Home › Forums › Political Corner › How does Trump have his businesses legally structured?
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IGMOW (I Go My Own Way) 3 years, 4 months ago.
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I figured I would run this by this board here, for anyone else who may be up on things, and may have an answer. This is the letter Trump is using to explain why he won’t release his tax returns, because he is being audited (it is on his site):
https://www.donaldjtrump.com/press-releases/donald-j.-trumps-u.s.-federal-income-tax-returnsIn it, at least some of his businesses in that letter are said to be in sole proprietorship. I am curious how many he is doing that with. I ask this here, because my experience with the realm of starting a business, from numerous places, say to go LLC at least, if you can. A think about a sole proprietorship, is that it opens you up to being able to be held personally liable for what the business does. It is said, if possible, to be in an LLC.
So, in regards to this, I am curious how many of his businesses he is going this way, and what advantage it has for him not to use an LLC? Anyone have answers? He said he never went through a bankruptcy personally, so I am having a hard time fathoming him using a sole proprietorship much at all.
Anyone have an answer here?
"I am my own thang. Any questions?" - Davis S Pumpkins.
My guess is that they are LLC’s, but he is the 100% owner. As such, it’s a legal entity but disregarded for tax purposes. When you disregard it, it becomes a sole proprietorship reported on Schedule C of your Form 1040 individual tax return.
Not the best move for estate planning, he should have got the kids in on it when they were just starting the companies and they had no value.
The 100% owned LLC is pretty common even in the corporate tax world. Let’s say you have a company making money that owns a company losing money. You can convert the lower level company to an LLC and offset the income and losses for some state taxes. Same goes if a loss company owns an income producing company.
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My guess is that they are LLC’s, but he is the 100% owner. As such, it’s a legal entity but disregarded for tax purposes. When you disregard it, it becomes a sole proprietorship reported on Schedule C of your Form 1040 individual tax return.
Not the best move for estate planning, he should have got the kids in on it when they were just starting the companies and they had no value.
The 100% owned LLC is pretty common even in the corporate tax world. Let’s say you have a company making money that owns a company losing money. You can convert the lower level company to an LLC and offset the income and losses for some state taxes. Same goes if a loss company owns an income producing company.
It’s different here in Canada,when taking public office,politicians have to transfer ownership,usually to the kids and can’t have any business dealings with said company because it would be viewed as a conflict of interest.
Lifes a bitch,but you don't have to marry one!
It’s different here in Canada,when taking public office,politicians have to transfer ownership,usually to the kids and can’t have any business dealings with said company because it would be viewed as a conflict of interest.
Two things:
1. I am talking about what you would see on his tax returns from past years.
2. We have a similar rule, but we have never elected a president with the empire that Trump has. I’m not sure anyone here knows exactly how it would work if he wins. But a president here can’t even know what stocks he owns in the stock market. All of his investments are placed in a blind trust and the trustee isn’t allowed to tell the President what is in it.Even if Trump transfers all of his ownership to his children (and faces several billion dollars in estate taxes), he still has intimate knowledge of what his policies would do to the value of the brand. It will be interesting to say the least.
FYI, the biggest thing that Trump could do for himself if elected president is attempt to get the estate tax repealed effective his first year in office. That would allow him to avoid that tax when he transfers ownership to his children. IF he is really worth the $10 billion he claims he is, that’s about $4 billion in estate tax. I’m guessing he would be arguing that his companies are worth much less than that in front of the IRS. It would be interesting to see a tax court case make it’s way all the way to the Supreme Court over the valuation of his businesses. The People vs. The President.
Order the good wine
My guess is that they are LLC’s, but he is the 100% owner. As such, it’s a legal entity but disregarded for tax purposes. When you disregard it, it becomes a sole proprietorship reported on Schedule C of your Form 1040 individual tax return.
Not the best move for estate planning, he should have got the kids in on it when they were just starting the companies and they had no value.
The 100% owned LLC is pretty common even in the corporate tax world. Let’s say you have a company making money that owns a company losing money. You can convert the lower level company to an LLC and offset the income and losses for some state taxes. Same goes if a loss company owns an income producing company.
It is “Trump Organization LLC”:
http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=344985But the letter looks like it says “Sole proprietorship” for the business structure, so it is confusing. I am not one to want to go off and rail ignorantly. I do this enough. When I said “I don’t want to” that doesn’t mean I don’t do it.
"I am my own thang. Any questions?" - Davis S Pumpkins.
I’m not sure anyone here knows exactly how it would work if he wins.
People support Trump because he is an honest gamble. Not sure which way he will go. But, the other options are a sure bet of screw us all over.
One thing is for sure. Trump is not beholden to the lobbyists like most of the political whores. The only thing the lobbyists are more scared of than this is that he has raised around a $100 million in three months from over 2.1 million people in small donations of less than $200 each. Trump just proved that a savvy campaigner can raise money without lobbyists.
Trump is also running rings around the media. And he is not spending money on political ads for the media. This is how the media makes its money, with advertising from the candidates: https://theconservativetreehouse.com/2016/09/21/cable-news-corps-reacting-to-scant-campaign-spending-frustrated-media-attempt-to-create-news/
If Trump can win the election without the support of the lobbyists and the tv/newspaper media, he will politically cripple them.
Tax law and corporate law would need someone here who understood both. Its not uncommon for companies to have multiple lawsuits running along with audits as government agencies and private interests look to screw businesses out of money.
It is by caffeine alone I set my mind in motion, it is by the beans of Java that thoughts acquire speed, the hands acquire shaking, the shaking becomes a warning; it is by caffeine alone I set my mind in motion.
It is “Trump Organization LLC”:
http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=344985
But the letter looks like it says “Sole proprietorship” for the business structure, so it is confusing. I am not one to want to go off and rail ignorantly. I do this enough. When I said “I don’t want to” that doesn’t mean I don’t do it.You have to think about the LLC and the sole proprietorship separately. LLC is a “legal” term describing the company you would sue, who your employer is, etc. “Sole Proprietor” is a “tax” term for a company that is reported on Schedule C of Form 1040. If you have a side business and reported the income, it would be a sole proprietor on Schedule C.
If the LLC has two or more owners, then it must be designated as either a partnership or a corporation. If it is a partnership, it must file it’s own Form 1065 and send a Form K-1 to each partner. They would then include their share of the income on their individual return. If it’s a corporation, it files Form 1120 and pays it’s own tax.
Now, if the LLC is 100% owned by one person, it can’t be a partnership. Can’t have a partnership without partners. But you can designate it as a “disregarded entity” for tax purposes. It’s still an LLC for legal purposes, but it is ignored for income tax purposes. When you do that, you look to owner for where to file the taxes. Since Trump is a person, it goes on his Form 1040.
If I were to take a guess, I’d bet you money that Trump Organization LLC owns a bunch of other LLC’s. You would create a separate LLC for Trump Tower, Trump Casino, etc. Otherwise you couldn’t go bankrupt on one company without sucking all of the other ones in. Trump Organization LLC likely is a holding company owning the LLC membership interest in each of those subsidiaries.
Since they are all LLC’s, they can all be disregarded for tax purposes. Which again just means that they are reported directly on Trump’s tax return.
If he discloses his tax return, you would be able to see the net taxable income or loss on EVERY company. And I mean company-by-company. You want to know how much he makes on Trump Tower? Find the Schedule C for Trump Tower LLC. They are each reported on a separate Schedule C.Compare that to Bill and Hillary. They would have a Schedule C for speaking engagements. With “income” on one line. Not speech by speech, just one line item combining all of their speaking fees.
Hillary releasing her tax return is akin to taking one’s blood pressure. Trump releasing his tax return is a full body cavity search.
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TaxGuy wrote:
I’m not sure anyone here knows exactly how it would work if he wins.
People support Trump because he is an honest gamble. Not sure which way he will go. But, the other options are a sure bet of screw us all over.Faust: I was just talking about how it would work with his businesses, specifically having to transfer ownership. I was not making an opinion on the election itself, although your analysis seems pretty spot on.
Tax law and corporate law would need someone here who understood both. Its not uncommon for companies to have multiple lawsuits running along with audits as government agencies and private interests look to screw businesses out of money.
Chir: This is what I do for a living, so it’s right in my wheel house. I work for a large company and we buy a lot of smaller companies, so I’m pretty familiar with how people structure companies for maximum tax benefit.
Order the good wine
Faust: I was just talking about how it would work with his businesses, specifically having to transfer ownership. I was not making an opinion on the election itself, although your analysis seems pretty spot on.
Thank you.
A little off, but I personally don’t give a crap about Trump’s tax return. I understand that running a business is about maximizing profits, which requires minimizing taxes. That is the goal from the perspective Trump was in…the role he’s playing.
You cannot look at his tax return and then make a judgment on how he would react as president. It’s a different role, different goal, different perspective. It’s like saying a goalie would make a lousy striker because he uses his hands all the time.
The same holds for the Clintons really, although personal taxes do hold a little more usefulness as a measure of ethics to me. It’s all irrelevant though as Hilary has a long political track record that is much more telling then any tax return, IMO.
Ok. Then do it.
It is “Trump Organization LLC”:
http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=344985
But the letter looks like it says “Sole proprietorship” for the business structure, so it is confusing. I am not one to want to go off and rail ignorantly. I do this enough. When I said “I don’t want to” that doesn’t mean I don’t do it.You have to think about the LLC and the sole proprietorship separately. LLC is a “legal” term describing the company you would sue, who your employer is, etc. “Sole Proprietor” is a “tax” term for a company that is reported on Schedule C of Form 1040. If you have a side business and reported the income, it would be a sole proprietor on Schedule C.
So, what part is LLC side, and what is sole proprietorship with Trump? Or is it that letter, on why he isn’t revealing his tax returns uses “sole proprietorship” in a way that is different them the business structure? It looks like the term means something different than business structure, and is used to describe how his ownership works.
"I am my own thang. Any questions?" - Davis S Pumpkins.
It is “Trump Organization LLC”:
http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=344985
But the letter looks like it says “Sole proprietorship” for the business structure, so it is confusing. I am not one to want to go off and rail ignorantly. I do this enough. When I said “I don’t want to” that doesn’t mean I don’t do it.You have to think about the LLC and the sole proprietorship separately. LLC is a “legal” term describing the company you would sue, who your employer is, etc. “Sole Proprietor” is a “tax” term for a company that is reported on Schedule C of Form 1040. If you have a side business and reported the income, it would be a sole proprietor on Schedule C.
So, what part is LLC side, and what is sole proprietorship with Trump? Or is it that letter, on why he isn’t revealing his tax returns uses “sole proprietorship” in a way that is different them the business structure? It looks like the term means something different than business structure, and is used to describe how his ownership works.
It’s the same company. Again, you have two different concepts. As far as the law is concerned it is an LLC. For tax purposes only, that same company is a sole proprietor. All the sole proprietor designation does for tax purposes is tell you what form to use to file your taxes on.
The one company just has a different name for tax and legal purposes.
Order the good wine
when he is required to produce his tax return, he will do so. Why should he do that one minute sooner? just because hillary supporters want him to? Think of it as a birth certificate. ha ha ha ha
I bathe in the tears of single moms.
when he is required to produce his tax return, he will do so. Why should he do that one minute sooner? just because hillary supporters want him to? Think of it as a birth certificate. ha ha ha ha
What exactly is the requirement to produce it? Is there some sort of law that requires it? It is the norm they do get released. Odds are he never will release it. He has no reason to NOT release his taxes from 2001 to 2008, and he still hasn’t.
It actually went from him being audited, to his son saying it would be a distraction.
"I am my own thang. Any questions?" - Davis S Pumpkins.
when he is required to produce his tax return, he will do so. Why should he do that one minute sooner? just because hillary supporters want him to? Think of it as a birth certificate. ha ha ha ha
What exactly is the requirement to produce it? Is there some sort of law that requires it? It is the norm they do get released. Odds are he never will release it. He has no reason to NOT release his taxes from 2001 to 2008, and he still hasn’t.
It actually went from him being audited, to his son saying it would be a distraction.
i don’t know what the law is regarding that. i’m not american.
I bathe in the tears of single moms.
It’s been a tradition for about the last 40 or so years to release your tax returns. Trump is under no obligation to release them.
Order the good wine
when he is required to produce his tax return, he will do so. Why should he do that one minute sooner? just because hillary supporters want him to? Think of it as a birth certificate. ha ha ha ha
What exactly is the requirement to produce it? Is there some sort of law that requires it? It is the norm they do get released. Odds are he never will release it. He has no reason to NOT release his taxes from 2001 to 2008, and he still hasn’t.
It actually went from him being audited, to his son saying it would be a distraction.
i don’t know what the law is regarding that. i’m not american.
As far as I can tell, there really isn’t one.
"I am my own thang. Any questions?" - Davis S Pumpkins.
There is no law so he doesn’t have to release them.
However, it is very suspicious that the wealthiest Presidential candidate in history won’t release them.
Trump doesn’t want any potential voters to know that despite being a billionaire, he pays a lower federal tax rate then they do.
And releasing the returns will show that he pays for millions of dollars of personal expenses through his businesses without having to claim that money as personal income, then pay taxes on it.
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