CDZ Avoiding the Appearance of Impropriety

[irosie91]

thanks tony, but no thanks-----we know what we have----various miserable choices------I'll take Trump-----I do not care if he houses his huge entourage in his own hotels

He says it's the law, he has to pay for his entourage according to campaign finance rules. He says he stays at his properties because they're the best ones. He would think that, obviously; I wouldn't know--his properties are outside the range of my pocketbook.
The other thing is, Trump doesn't have a huge entourage--according to last count, about 70? As compared to Clinton's 600+

Clinton has 600? 600 what? 600 is a lot of people

Yup. Heard it on CNN or NPR or some such. She has a huge "organization," whatever that means. In comparison, they said Trump had 70.

sheeeesh-----who-da-hell----does she think she is?
CATHERINE THE GREAT?

Good indication on how each run their stairs,one a horribly flawed candidate with a bloated staff,or also a flawed candidate mostly through perception,but runs with a more stream lined staff.
Which one off hand would a smart person think would have the same dynamic if elected?

Business efficiency?
Government bloat and inefficient?

GIANT ENTOURAGE----annoys me-------well....that's just me

 

[320 Years of History]

Good indication on how each run their stairs,one a horribly flawed candidate with a bloated staff,or also a flawed candidate mostly through perception,but runs with a more stream lined staff.
Which one off hand would a smart person think would have the same dynamic if elected?

Business efficiency?
Government bloat and inefficient?

??? I don't understand what you are getting at by the "red" remarks above. I don't currently want to be a part of yours and Irosie's discussion, but I would like to understand it and follow it. Do you mind clarifying a bit please?

• I can't tell which candidate you have in mind re: your second trait in the opening sentence. I have an idea re: the first and last ones.
• The two final "questions" -- would you mind framing them as whole sentences or connect them as "add ons" to the question that precedes them. They appear as a totally separate paragraph from that containing the question that is a full sentence, so that's why I have no idea how to interpret them as questions.

 

[chikenwing]

320 Not sure why the red?not intended,this phone I post with does strange things some times?

Comparing the two candidates ,Trump has a much smaller group. Business people push efficiency.while Clinton has a much larger ,and most likely less efficient often the case in government run entities.

Based on this comparison which would be the smarter choice?

My contention is both would continue their management style.A huge plus for Trump,bloat is a common complaint on main Street,a minus for Clinton.

 

[Dekster]

Red:
Did you click on the link? There was no logic involved. I merely stated the fact that is the nature and extent to which in-kind contributions can be made without violating campaign finance rules.

Obviously I did because I directly referenced the $2,700.00 had you bothered to process my post before having your condescending knee-jerk reaction.

Blue:

"Father, if thou be willing, remove this cup from me: nevertheless not my will, but thine, be done."
-- Luke 22:42​

Sweet Jesus! Please, please inspire folks to carefully read what I write before they remark upon it.

Appeal to authority.

Where did I intimate or say that Trump was using the money he contributed to his campaign to buy influence? Did you read the content I wrote and linked to? Did you overlook all that I wrote about the way loans work with the tax code and how that generates deductions?

When you expressed concern about him using tax deductions

I'll tell you what...contact the Trump campaign and see if they'll accept a loan from you. I can tell you now they most likely won't. They will accept a donation from you. That donation is not tax deductible. I don't have a problem with Trump loaning his money to his campaign. I have a problem with him doing so, then directing his campaign to buy services and goods from his own companies or affiliated companies, and then Trump's taking a tax deduction for the loan on his personal income taxes.

Non-Sequitur.

Were any other candidate to loan their campaign money, they'd either get repaid or they'd take a deduction for bad debt, but wouldn't use their loaned money to buy goods/services from themselves, thereby boosting sales in their own company with their own money. As I said in the post were I detailed all that stuff, it's a very complex set of financial accounting and tax accounting moves that a non-accountant would not readily understand, not because they can't understand it, but because they haven't been trained to understand it or recognize it. That's why I made an effort to try to explain it. If I recall correctly, I only explained the tax side of the matter. I didn't explain the financial accounting side because Trump's companies are privately held.

To understand it more readily, it may help if, instead of thinking of each entity/person involved as just being Donald Trump, when/if you re-read my post explaining the details, you think of the situation in terms of:

• Company A
• Political Campaign B
• Individual Taxpayer/donor C

The reason for thinking of them that way is because Donald J. Trump, Trump Organization LLC and Donald J Trump for President political campaign are three legally separate entities.

That they all have the Trump name on them certainly does add to the confusion for the non-accountant layman. That a non-CPA/accountant won't inherently "get it" is perfectly understandable. That a non-CPA is going to tell me that I don't know what I'm talking about or, at the very least, not ask questions seeking clarification for the bits they don't follow is not pardonable. The idea that anyone, accountant or not, is going to raise the idea that I said something about Trump buying influence with his campaign donations, something I didn't say or hint at, in an effort to discredit or discount the merit and veracity of my remarks is rude, irresponsible and thoroughly disingenuous. That latter tack is the approach of cad, curs and charlatans and you should be ashamed for having attempted it.

Now if you or someone else care to point to a section of the IRS Code that shows I've based my detailed discussion on one or several facts that are no longer so, that's fine. Were you to do so, I'll readily admit my mistake. I will also revise my remarks and/or conclusions as needed given the nature of the error.

Trump doesn't own many of the Trump brands so you ramble on with a faulty premise. In addition, using the services of their own enterprises increases their tax liability.

Pink:
I think you should check into the veracity of that statement. Among privately held companies and individuals, you may be right. Among entities of the the size the Trump Organization is, the vast majority if not all transactions are "arms length." Certainly among publicly traded companies that is so; it has to be so for were it not, companies would not receive "clean" audit opinions. Most if not all transactions that receive favorable tax treatment also must be arm's length transactions.

Now, it might be that Trump won't take the bad debt deduction for his campaign loans. We won't know that until he releases his tax returns for 2015 and 2016, if he ever does. Given Trump's demonstrated lack of integrity and willingness to "do anything" to come out ahead, to "win," do you think he won't? I damn sure don't.

He has no obligation to release his tax returns...and again, Trump is not the sole owner of his organization. This came up with John Kerry, and I believe John Edwards as well. They could only borrow against their interest in jointly held property because if they borrowed against their spouse's interest too it would have been a violation of campaign finance law.

 

[320 Years of History]

http://www.nytimes.com/2016/06/22/us/politics/donald-trump-self-funding-payments.html

According to documents submitted to the Federal Election Commission, Mr. Trump, whose campaign has just $1.3 million cash on hand, paid at least $1.1 million to his businesses and family members in May for expenses associated with events and travel costs. The total represents nearly a fifth of the $6 million that his campaign spent in the month.

The spending raised eyebrows among campaign finance experts and some of Mr. Trump’s critics who have questioned whether the presumptive Republican nominee, who points to his business acumen as a case for his candidacy, is trying to do what he has suggested he would in 2000 when he mulled making an independent run: “It’s very possible that I could be the first presidential candidate to run and make money on it.”​

 

[320 Years of History]

Pursuant to post #25:

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....

 

[JimBowie1958]

Let me start out by saying clearly, none of the transactions noted below is illegal. ....

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:....

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...

Yep that Trump sure is one smart M'Fer.

Thanks for establishing that so well, 320!