His entire life has been deal making. One way or another, he usually comes out on top.
Actually, most of his life has been deal
breaking. Runs up debts and expenses, sticks others with the bill. Whether it's refusing to fulfill his contractual payments, refusing to pay employees, or writing off $1 billion in other people's lost money to avoid paying taxes for two decades.
I would like to know how to use the loss of other peoples money to avoid paying taxes. Perhaps you can explain that to me.
Okay, let's say you're a bank. I have a business venture I want to try out. I'm going to set up an LLC, with myself as the only member. Next, I come to you and convince you to loan my LLC some money. Before my venture ever really gets going, I mess things up bad, and I've basically lost all your money and I've stopped making payments on the loan you gave.
Now, you're out of a shitload of money. You're in a pickle because there's really not much you can do. I pay you a visit and I explain that things have gone bad and I just don't have the money to pay you, and I don't plan to try paying you at this point. You're screwed. Your money is down the drain. It's lost down the black hole of my failed business venture.
Meanwhile, my LLC business venture has been a failure. It's $1 billion dollars in debt and there's no moving forward because there's no cash left. I didn't lose my money, I lost yours. But on paper the LLC has a $1 billion loss. So now, I'm going to claim that loss on my personal income taxes.
Of course, that debt owed to you still has to be paid back one way or another. Otherwise, it counts on my tax return as income. I don't want you to write off the debt and force me to claim the loan as income. And I don't want you to come collecting on the debt either. So, I pay you a visit, and I tell you that I have a consolation prize. I tell you that the business is going to fold up, and that there's so much debt I won't be able to give you anything. You have two choices, either leave the debt in place, and get nothing; or accept a small slice of equity in repayment of the debt, and maybe you get
something when I liquidate. You want to at least get
something, so you accept the offer. I give you a piece of paper saying you own 10% equity in the LLC, nominally worth the $1 billion debt you are now forgiving.
Presto, bam! I've now completed the process. I've lost
your money, and can now write it off on my personal income tax return, by exchanging it for worthless equity in the LLC that lost your money.