There’s no way in hell the President should release his tax returns.
Background: I was an accountant. I worked for Fortune 50 Banks, Investment Houses, and Insurance Companies, ending as a partner in a small brokerage firm out of Miami. Because I was the designated test taker in the office, I had every license offered from the SEC, Series 6, then 7, Series 22 for REIT’s, and I could even sell commodities, 4X, and gold. I was a CFP, a ChFC, a CLU, and RHU, and an LUTCF. Most of the work was for small to medium sized businesses, and estate work for clients from Manhattan to Chile. Throughout my corp career, I represented over 300 clients and their families in front of the IRS for final disposition of assets. I’ve testified as an expert, and back in the day, I was one heckuva forensic accountant.
For the President’s tax return, it would have taken a team of 30-50 people, probably far better than me, and two years of time (at least), to accurately audit a single year. Yeah, at least two years and maybe more like 5 years.
Most people work FOR a company. They receive a W-2, add in a few deductions if they own a home, have medical or childcare expenses, and take a deduction for tithing to a church, etc. A business owners’ taxes, and the audit of those taxes, is completely different. EVERYTHING a business owner touches has the potential for a deduction in varying percentages. If a person owns MORE than one business, or businesses in more than one state, or more than one country, the tax return becomes exponentially complex.
President Trump is a named principal in over 512 entities. He owns portions of many more companies, in many states and countries. Imagine the overwhelming task of auditing such a tax return. MILLIONS of decisions and rulings would have to be made and each decision would change the bottom line amount of taxes due……, which is why anyone CAN release a tax return while under audit……… but it’s a horrible idea…….. because the bottom line number will change and only necessitate an explanation as to WHY the bottom line number changes.
Now, imagine how complex the return would become if viewed by those with a political bias.
To understand how difficult this can be, let’s narrow the scope to something manageable. Forget Santo Domingo sugar plantations and private islands, or President Trump’s private planes and golf courses. Allow me give you a few examples of how obscure decisions/rulings can become. Let’s look at an actual audit for a single teeny-tiny company….. mine.
I was advised 3yrs of one of my companies’ returns was to be audited when the “revenuer” burst through my back door, unannounced, and presented me with a bill for $27K, and…… I could settle it by writing her a check….. “Right now!”. Most people, even business owners, are intimidated by the IRS and stop at this point. They panic. They mortgage the house, dip into savings, and pay the IRS. I knew better. I fought back, for accuracy, reputation, and I was offended by the intimidation tactics being used….. which is probably exactly what the President and his accountants are doing.
The audit lasted 4yrs and every single penny spent over a three year period was ruled upon a total of three different times. The second review of the three shut my business down for 6 weeks, while I personally went over every penny, with state and federal auditors – in my dining room. I had to walk them through a real audit and NOT ONE of them was an accountant.
Example #1: Whether or not I could deduct food was a huge fight with the auditors. I spent about $85K a year on food and they came up with a formula for 1/3 of food cost as personal expense. Nothing legal, they just decided it was a good number. No, I had receipts for other expenditures which were personal food expenses.
A. Whether or not I could deduct mayonnaise required a ruling. My secret ingredient in scrambled eggs is a tablespoon of Hellman’s for every 3 eggs (no milk or butter). I produced a B&B magazine, to whom I submitted a published recipe. The ruling took 8 months… for mayonnaise. It set the tone for what was to come.
B. $476 dollar deduction for something I listed as an Italian Bolillo. They didn’t know what it was so they struck the deduction. A Mexican bolillo is short crusty roll, an Italian version is a little longer, kind of like a loaf of French Bread for a single sandwich. How would it be possible for my husband, who worked all day, me, and an infant who wasn’t on solid food, to eat $476 dollars worth of bread before it went stale? The ruling on Bolillos took 18 months.
C. Surely, the auditors thought, during Decembers, I would be home, the house-frau (they were so condescending), with my family, and tried to strike all food purchases from Thanksgiving onward. No, I had the receipts and schedules. Again, 63 lbs of grapes, for my husband, me, and a baby? How could my family eat 63lbs of grapes? The grape ruling took 11 months…. for grapes.
Example #2: Garden expenses versus floral expenses: My company’s CPA advised me to take 72.9% of the garden expense as a deduction, cuz the guests enjoyed the garden and 72.9% of the square footage of the house was “guest space”. Auditors did not like that and demanded another measurement of the house…….., by a local certified architect, who just happened to be Gunner’s godfather. Well, 16 months before it was approved, and counting cubic footage of walls, the measurement went to 75.2%. Same deduction for home repairs roofing, with depreciation, etc. Yet, 83.33% deduction for cable expense and 100% for phone lines. Floral expense was something I purchased for a specific event, and deducted at 100%, even if it was 12 ferns for graduation and I took them home.
Example #3: I found a mistake in their software and threatened a class action lawsuit. For instance, I am allowed to deduct local sales taxes on items I sell/rent. At the time, we had a 7% sales tax. Yet, anything from 86 cents to 99 cents, their software calculated at 7 cents of sales tax due. No. by law, it’s still 6 cents from 86-99 cents, and not 7 cents until a purchase reaches $1.00. Now, think about ALLLLLLLLL the McDonald’s and fast food joints, all over the country, who charge $.99 for an item. The auditors were revealing when a sales tax was demanded (which was different than an income tax audit), they were seeking an amount from ALLLLLL those franchises in excess of what was due. I was wide-eyed at the thought of a lawsuit. They capitulated on that one fairly quickly.
Example #4: Diaper trees. They thought they had me on Diaper Trees……. because one of the auditors was a new mom, and thought I was trying to deduct diaper expense…. When you have a baby, you tend to make friends with those who have babies. We held a LOT of baby showers here. I used a grapevine Christmas tree form and glued baby diapers to the form, with little bows, and they made perfect centerpieces. I had the receipts for 87 forms and receipts for personal family diapers – separated. Ruling took 13 months……. I had pictures from the parties, and invoices where I charged for the diaper trees, with a corresponding deposit. Wrong. Deduction allowed.
Example #5: The ruling to deduct sales tax from other purchases, for items which were resold or rented, was a massive ruling. It went through two Big 8 accounting firms and took almost 2 years. Of course, in principal, I was correct, cuz otherwise, I would have been forced to pay what amounted to double taxation. Not fair to my customers. It saved me about $12K.
At the end, they owed me about $2300. Ruling after ruling was required and I didn’t win them all – everything is a negotiation, back and forth, with proof…. even when it comes to mayonnaise. I went through supervisor after supervisor and never yielded. Meanwhile, my own CPA told me of 6 other clients he had on his desk, undergoing the same harsh treatment by the IRS and state auditors in our county. One elder couple owned a large fabric store. Their bill was $68K at first. They mortgaged their home and laid off an employee to afford to pay their tax bill. I knew it was BS, they were being targeted.
Okay, you have examples of my teeny-tiny business. Multiply my lone small biz audit problems by a thousand, or a million — then multiply those problems by 512 entities, across multiple states, AND countries, to conceive a Trump audit.
Imagine pundits on CNN or MSNBC evaluating whether or not President Trump should be able to deduct something as small as “mayonnaise”, or the personal square footage for him, his wife, and Barron. CNN would demand to measure Mar-A-Lago or Bedminster. For CNN, it would be better speculation than a downed plane, and provide those who oppose the President with material for endless criticism….. which is WHY they want his tax returns…. political fodder.
Does ANYONE here have ANY confidence a television pundit could understand the President’s return AND communicate it accurately? Yet, we ALL know, the pundits would speak with authority and probably mislead at least half the country. The chances are 100%, we could find an “expert” accountant, willing to become the “Avenatti of Taxes”, appearing 200X’s on cable television, who would insist, a “mayonnaise” deduction should never be allowed…. and thus…. the President is cheating on his taxes. See how that works?
Need Proof? Given what you read above, you’re all qualified as junior accountants. Consider the following statement from Arthel Neville of Fox News to a Dem strategist: (Paraphrasing)
Arthel: We’re all looking forward to the President’s tax return. Please come back when he releases it and we can go through it, together, line by line.
Is Arthel crazy? We don’t have until the year 2050 to go through the President’s return! Line by line???? …. and then put it up for pubic discussion? The idea is absurd.
You might ask: But Daughn, every other President has released his taxes for the past 50 years, what is Trump so afraid of? It’s an unwarranted extrapolation. Cats have tails, Dogs have tails, Cats are not Dogs. It’s bad logic. Not every President has the same finances, just because they are all Presidents. The Bush’s tax returns were easy. They owned relatively few businesses and had been in public life before becoming President. Everything was separated and isolated. Clinton’s and Obama’s would have been close to a one page return. Jimmy Carter only had a farm. Easy-Peasy. Reagan was Governor of Cali before becoming President and would have separated monies into trust accounts. What did Nixon own? Eisenhower was a General. NONE of these past Presidents have assets anywhere close to the complexity of President Trump and NONE of them ever had such a virulent press corps…. who clearly only want the returns for political fodder.
You might say: But Daughn, CNN tells me the reason President Trump doesn’t want to release his tax returns is because he’s really not worth 10 billion dollars, it’s really more like 3.5 billion. Well, if you’re expecting to evaluate the President’s net worth from a tax return, you’ve been misled. His FEC filings or a balance sheet, would give a more accurate snapshot of net worth…. which the President provided, as legally required, before the election. The DIFFERENCE in the two numbers is probably coming from an evaluation of a business as a “going concern” as to a “liquidation value”, PLUS, “valuation of “goodwill”. We all know Steve Forbes (who ranked billionaires) hates Donald Trump and has hated him for decades — thus the constant fight about the evaluation of “Trump” good will.
These evaluations of net worth can swing wildly. As a going concern, my stove might be worth $5000, but if I had to sell it in a garage sale/liquidation, it might only be worth $800. See what I mean? Good Will, adds value to a company. My little B&B is worth more than a new B&B, because I am published, have a reputation, and decades of customers. What do we suppose the “Trump” name would be worth?
Let’s all understand, “Trump” does license his name to other hotels if they meet a certain threshold. A significant hit to his reputation would degrade his “good will” value….., which is another reason the press and Dems attack our President in a personal manner. We know, before Trump became President, the Trump brand was one of the top 10, requested in China for expansion. Yeah, top 10. Huge net worth added to the valuation of his good will. The “Trump” name, as a past President of the USA, could normally add ANOTHER 5 billion to his good will….. which is WHY you see protesters, funded by wealthy opponents like Soros, attacking his hotels and demanding the Trump name be removed. They’re trying to attack the largest part his his personal wealth…. his reputation…. his name…. and his good will.
You might say: But Daughn, these people are experts. They know what they’re talking about! I’m shaking my head. Most accountants don’t have the time to dig into personal expenses. AND People who always talk about how smart they are are…. well, we watch them closely. Consider this, when I met husband, he was a trial lawyer in Boston, which is the LAND of great lawyers and accountants, right? And I was just the chic who made the muffins, from Mississippi, right? Well, knew he would be receiving a large settlement from the whistle-blower case, and the tax implications would be massive. Finally, I talked him into allowing me to look at his past seven years of tax returns. One assistant and I took four months to complete the project, with 12 hour days. I re-filed them all, saving $227K in Fed/state taxes and accumulating 1.6 million dollars in legitimate expenses to carry forward. It saved us a fortune when the settlement finally came through and helped fund the kids’ college plans. The difference was common sense and elbow grease, not an Ivy-League degree.
Now think for a minute. If it took me and one other person four months to redo 7yrs of a small law office, how long would it take to do a single year for President Trump and his 512 companies?
One more point, in summary. Does anyone think President Trump tweets in the morning, flies to Minnesota in the afternoon, and plays with Turbo Tax in the evening? Of course, he does not. President Trump has the best CPA’s working on his tax returns. We’ve all heard the stories of President Bush AND President Obama auditing Citizen Trump, every year of their administrations. If there was any kind of a problem, we would have already heard about it.
No, the President should NEVER release his tax returns. I would lay in the middle of the road to stop him if he was my client. But if he was my client – of course, I would invite you all to lunch to meet him.
It’s time for dinner. Who’s paying the bill? After today, who can afford to pay the bill?