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We've known for years that the collapse of Trump's debt ridden casino empire in Atlantic City almost destroyed him more than two decades ago. He was able to wriggle through by a number of angles and connivances. But one of the biggest was that he was able to convince his lenders that they'd be even worse off if he was cleaned out and removed from the picture entirely.
If you sustain real capital losses, you can apply those losses to cancel out future income/profits and reduce your tax liability. But if your losses are canceled out by debt forgiveness, the debt forgiveness is counted as income. That cancels out the losses that would provide you with the tax benefit. In other words, you can't have your cake and eat it too.
But there are many ways to be crafty and end up with both - some of those may simply be aggressive and sleazy and others may be clearly illegal.
originally posted by: Edumakated
If he did anything illegal, the IRS would be on it through their audit. No individual is going to claim almost a billion personal loss without the IRS doing a rectal exam. Without seeing future tax returns there is no way to know what was claimed and thus we'd be speculating.
With that said, if debt is forgiven it is general considered income. However, the issue is that between the LLCs, personal, Corporations, and partnerships the water gets muddied up quite a bit as to what is personal income vs that of an entity he controls.
This is why I said Trump has nothing to gain by releasing his tax returns. No matter what he does, it will be a negative.
originally posted by: Edumakated
This is why I said Trump has nothing to gain by releasing his tax returns. No matter what he does, it will be a negative.