Washington: US Republican presidential candidate Donald Trump used “legally dubious” tactics to avoid paying taxes on millions of dollars of taxable income, The New York Times said on Tuesday.
According to the newspaper, in the early 1990s the real estate magnate pressured his creditors into forgiving his multimillions of dollars in debt after declaring his three casinos in Atlantic City, New Jersey, bankrupt.
According to the US Internal Revenue Service, or IRS, the government’s tax-collecting agency, any debt forgiven automatically becomes taxable income, which meant that Trump had to declare those hundreds of millions of dollars, EFE quoted the report as saying.
However, the real estate magnate exchanged that debt for shares in his bankrupt empire and ipso facto, no more pardoned debt nor taxes to pay on it. The manoeuvre was legal on paper though his advisors advised him not to do it because the real value of the shares was a fraction of their face value.
The same advisors warned him of the problems he could face in an IRS audit.
The New York Times calculates that Trump avoided paying millions in taxes with this tactic, though the exact amount is unknown because the businessman-turned-politician has refused to make public his income tax returns.
Expert accountants, consulted by the daily about the legality of Trump’s manoeuvre, said, “whatever loophole existed was not ‘exploited’ here, but stretched beyond any recognition.”
However, a spokeswoman for the Trump campaign, Hope Hicks, said the information contained in the article is “either a fundamental misunderstanding or an intentional misreading of the law”.
Weeks ago, the same newspaper reported that Trump managed to avoid paying federal taxes for two decades after filing a return in 1995 declaring $916 million in losses.