The contentious Presidential campaign is winding down. Donald Trump has declined to release his tax returns citing pending IRS audits. Hillary believes Donald is hiding some deep dark secrets that could be a game changer. Randall Sorensen, CPA, did some fact checking to bring some much needed clarity to next week’s election.
The New York Times reported that Donald Trump may have avoided paying taxes for 18 years at first glance is shocking. However, if Mr. Trump hadn’t deducted $916 million in losses on his personal return then it’s likely the losses would have been utilized by his corporate entities. According to the CCH 1996 U.S. Master Guide, the maximum personal tax rate was between 36% & 40% versus a maximum corporate tax rate was between 35% & 39%. Stated another way, the net tax benefit recognized by Trump or a Trump entity would have been approximately $9 million ($916 million x 1%). To put this in perspective, this represents the same amount Bill Clinton was paid for 60 speeches in 2002 as reported to the Senate. http://pfds.opensecrets.org/N00000019_2002.pdf
I then reviewed something that everyone can relate to….. cleaning our houses. According to their 2003/04 Federal Tax Returns, Hillary and Bill listed home office cleaning expenses totaling $147,000 for 2003 and $109,000 for 2004. Not a game changer but worthy of discussing around the water cooler. www.taxhistory.org
The next item could actually have implications on national security. On the 2002 Federal Tax Return, Bill listed depreciation on a barn that he had converted to an office at a cost of $147,500. The total amount of depreciation deducted by the Clinton’s for the barn was $10,240 between 2002 and 2015. In the previous year, the Clinton Foundation was gifted two servers valued at $62,500 each. www.clintonfoundation.org/sites/default/files/clinton-foundation-2001-financial-report.pdf
The Wall Street Journal reported that Bill Clinton sent only 2 emails during his presidency and didn’t own a blackberry. http://blogs.wsj.com/washwire/2008/09/12/does-a-president-need-to-be-computer-literate/ The 2001 Clinton tax return showed that Hillary purchased a new computer for $2,100.
If we were treating servers like cars, this would be like comparing a small compact to a Ferrari. No one would fault Hillary for opting to use the latest and greatest technology unless at the time she was Secretary of State. I believe both the FBI and voters would want to know if Hillary ever sent emails utilizing the Clinton Foundation server. Further, did one of the Clinton Foundation servers ever reside in the barn? Last, what type of security measures were in place to safeguard any and all information and documents being stored in the office in the barn?
The upcoming Presidential election has become a scary proposition to many Americans. What should be even scarier to both Republicans and Democrats is the fact that the IRS and U.S. Government have risked exposing as many as 45 million Americans to identity theft. The IRS is either too proud or dysfunctional to accept help being offered by the private sector. Regardless of which candidate wins next Tuesday, if complying with the Federal tax code compromises a taxpayer’s privacy, then it’s time for the President-elect to explore a national sales tax and permanently retire the IRS.
Randall Sorensen, CPA has been practicing accounting for over 30 years and has specialized in forensic accounting for 25 years. Randall Sorensen’s accounting practice is located in Phoenix, Arizona.