In what could be another significant financial blow to Donald Trump, the former President has been accused of using a dubious accounting trick to claim unwarranted tax deductions on his struggling Chicago tower. According to an investigation by the Internal Revenue Service (IRS), if Trump loses a years-long audit fight over the claim, he could face a tax liability of over $100 million.
The investigation by the IRS revealed that Trump’s tax maneuverings may have resulted in him unlawfully writing off the same losses twice. The first write-off occurred in Trump’s 2008 tax return, where he declared his investment in the Chicago tower as “worthless” due to its poor financial performance. This allowed him to claim significant losses of up to $651 million for the year.
However, in a subsequent move, Trump and his tax advisors attempted to squeeze additional benefits from the Chicago project. They restructured the tower’s ownership into a new partnership, and Trump declared an additional $168 million in losses over the next ten years based on this change.
The IRS, after conducting a thorough legal examination, challenged Trump’s claims. The Times and ProPublica, along with tax experts, estimated that the IRS’s proposed adjustments could result in a new tax bill of over $100 million, plus interest and potential penalties.
The audit poses yet another significant financial threat to Trump, who is already facing multiple legal challenges. He has been ordered to pay $83.3 million in a defamation lawsuit and $454 million in a civil fraud prosecution filed by New York Attorney General Letitia James. He is also facing a criminal trial in Manhattan for allegedly concealing a hush-money payment to adult film star Stormy Daniels ahead of the 2016 election.
