I have to disagree. Undervaluing properties would not result in tax fraud under any circumstance I can think of.
In fact, undervaluing depreciable real property has an interesting downside at sale, in that basis is determined by reducing cost by "depreciation allowed or allowable", which means that if you DID understate value for any reason (including error) it means you would forego some tax deductions annually yet STILL have to deduct the full amount of allowable depreciation from the cost of the property in arriving at basis at the time of sale, resulting in double taxation (I think this rule is still in place).
The second thing is that it is almost impossible to have tax fraud when there is disclosure. I've prepared returns where we had no data at all, but you can't get an extension past 10/15 of the filing year. It is, of course, illegal not to file a tax return. So, I would prepare the return based on the best numbers I had, attach a statement saying,
"ALL FIGURES ARE ESTIMATES. TAXPAYER HAS NO RECORDS DUE TO (WHATEVER REASON). IF WE ARE ABLE TO RETRIEVE RECORDS AN AMENDED RETURN WILL BE FILED IF NECESSARY".
Something like that. There really cannot be a cogent fraud case in that instance as it is almost impossible to prove a criminal intent (there can still be a statutory fraud penalty for under-reporting income). But you can't go to jail unless they can show you intended to commit a fraud.
There is not going to be tax evasion, I don't think. That seems extremely unlikely given that he sustained a billion dollar loss in the mid-90s, and it took him until 2004 to use it up (I'm assuming that he sent Maddow the oldest return which showed significant taxable income after that, 2005).
OVERSTATEMENT
More likely for a real estate developer is an OVERSTATEMENT of value to get a bank loan, and this is potentially serious federal charges in the case of an FDIC insured bank. It can give rise to bank fraud as well as potentially run afoul of RICO Conspiracy Statutes. And other things.
Generally, the applicant provides a personal financial statement which states property not at cost, but at estimated FAIR MARKET VALUE and who the hell knows? One can envision Trump saying, "I have this building at Central Park, and the one next door recently sold for $1800/square foot. But MINE is a "TRUMP BUILDING", and it is worth $2400/sqare foot, so that's its value." Who the hell knows the values of the golf courses as going concerns?
I've prepared many personal financial statements for borrowers and business interests are hard. And I still have people pissed off at me 30 years later for the values I put on their business. It is a really difficult area for CPAs. For that reason, on large real estate transactions, you would almost always have an appraisal done. The bank would demand it. And the CPA doesn't want that responsibility. I do not know the implications if he has in fact dealt with foreign banks and overstated property values. It could be fraud but I don't know who would prosecute or what.
I understand David Farenthold (sp?) is "advertising" on Twitter right now for anyone who has a copy of a Trump Personal Statement, presumably trying to find some kind of abuse. If Ways & Means gets the tax returns, it is going to be a political shit storm from now until the election. If they get financial statements you would well see an unjustified impeachment because it is so wide open. They should not be allowed to get the tax returns but they can. |
