Year after year, real estate magnates like Donald Trump & Miami Dolphins owner Stephen Ross managed to avoid paying ANY federal income tax, despite reporting huge earnings.
The latest Secret IRS Files entry reveals how they do it by claiming huge losses.
propublica.org/article/these-…
The latest Secret IRS Files entry reveals how they do it by claiming huge losses.
propublica.org/article/these-…
2/ Trump and Ross are among a subset of the ultrarich who exploit businesses that generate huge tax deductions that then flow through to their personal tax returns. Many are in commercial real estate or oil & gas, industries granted unusual advantages in the tax code.
3/ Manhattan apartment towers that are soaring in value can be turned into sinkholes for tax purposes. A massively profitable natural gas pipeline company can churn out Texas-sized write-offs for its billionaire owner.
propublica.org/article/these-…
propublica.org/article/these-…
4/ Trump is perhaps the best-known example of commercial real estate’s tax beneficiaries. According to ProPublica’s data, Trump took in $2.3B from 2008-2017, but his massive losses kept his overall income below zero every year. 
5/ In 2008, Trump reported a negative income of over $650 million, one of the largest single-year losses in the tax trove obtained by ProPublica.
6/ Charles Kushner, father of Trump’s son-in-law, Jared Kushner, also avoided federal income taxes for long stretches of time. Though he reported making $330M between 2008-2018, Charles Kushner paid income taxes only twice in that decade ($1.8M in total) thanks to deductions.
7/ A spokesperson for Trump did not respond to questions about his taxes. Representatives for Kushner did not respond to repeated requests for comment.
8/ Dolphins owner Stephen Ross is the second-wealthiest real estate titan in America, and reported earning $1.5B between 2008-2017. But he also claimed $2B in losses during that time, which is why Ross didn’t pay a nickel in federal income taxes over those 10 years.
9/ Among the properties Ross owns is One Columbus Place, a NYC apartment tower whose value more than doubled, from $250M to $550M between the early 2000s-2016.
Yet, for more than a decade, this prime piece of Manhattan real estate was a surefire money-loser for tax purposes.
Yet, for more than a decade, this prime piece of Manhattan real estate was a surefire money-loser for tax purposes.
10/ Since Ross, who started his career as a tax attorney, acquired a share in the property in 2007, he has recorded $32M in tax losses from his stake in a partnership that owns it, his tax records show.
11/ Ross and others exploit rules in the tax code that apply only to the real estate business, letting developers take outsized deductions today to reduce their taxable income while delaying their tax bill for decades — and potentially forever.
12/ Real estate developers are allowed to claim depreciation of their buildings, based on the idea that space in older buildings will tend to command lower rents than space in newer ones.
13/ But rather than losing value, real estate properties often rise in value over time, like One Columbus Place has done for Ross and his partners.
14/ These depreciation write-offs, along with deductions for interest and other expenses, have helped many of the nation’s wealthiest real estate developers largely avoid income taxes in recent years, even as their empires have grown more valuable.
15/ A rep for Ross declined to accept questions, but said in a statement that “Stephen Ross has always followed the tax law."
16/ The techniques used by these billionaires to generate losses are generally legal. Carve-outs for real estate & oil have withstood sporadic efforts at reform, in part because there has been widespread support for investment in housing & energy.
17/ While there have been attempts to rein in illusory paper losses, ProPublica’s findings show these measures to prevent deduction abuses “aren’t doing what they are supposed to do,” said NYU tax professor @DanielShaviro. “The system isn’t working right.”
18/ Read the full story from @JeffErnsthausen @paulkiel & @eisingerj here:
propublica.org/article/these-…
propublica.org/article/these-…
20/ Don't miss out on new stories from the Secret IRS Files.
Sign up at the link below or OR text “IRS” to 917-746-1447 to get the next piece of this ongoing project as soon as it publishes.
propublica.org/newsletters/th…
Sign up at the link below or OR text “IRS” to 917-746-1447 to get the next piece of this ongoing project as soon as it publishes.
propublica.org/newsletters/th…
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