Professor Dan Sheafferwas a senior corporate tax attorney for an international multi-billion-dollar corporation, where he led the implementation of several sophisticated international corporate restructuring projects involving multiple foreign tax jurisdictions. Sheaffer teaches courses in corporate taxation, international tax, and business organization.
After reading The New York Times article, “The President’s Taxes Long-Concealed Records Show Trumps Chronic Losses and Years of Tax Avoidance,” Sheaffer has offered the following analysis.
“Normally, we should not assume that just because a businessperson has tax losses that they are a tax cheat or a bad businessperson. The legitimacy of each of President Trump’s deductions is the more important issue. In real estate and other businesses, an individual or entity can show legitimate losses while still having positive cash flow.
It appears that at least some of President’s Trump’s losses are driven by legitimate deductions, such as depreciation and loss carryovers. Depreciation deductions and the carryover of losses are not loopholes in our tax system. These provisions allowing taxpayers to spread the cost of certain assets over a number of years and to carryforward losses from previous years, have been in place for decades, if not over a hundred years. Depreciation deductions are used by virtually all forms of business, from real estate to farming.
It also appears from the article, however, that President Trump may have taken deductions that he may have not been legally entitled, such as deductions for personal expenditures. For example, expenditures for haircuts and other personal expenses are generally not deductible, even by actors and actresses.
I am certain the IRS is also closely examining a number of President Trump’s other deductions discussed in the article.”
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