CDZ Corruption: Trump directs nearly one-fifth of his money to his own businesses

[Silent Warrior]

The really funny part of this whole discussion is Hillary supporters complaining about someone else for lack of integrity.

 

[Tresha91203]

There is nothing improper in buying from your own LLC or family IMO.

There isn't. What has the appearance of impropriety is making another do so by using one's own influence to effect as much.

She actually broke the law with her server, whether she intended or not, whether others did the same or not.

Sec Clinton has proven to be corrupt, incompetent or both.

She's under criminal investigation by the FBI

The FBI that is investigating the server matter hasn't seen fit to think so; they've neither arrested her nor has any prosecutor brought charges against her for her use of a personal email server. Ditto her actions as Senator or SecState.

You're a judge's kid. I should think you understand well the difference between under investigation, under arrest, or facing charges, to say nothing of the principle of innocent until proven guilty.

What of her glaring appearances of impropriety? They are way beyond the ones you accuse Trump of, yet you give her a pass in your OP. Seems upside down to me is all.

 

[koshergrl]

Soooo...the OP is whining because Trump, a private businessman, spends the money he earns the way he wants. Is that about where we are?

It's not "improper" to "grease the palms" of your friends in the private world. Appearance of impropriety, are you kidding me????

 

[320 Years of History]

There is nothing improper in buying from your own LLC or family IMO.

There isn't. What has the appearance of impropriety is making another do so by using one's own influence to effect as much.

She actually broke the law with her server, whether she intended or not, whether others did the same or not.

Sec Clinton has proven to be corrupt, incompetent or both.

She's under criminal investigation by the FBI

The FBI that is investigating the server matter hasn't seen fit to think so; they've neither arrested her nor has any prosecutor brought charges against her for her use of a personal email server. Ditto her actions as Senator or SecState.

You're a judge's kid. I should think you understand well the difference between under investigation, under arrest, or facing charges, to say nothing of the principle of innocent until proven guilty.

What of her glaring appearances of impropriety? They are way beyond the ones you accuse Trump of, yet you give her a pass in your OP. Seems upside down to me is all.

I don't know why you persist in ignoring the heart of the matter: Trump appears to have used his political position as a candidate for public office to direct his campaign's monies, not his personal money, to his family members and friends.

Red:

• What of them? The thread is about Trump's behavior, not Mrs. Clinton's. Is it really that difficult to keep to the topic at hand?
• Beyond or not, unlike Trump's, Mrs. Clinton's so-called "shady" behavior occurred under the spotlight of public scrutiny. That it did is precisely why folks are able to know what happened and what didn't. It's not as though it was a secret that she used a personal email server. What she's done and not done is out there to be seen.
  
  The same can be said of Secs. Powell and Rice's personal email accounts, which used commercially owned rather than privately owned servers -- Powell's was an AOL account -- and whose use of personal accounts was just as well known (not known) as Mrs. Clinton's.
  
  Were any of the emails (apparently there were 22 of them) that contained info that is classified now also subject to confidentiality constraints at the time they were sent? I don't know. Do you? Did Mrs. Clinton's personal server and related facilities comply with the SCIF, eCFR and TEMPEST (a short summary/overview is here) requirements? I don't know, but it's also my understanding that it didn't have to, and that it instead had to comply with Federal Register guidelines. Did it? I don't know. Do you? AFAIK, all that is what the FBI is investigating.
• I haven't given Mrs. Clinton a pass in any active/willful sense. I don't have anything to say about her dealings seeing as the only one that may be "shady" is under investigation by the FBI, and unlike the audit (investigation) Trump is under with the IRS, the results of the FBI's investigation will, like everything else about Mrs. Clinton's affairs, be made public. What am I to say about it?
  
  Additionally, as goes Mrs. Clinton's emails, look at what had/has she to gain from having used a personal email account/server and then look at what Trump had to gain by potentially overstepping the line as goes the tax code.
  • Mrs. Clinton implemented her personal email capability in order to keep personal information distinct from what is rightly government business. That's not unreasonable. Were I to hold public office, I too wouldn't want my personal affairs necessarily made public merely because I discussed it using government owned data transmission equipment. I'd want full control over my personal information and thereby have the freedom to disclose it or not as I see fit. One thing we know that is the Clinton's personal information is their income data, of which they've shared years worth of it.
    • None
      
    • Hillary Clinton Releases Her Tax Returns
      
    • Clintons 'dead broke' after White House? Actually, they earned over $12M that year | Fox News
  • What has to gain from not disclosing his tax returns as has every candidate for President? Personal political gain, or the avoidance of personal political harm. Trump hasn't been a public official ever, so there was no expectation that he'd disclose his finances. Now he wants to be one, so he should release the information.
    
    Now I doubt anyone truly cares whether he's a billionaire, multi-millionaire, or whatever. I certainly don't. I do want to learn the nature and extent to which he's availed himself of the tax code's opportunities for tax minimization. I'm interested in learning the extent of his charitable giving. I'm curious to know whether he's paying taxes at a rate that seems "just" given his great wealth.

 

[320 Years of History]

It's worth noting too that in light the fact that Trump has been directing his campaign to use Trump goods and services, how that plays with donors is central to their expressed reticence to proffer money to him because of fears he will use the money to repay himself. I certainly don't think he's so brazen as to do so directly, but by directing his campaign to purchase goods services from himself is minimally an indirect way of doing so. His having done so already to the tune of $11M is hardly something to overlook, and it smacks of precisely the appearance of impropriety, the caginess, that the OP discusses.

 

[Katzndogz]

His companies offered the best prices. Campaign finance laws prohibit the goods and services be free they must be paid for. Your gripe is that Trump didn't deliberately overpay.

 

[depotoo]

Geeesh, why not just go write a novel? Lol

 

[depotoo]

Oh, and you must have never run anything, as it only makes good business sense.

 

[320 Years of History]

depotoo what about the OP is humorous?

 

[320 Years of History]

His companies offered the best prices. Campaign finance laws prohibit the goods and services be free they must be paid for. Your gripe is that Trump didn't deliberately overpay.

How do you know they offered the best prices?

The campaign doesn't have to pay for Trump's personal travel or use of Trump-owned resources. He is entirely free to donate them to his own campaign committee. In fact, anyone can donate in-kind resources to a campaign. Accordingly, Trump can personally travel on his own planes and use his own hotel or home as he sees fit, and the campaign need only report the use of the resources and/or receipt of the goods or serviced received.

My gripe is about his directing his campaign committee to use those same resources and pay for them. He's "self-funding," or at least he claims to be, so why should his personally owned resources be actually paid for by his campaign committee? For example, had here merely donated the use of his plane his campaign, his campaign would have some $4.6M available to spend on things like ads. But that's not what he did, is it? Instead, he makes his campaign pay for the use of the plane.

And who gets the financial benefit of TAG airlines getting paid for the use of the Trump plane? Trump's kids. Now I don't know what the profit is on $4.6M of charter jet travel, but I do know that had Trump simply given that sum to his kids, he'd pay a gift tax on it. But the question remains, why should Trump's donors contribute money to the Trump campaign for his kid's profit?

 

[depotoo]

depotoo what about the OP is humorous?

You do realize most people won't read a novel on a message board, right?

 

[320 Years of History]

depotoo what about the OP is humorous?

You do realize most people won't read a novel on a message board, right?

Red:
Not expressly, though I thank you for telling me that.

What I do realize is that:

• Most topics that I discuss don't lend themselves to intelligent discussion/debate in the space of tweet or short paragraph or two and, with one recent exception, I post almost exclusively in forum sections marked "debate." I tried for the sake of finding out what be a non-debate-labelled section of the forum's tolerance for comprehensive discourse, and indeed your assertion seems borne out by that test.
• I'm not seeking feedback from most people. The folks who give enough of a damn about the topic to have something of substance to say are the only folks from whom I care to receive replies/comments.

 

[beautress]

Sorry, this is a very long OP, even for me. Unfortunately, the topic is complex, so the post has to be long if I'm to have any hope of non-CPAs/non-financial analyst folks following it. It's also very long because this is the level of detail one must be at if one is to even begin credibly and critically evaluating Trump's claims (on the subject matter discussed here) and find out just how much "water they hold." So again, sorry for the length.


Let me start out by saying clearly, none of the transactions noted below is illegal. This post is all about the appearance of impropriety. It's about pointing out the dichotomy between Trump's words and his actions. It's about how Trump misrepresents and downplays his own corrupt seeming acts while at the same time loudly trying to claim corruption on the part of his opponent. This thread is about highlighting Trump's hypocrisy with stuff that simply cannot be made up. Most importantly, it's about what, were I discussing drug dealers, would be called money laundering, and because the goods and transactions involved drugs, the transactions would literally be illegal. That said the sort of "shadiness" isn't uncommon for the real estate (real estate development) industry.

• Suspected Money Laundering in the Residential Real Estate Industry: An Assessment Based Upon Suspicious Activity Report Filing Analysis
• MONEY LAUNDERING IN THE COMMERCIAL REAL ESTATE INDUSTRY
• Tax fraud and shady buildings - OECD Observer
• How secretive shell companies shape the U.S. real estate market
• Panama Papers And Real Estate: New Push For Old Priorities - Law360

So Trump lent his campaign money, a lot of money. What did he do with it? He spent some $11M of it, some 17% of is funds, to purchase goods and services from Trump businesses in part as follows:

• $420,000 to Mar-a-Lago, the private Florida club
• $4.6 million to TAG Air, so he can use his private jets (TAG is Trump's airline)
• $5,000 to Eric Trump Winery Manufacturing LLC

Then there's this from last year and reported by the Wall Street Journal:

After making his “Make America Great Again” headwear iconic over the summer, Mr. Trump’s campaign spent more on hats and t-shirts than anything except airfare.​

​

The $678,000 the Trump campaign spent on items listed as hats or “t-shirts/hats” is more than he spent on any line item except airfare — and the airfare was paid to Trump-owned Tag Air. No outside vendor approached the more than $500,000 Mr. Trump’s campaign paid to hat-maker Ace Specialties of Lafayette, La.​

​

The owner of Ace Specialties is Christl Mahfouz, who is a board member of a charitable foundation named for Mr. Trump’s son, Eric.​

​

(Sidebar comment: On the PBS Newshour, I think, I yesterday heard Trump remark, as part of a spiel about American manufacturing, about how hard it was to find a U.S. maker for his campaign slogan hats. Really? Just how hard was it to reach out to a guy who sits on the board of a charity named for Trump's son? Apologies for not being able to find the specific quote...I'll keep looking for it.)​

Trump Greases the Palms of His Friends: The "pot" has the gall to call the "kettle" black!
Really? Trump spent at least $680K greasing the palms of a friend and his son. Really? Yet he wants us to think Hillary Clinton is corrupt when there's no evidence that she greased anyone's palms, least of all her own or her family's and friends', by using the political power of her position as Secretary of State.

​

Critics alleged that Bill Clinton’s fundraising, which in many cases came from foreign billionaires who have reason to court influence in the United States government, created at the very least the perception of quid-pro-quo corruption, in which big dollar donations to the Clinton Foundation won favorable treatment from Hillary Clinton in her roles as senator and Secretary of State.​

​

This was the argument of a book released last year by conservative writer Peter Schweizer called Clinton Cash, which claimed to have discovered several examples in which big donations from wealthy foreigners led Hillary Clinton to give official favors. Schweizer found no hard evidence of a time when Hillary Clinton changed her opinion on an issue of concern or provided an official favor for a Clinton Foundation donor.​

Based on the Trump Campaign filings with the FEC, the same simply cannot be said of Trump.

Okay...So, let's say the sums involved are small, for in one sense they are...$5K and ~$680K is "chump change" in the context of Presidential campaign spending, but it's not de minimus to the suppliers in question, and that's what makes it a "palm greasing" transaction. More importantly, what matters about it is that it's hardly what one would consider as truly an arm's length transaction. That they aren't arm's length transactions speaks directly to Trump's willingness to use his political situation to benefit his favored friends and family.

I don't know from which company Trump purchased his hats, but I do know there are several options for "Made in America" baseball caps (three linked below). Does his "friend" own all of America's baseball cap producers? Could Trump not have chosen a maker who doesn't have a clear connection with himself, thereby maintaining the arm's length nature of the transaction?

• Union Made in USA: UNIONWEAR
• Hats Made in USA - Village Hat Shop
• USA Made Caps & Hats | Wholesale Blank Caps & Hats

Isn't the absence of the arm's length principle in the dealings of Congress and the Executive Branch part of the very point Trump and Sen. Sanders have been making throughout the campaign season? How does he then expect us to believe his remonstrations to that effect when there's clear proof he's doing exactly what it is he derides the "establishment" for doing?

Oh, the hypocrisy of Donald J. Trump....


"Funny Money": Loan Money to My Campaign --> Campaign Buys from My Companies
Okay, let's get into the matter of Trump's loans to his campaign. Notice that Trump loans money to his campaign rather than donating money to his campaign. What's the impact of that? Well let's take a look.

• Donations to political campaigns, one's own or anyone else's, are not tax deductible.One may as well have spent the money on a pair of shoes or groceries for the tax deductibility of a donation to a campaign. Indeed, those acts may yield a tax deduction whereas a political donation never does.
  • The impact of this is that one earns money (wages or whatever) and then spends it. One pays taxes on the money earned, the money donated is simply not in one's pocket anymore, and that's that. It's what most people are used to, and it's certainly the circumstance of nearly everyone who contributes to political campaigns.
• One may make an interest free loan to a non-profit organization, in this case one's own political campaign; however, in doing so, one must also impute interest income on the loan and include the imputed interest in one's income.
  • That interest then can be deducted as a charitable contribution since it's not actually collected from the recipient of the loan. It's not exactly "a wash" if the deduction is post-AGI, but it is "a wash" if the deduction is one taken to arrive at AGI. Whether the loan was given by an individual or a business will make the difference in this case because Trump is an individual and the campaign is not a business.
  • The above is relatively straightforward. But here's where it gets complicated and "technical," if you will. Accountants won't have trouble with this, finance types probably won't either. The average person probably hasn't any idea of this stuff, so I'll try to keep it as simple as possible.
    
    (Note: To repeat, none of this is illegal, but it is "shady" given all Trump's "soapboxing" about being self-funding, which to the layman means he's spending his money, funding his campaign, in much the same way you and I would be doing were to donate to it. Had Trump not been "on about" being self-funding, I wouldn't be bringing this up, quite frankly because it wouldn't apply.)
    
    Trump's contributions to his campaign are loans not donations. Trump will not seek repayment of the loans, which, in turn, means the loans will eventually, if they aren't already, become bad debt expense. That means that while he has to impute interest as noted above, Trump also gets to take a deduction for bad debt expense. Why? Because his "contributions" are loans not donations.
    
    Another thing to keep in mind is that Trump's businesses are all privately held. Most of them are LLCs, which means they are treated as "flow through" entities and taxes are paid by the equity partners in the organization. That basically means the accounting happens at the partnership/LLC level, and the net results (gain or loss) flow down to the partners in direct proportion to their equity participation. The other equity owners in Trump Organization, the holding corporation (not an LLC) for all Trump's businesses, are his kids.
    
    For now, just store this in the back of your mind; it's relevance will appear below shortly. Also keep in mind that LLCs/partnerships and very closely held corporations function pretty much as do sole proprietorships, that is, the owners can pretty well "run" any expenses -- down to toothpaste and toilet paper if they want to -- through the business and deduct them as business expenses, be they operating or miscellaneous. (There are myriad legit ways to do so, but it's not hard at all to do so, especially with the great variety of types of businesses Trump Organization owns. In super closely held entities like Trump's, doing so basically comes down to cash flow not actual income, which may well explain why Trump was for his campaign begging for $100K in "emergency" funding recently.)
    
    So what does all this mean?
    • Donald Trump loans money (let's just call it $100 for simplicity's sake) to the campaign (DTFP).
      • Pre-AGI tax deduction = $100 for bad debt expense
        Had you and I donated $100 to DTFP, we get no tax deduction. It's just our hard earned money that we spent.
        Now up the $100 to $55M. Quite a nice deduction for something that to everyone else isn't deductible at all, hugh? Don't forget that the $55M expenditure is one he is predisposed to making anyway just as most Americans are predisposed to spending money on their summer vacations, car maintenance, food, political campaign donation, or whatever, but those are expenditure for which they don't get a deduction for making.
    • DTFP spends $10 to buy "whatever" from XYZ Trump-owned LLC (it doesn't matter for this illustration which one).
      • XYZ records $10 in sales and some share of that flows to Trump Organization, and thereby to his family members via their ownership in Trump Organization. For Trump himself, he avoids the gift tax. (Remember, LLCs don't pay taxes directly, their income/loss flows to the owners/partners, and taxes are then paid by them, not the LLC itself.)
      • Trump Organization receives the profit from the LLC. It can then distribute the gains as returns of equity (dividends) rather than as wages. This, for folks in Trump's, including himself, and his kids' income bracket, avoids the double taxation of corporate income and sets the tax rate on the money received at the capital gains rate (likely 20%) rather than at their nominal income tax rate (39.5%).
        
        (Indeed, Trump Organization, because it is 100% family owned, can, unlike public corporations that are widely held, run continual net operating losses and suffer no real consequences for doing so, but that's a topic for another time.)
      • For Trump himself, if the money he earned was ordinary income, he'd initially be taxed on it at his marginal rate of 39.5%. Since he's gotten the deduction noted above, he's instead got a deduction, i.e., not taxed on that money. Yet part of it comes back to him via his use of it to buy stuff from himself, which is indeed income, but it's income that's taxed at 20%.

So there's the net result for Trump and his kids of just what seem like simple transactions:

• Trump gets a $55M deduction and a gift tax deduction.
• His kids get income that's taxed at a far lower rate than their nominal tax rate.

If you've read the details above, you may now be asking, "So what?"

• The "so what" is that Trump is claiming to be self funding, which in manner of speaking he is and to the extent he is, I'm not saying he isn't, but the reality is that while he's telling us he's spent $55M of his own money, he's actually "spent" less than that, a lot less. I doubt that much you'll see in the press and in blogs will go into the details as I have above. The linked article in the preceding sentence, for example, doesn't. I just provided all that so you'd understand at least some of the "hanky panky" (not illegality...it doesn't become illegal until and unless Trump himself makes a profit, which is all but impossible for anyone but the FEC and IRS to determine whether, after all is said and done with the election, he has).
• The "so what" is the appearance of impropriety that exists in the way Trump is funneling money through his campaign back to himself and getting a huge tax deduction in the process.
• The "so what" is that Trump makes claims of financial "corruption" by Mrs. Clinton when, in contrast to her Foundation's activities which are very public, there's almost no way for anyone other than the IRS and the FEC to determine whether there is anything unsavory going on with Trump's own finances. He won't even release tax returns from years not under audit, when his opponent has released some 30+ years of them. (What her speech transcripts have to do with his tax return release is this: nothing. She's already released her tax returns. Why should she release her speech texts in exchange for his tax returns? She can release them in exchange for something else, perhaps the tax returns of Trump Organization (TO), the details of which, as a corporation, would not be included in the content of Trump's personal tax returns beyond the itemization of the dividends received, equity transactions and loans (if any) with TO.)

Will Trumpeteers "get" the above? I don't know. I can only hope that by reading it, and examining the content at the links I provided, they'll at least objectively evaluate the integrity of Trump and his claims. I don't expect some sort o "overnight" transformation, but hopefully this post will inspire a bit more critical analysis and objective circumspection.

It's precisely the sort of examination of the details of Trump's remarks and deeds I had to pursue, but pursue them I did because I won't vote for the man/woman who prevaricates and lies more than every other person in the race. Integrity is what I consider most important, and the easiest way to demonstrate that is for a candidate to be open and straightforwardly candid, not "spinning" if you will, re: their dealings. I don't have to like what they do, but I do need to know that what they say, and what they say they're doing, is true. I need to know that I can count on what they say long after they've said it.

• Trump often says, "People say such and such." Who are these people? Why doesn't he name them?
• CDZ - You think Trump's claim that the GOP process is "rigged" eh?
• CDZ - As if anyone needs more evidence that Trump cannot be relied upon....transsexuals and bathrooms
• CDZ - Critically reading Trump's foreign policy speech from 27-April-2016
• Trump: "I'll fund my own campaign. I'd love to do that."
• CDZ - Donald Trump's Tax plan evaluated

Unlike partisan bloggers, editorialists, and party "hacks" (be they private citizens or public commentators), I don't need to make up stuff; I don't even want to. I'm an Independent, not a Rep, Lib, or Dem. I know how to and will look up stuff from objective sources, not my favorite conservative "this" or liberal "that." The will to do that is all I aim to inspire among others.

As I some time back wrote, I was once quite optimistic about a Trump run for President. I had high expectations back then. Sadly, the hype hasn't matched the reality; in fact, it's totally the opposite. Now, in light of the recent news about Trump's money woes, troubles I would have never expected a billionaire self funding candidate to have, I've opted to apply my CPA skills to figure out for myself just "what's what" as goes the money flows. So here I am, and this post is the first result of my inquiry....

You're all over the map.

Trump used his own investment money to stay in business. And it's his choice to stay alive.

 

[Staidhup]

So they are still worried about the boogieman Trump yet are willing to look the other way when it concerned the Clintons, Biden’s, Pelosi and a host of others, really? Apparently he still scares the hell of them when they sleep, why is that so, they claimed overwhelming victory in the election, proclaim socialism is the new wave, furthermore confident in their securing full control from here until eternity. Yet they fear the Orange man and voices of the disenfranchised, interesting to say the least. Now as it regards Trumps financials, Congress wrote the laws and his accountants followed those laws to the letter. Ain’t that an interesting twist? Better look under your bed and lock the doors before you turn in for bed, don’t forget the depends!

 

[sartre play]

Thanks for pointing out the discrepancy between what many believe is morally dishonest & things that are illegal.

 

[Admiral Rockwell Tory]

Well, given the tone of your post, I'd have to say the answer is you would do as Trump is doing because you have little to no sense of integrity, don't understand the optics of your actions, and because you are fine with nepotism.

At the risk of "whataboutism", can you explain all of the Democrats who employ family members on their campaigns at exorbitant salaries or hire consulting firms staffed with relatives?

Maxine Waters and Ilhan Omar are prime examples of employing these tactics. Maxine doesn't even live in the district she represents in Congress.

 

[Admiral Rockwell Tory]

Red:
Not expressly, though I thank you for telling me that.

What I do realize is that:

• Most topics that I discuss don't lend themselves to intelligent discussion/debate in the space of tweet or short paragraph or two and, with one recent exception, I post almost exclusively in forum sections marked "debate." I tried for the sake of finding out what be a non-debate-labelled section of the forum's tolerance for comprehensive discourse, and indeed your assertion seems borne out by that test.
• I'm not seeking feedback from most people. The folks who give enough of a damn about the topic to have something of substance to say are the only folks from whom I care to receive replies/comments.

There is no debate. You are creating a problem where none actually exists.

 

[jc456]

At the risk of "whataboutism", can you explain all of the Democrats who employ family members on their campaigns at exorbitant salaries or hire consulting firms staffed with relatives?

Maxine Waters and Ilhan Omar are prime examples of employing these tactics. Maxine doesn't even live in the district she represents in Congress.

Didn’t Omar marry her biological brother?

 

[Admiral Rockwell Tory]

Didn’t Omar marry her biological brother?

Allegedly. We will never know until the Republicans take back the government.

 

[beautress]

It's a complete waste, I pity the electrons killed in making the OP. It's rambling, incoherent, vapid and boring

It also ignores the multiple attacks on Trump by the left that are timed for their own political gains.