by Stephen Gandel @FortuneMagazine
October 4, 2016
By far, the oddest thing about Donald Trump’s 1995 tax returns, a portion of which was published by The New York Times on Saturday, is not the massive $916 million loss—some 9,385 times as large as what was taken by the average filer who claimed a similar loss—but this: 1995 was actually a very good year for Trump, perhaps one of the best of his career.
Trump’s Atlantic City casino empire went public in a near-$300 million offering in June 1995. The stock soared, rising from $14 to $21 by the end of 1995, creating a paper gain for Trump of more than $69 million. On top of that, Trump’s casino empire performed well. Revenue was up 13% in 1995. And its losses, excluding a one-time expense, had shrunk to just $2.3 million, less than a tenth of the $35 million Trump’s Atlantic City properties had produced in red ink just three years prior.
And yet, 1995 is also the year Trump told tax authorities that he lost nearly $1 billion.
It doesn’t seem to add up. Just one example of where Trump’s tax returns seem to conflict with reality: the Republican presidential candidate told the IRS and New York state tax officials that he collected a mere $6,108 in “wages, salaries, tips, etc.” in 1995. Yet, according to financial reports filed with the Securities and Exchange Commission, that same year Trump received $583,333 in compensation from the then-named Trump Hotels & Casino Resorts, the company Trump had taken public in the middle of that year. The figure comes from a proxy statement that the company filed in early 1996. The payment is clearly listed as salary for 1995, and it appears to have been paid directly from the company to Trump, and not through one of the corporate entities he controls.
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It’s possible that while Trump earned that compensation for 1995, he was not actually paid it by the company until 1996 or later. Some executives defer their compensation in order to delay paying taxes. The table in the proxy statement says that the compensation list is what was “paid to or accrued” by the named executive that year. And that if there is a difference, the income would be reported in the year that the compensation was accrued. But salaries, unlike, say, bonuses, are typically not paid in lump sums.
What’s more, that’s not all Trump was paid directly from his casinos that year. Trump also was reimbursed by Trump Hotels for $733,000 in expenses in 1995. And, unlike the salary, the company filings specify that Trump’s expenses were paid monthly.
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But given the size of Trump’s expense reimbursement, it seems likely that at least some of the nearly three quarters of a million dollars that Trump was reimbursed by his company for expenses should have been included in wages.
And that’s not it. Along with the direct salary Trump collected from his casino company, Trump had a number of “service agreements” that required the casinos to pay Trump-controlled businesses annual fees for licensing, marketing, and management.
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