Former President Donald Trump might have claimed improper tax breaks on his Chicago skyscraper that could lead to a tax bill of more than $100M if he loses an IRS audit, according to new reporting on his real estate empire.
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The Trump International Hotel & Tower at 401 N. Wabash Ave., Trump's tallest and most recent construction project, lost money through a coupling of cost overruns and opening during the Global Financial Crisis.
But as Trump angled for tax benefits on the losses he incurred from the 92-story tower, the IRS argues he essentially wrote off the same losses twice, according to a joint New York Times and ProPublica report.
Trump claimed his first tax write-off on the condo-hotel building in 2008, asserting that his investment in the property met the tax code definition of “worthless” because his project debt meant he would never see a profit on the tower. He reported losses as high as $651M for the year, and the IRS didn't appear to challenge that initial claim, the outlets reported.
Yet two years later, Trump and his advisers looked to garner additional tax benefits from the project through an accounting play that led to years of IRS inquiry. He shifted the tower's ownership to a new partnership that he also controlled, using the change to justify declaring $168M in additional losses over the next 10 years, the NYT and ProPublica reported.
The IRS is now seeking a tax revision that would create a new bill of more than $100M, plus interest and possible penalties, the outlets calculated. The status of the audit is unclear.
“This matter was settled years ago, only to be brought back to life once my father ran for office,” Eric Trump, the former president's son and executive vice president of The Trump Organization, told the outlets. “We are confident in our position, which is supported by opinion letters from various tax experts, including the former general counsel of the IRS.”
An IRS spokesperson told the NYT and ProPublica the revenue service couldn't comment on private taxpayer information due to federal law.
Trump purchased the land and building that became the site of the 825-unit condo-hotel in 2001.
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