something like that. But in this case, the consultant appears to have been his daughter, whose own public financial disclosures show receipt of $747,622.

    Trump’s company issued a Form 1099-MISC to Ivanka for non-employee compensation for services rendered to the business as a consultant. It then properly deducted the payments as a business expense.

    This is the kind of thing the IRS could easily overlook because it requires checking two different forms, realizing that the numbers match, and then seeing that the $747,622 payment was almost certainly to Ivanka.

    No, the IRS would not overlook it. That’s because Trump’s company sent a copy of the Form 1099-MISC to the IRS, as it is required to do by law. The IRS had a copy of the 1099 not later than the end of either January of February of the tax year (the month will depend on which year we are talking about).

    There’s nothing wrong with giving your daughter a six-figure gift if you are rich enough to do so. But when you receive gifts of this size, you need to pay a gift tax on them. If you structure your gift as a consulting fee, it passes to your heir untaxed. Taking what’s really a gift and pretending it’s a business expense is against the law.

    Guess what? Ivanka received the Form 1099-MISC for non-employee compensation and reported it as income on Schedule C of her Form 1040. She then paid income and social security taxes on that income. Why? Because it was income, not a gift.

    Bottom line? Matty Yglesias (who is a modern day moron if there ever was one) doesn’t seem to understand that you disclose all sources of income on the public disclosure forms, not just gifts.

  2. One might almost infer that Mr Yglesias is not in the habit of disclosing all his income to the tax man. Time for the IRS to take a shufti?

  3. Yeah, they’d better have something more interesting as an October surprise or Biden’s not going to win.

    Seems to be zero energy or enthusiasm among his supporters, they’re not happy about his debate performance, and REMOVE GLONALD GLUMF probably isn’t a strong enough message to ouster a sitting Prez.

  4. I wonder if anyone will “investigate” the tax affairs of Biden and son. I’m sure they are squeaky clean, ha ha ha

  5. ‘The full details are not available on Trump’s tax returns. They show instead that his company once paid $747,622 to an unnamed consultant . . . .’

    Mr Yglesias is in violation of 26 U.S.C. §7213. Publishing someone else’s illegally obtained tax information is a crime.

    I hope Barr gets all of the bastards.

  6. There’s something else fishy about this. There is NFW Donald Trump does business as Donald Trump. The Trump Organization, his real estate company, is surely incorporated**. Hence, The Trump Organization, not Donald Trump, would have paid Ivanka, and there would be nothing on The Donald’s tax return about it. There is BS somewhere in the chain of this evidence.

    ** https://www.bloomberg.com/profile/company/3603126Z:US

    ‘The Trump Organization, Inc. operates as a real estate development company.’

  7. @gamecock
    You can’t possibly mean that by conflating his business dealings with his personal taxation they think they can cause confusion and mislead people.
    Can’t imagine that anyone would stoop so low

  8. Dennis, Understated As Always

    I’ve been heckling Matty Y. about this all day. A variation of my post above was sent to him hours ago. Since then Timmy found the public disclosure form, and it provided details that make Matty look even worse. Here’ the email I just sent him:

    It’s worse than I thought.

    1. Trump’s company made the $700K payment to 5TTT, LLC, not Ivanka.
    2. 5TTT, LLC is an LLC that has elected to be taxed as a partnership. She’s one of the partners.
    3. 5TTT, LLC paid $700 to Ivanka in the form of Guaranteed Payments. That doesn’t mean anything to you, ‘cause you don’t know shit, but to the educated and informed, it is significant. Partners don’t get W-2 wages in a partnership. They take Guaranteed Payments instead. They are reported on the Form K-1 issued by the partnership to the partner. The partner then pays income tax and social security taxes on the Guaranteed Payments on their Form 1040, Schedule E.

    If you’d known what you were talking about, you’d have noticed the Guaranteed Payment disclosure on the public disclosure form and understood that Ivanka had taken the entire $700K as business income and paid taxes on it.

    I understand you’ve decided to whore for the Democrats for a living. Pathetic as that is, it’s not what I object to. What I object to is you being so fucking stupid (and lazy) about your whoring.

  9. As my father liked to point out while he paid little personal taxation, his business and the wages he paid to employees meant he handed over a lot of money to the govt in various forms of tax overall

  10. Pursuant to 26 USC 102(c), the receipt of a gift, bequest, devise, or inheritance is not included in gross income. Thus, a taxpayer does not include the value of the gift when filing an income tax return. Although many items might appear to be gift, courts have held the most critical factor is the transferor’s intent.[10] The transferor must demonstrate a “detached and disinterested generosity” when giving the gift to exclude the value of the gift from the taxpayer’s gross income.[11] The courts have defined “gift” as proceeds from a “detached and disinterested generosity.”[12]

    There is no such thing as a ‘gift tax’. Gift’s are either included in gross income or they’re not.

    If Trump had paid her as a gift she could have been in a position to not include it in her income. They literally paid her in a way that guaranteed she would have to include it in her gross income and pay taxes on it.

  11. Gamecock
    September 30, 2020 at 4:58 pm

    ‘The full details are not available on Trump’s tax returns. They show instead that his company once paid $747,622 to an unnamed consultant . . . .’

    Mr Yglesias is in violation of 26 U.S.C. §7213. Publishing someone else’s illegally obtained tax information is a crime.

    I hope Barr gets all of the bastards.

    No, it doesn’t work that way over here.

    If you have a duty to protect information, it can be illegal for you to disclose it without permission. However, once its disclosed its public and anyone can do whatever they want with it. The original leaker can be prosecuted – no one past that can. And only people with a duty to protect that information are bound by that duty – neither you, nor I, nor Yglesias have a duty to protect Trump’s tax returns.

    This is a pretty long-standing precedent going back to the leaking of The Pentagon Papers in 1971.

  12. Dennis, God of Taxation

    Form 709 is used to report transfers subject to federal gift taxes and to figure the tax, if any, on said transfers.

    There is a gift tax, Agammamon. The Internal Revenue Code and the IRS say so.

  13. Possibly try understanding the tax system. If it’s not a legitimate business expense then there’s no tax relief for the payment but she gets taxed regardless so there is a “loss” of tax here (a disallowed deduction) if the payment was not legitimate.

  14. “f it’s not a legitimate business expense then there’s no tax relief for the payment but she gets taxed regardless so there is a “loss” of tax here (a disallowed deduction) if the payment was not legitimate.”

    I have to agree with Perry here, the point is not whether the recipient paid tax on it, its more whether the recipient did legitimate work that entitles the business to claim the payment as a business expense. Which on the face of it doesn’t look very likely given the circumstances and people involved.

    That being said its a very commonly used tactic, putting family members on the payroll, particularly in small businesses. How many wives who are partners in a family business actually do any real work in the business or are they just there to save tax? Or in the case of the ex-wife of a certain R Murphy of Ely, to make his LLP legal? How many children on the payroll do the full amount of work their salary entails? Doesn’t Chelsea Clinton have some well remunerated salary from the Clinton Foundation? Do we really think thats a legit hiring, or a nice little earner for one of the Family?

    If every business expense payment to a family member is going to get the microscopic forensic treatment there’s hardly a business (or politician) in the world that would not be worried.

  15. Let’s assume Ivanka did some work for her consultancy fee.
    She would have to research the Hawaii hotel market, and travel and stay in Hawaii for a certain period of time, entertain potential sources of information, discuss potential projects, pay local tax and planning advisors, etc., etc..

    I can see a fair amount of deductible expenses before that 700K gets taxed.

  16. Dennis, Odin's Tax Collector

    I can see a fair amount of deductible expenses before that 700K gets taxed.

    Any expenses incurred in the production of the revenue would be recorded in the books of the partnership (5TTT). They would show up in the partnership’s Form 1065 tax return.

    Don’t confuse the partnership’s profit (or loss) with guaranteed payments. They are two different things. Profit and loss is determined by income and expense, guaranteed payments to partners are determined by agreement between the partners.

  17. Dennis, CPA to the Gods

    I have to agree with Perry here, the point is not whether the recipient paid tax on it, its more whether the recipient did legitimate work that entitles the business to claim the payment as a business expense. Which on the face of it doesn’t look very likely given the circumstances and people involved.

    A completely fact free assertion… Very Murphy-esque.

    Actually, given the amounts involved, I’d suggest that it is highly likely she did quite a bit of work for the money. And I’d further suggest that work has been documented properly. Why? Because it’s a large enough amount to catch the attention of an IRS examiner, and because Trump has a passle of tax attorneys and accountants advising him on how – and how not – to do things so they pass muster.

  18. If it’s not a legitimate business expense then there’s no tax relief for the payment but she gets taxed regardless so there is a “loss” of tax here (a disallowed deduction) if the payment was not legitimate.

    No. If the expense is disallowed then Trump’s company’s income increases by $700K. Depending whether the company is taxed as a C corporation, S corporation, partnership, disregarded entity or sole proprietorship, either the company or Trump (and the rest of ownership, if any) pays the additional tax due on the $700K.

  19. “A completely fact free assertion… Very Murphy-esque.”

    Whatever.

    You can quote all the chapter and verse you like of the elebenty gazillion pages of the US tax code, all I know is that when a billionaire property tycoon pays his daughter a hefty wedge for ‘hotel research’ (in Hawaii no less) thats not really a legit business expense. Its a freeby to a family member, albeit one thats plausibly deniable.

    I’m as pro-Trump as the next Deplorable, but I’m not going to try and make out he’s a saint, because he isn’t. Now this undoubtedly happened years ago before the idea of being a politician was even on the horizon, so it was just another bit of ‘smart’ tax work. Just like every other tycoon helping their kids out with ‘jobs’ in the family firm. But under the spotlight we see it for what it really is, a freeby, albeit one that is pretty much endemic throughout the lives of the rich and famous, and to be honest the not so rich and famous to boot. Everyone wants to give their kids a leg up and giving them assistance that they don’t really deserve is SOP for the human race.

  20. Dennis, God of Taxation
    September 30, 2020 at 9:52 pm

    Form 709 is used to report transfers subject to federal gift taxes and to figure the tax, if any, on said transfers.

    There is a gift tax, Agammamon. The Internal Revenue Code and the IRS say so.

    I will defer to your superior expertise here (since mine is non-existent) but my understanding is that gifts are just included into gross income and taxed that way. That there’s no special ‘gift tax’ rate or separate taxation – you report it as a form of income and pay income taxes on it.

  21. Dennis, CPA to the Gods

    Agammanmon –

    I think we are talking at cross purposes. Under US tax law, the recipient of a gift is not taxed. Under IRC a gift is not considered income. The gift is not included in gross income… In fact, it is not even reported on the Form 1040. When there is gift tax, it is levied on and paid by the giver of the gift. That’s where Form 709 comes in.

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