Where Is Donald Trump's $916 Million Loss Parked?

As news of Trump s taxes breaks he goes off script at a rally in Pennsylvania The Washington Post

Must-Read: John Hempton: Some comments on Donald Trump's tax returns:

Either the loss is a real loss and the Donald was really was out of pocket by $916 million (in which case he has legitimate NOLs), or the loss was passed on to someone else by The Donald defaulting on debt - in which case Donald Trump should be assessed for income from debt forgiveness. After all if the debt is forgiven it is not Donald Trump's loss....

Debt parking... the debtor (in this case The Donald) is going to get his debt cancelled for (say) 1c in the dollar. When he gets the debt wiped out the debtor (ie The Donald) will have to report assessable income equal to the debt wiped out (in this case 99 percent of $916 million).

The alternative though is for the debtor to set up a dummy party... some completely opaque offshore trust. And that dummy party goes and buys the debt for say 1.1 cents in the dollar. Then they just sit there. They don't force the debtor (ie The Donald) to repay. They don't make a profit or loss on the debt. And because the debtor never has his debt forgiven he never gets the assessment on debt forgiveness and he gets to keep his NOLs even though the losses did not come out of his pocket. Every tax system worth its salt has some rules on "effective debt forgiveness" to prevent debt parking. And - from my experience which is now over twenty years old - none of them work entirely.

Now if Donald really has all those tax losses... the debt must be parked somewhere. There is a vehicle out there... effectively controlled by Donald Trump which owns over $900 million in debt and is not bothering to collect it [or write it off]. I do not have the time or energy to find that vehicle. But it is there.... There is a Pulitzer prize for whoever finds it...

Comments