By my read of the Trump tax return published by the New York Times, he would have been tax-free because of a $15,818,562 loss reported on Line 11 of the return under “Rental real estate, royalties, partnerships, S corporations, trusts, etc.” It looks to me that this loss reflects the outrageous, special tax break that real estate developers that people like Trump can get, but that the rest of us can’t.In the New York Times, columist James B Stewart writes How Donald Trump Turned the Tax Code Into a Giant Tax Shelter:
To give you the brief version, people who qualify as real estate developers or managers can use depreciation deductions to offset non-real-estate income. But people who don’t qualify for this special treatment can’t do that.
There are other provisions, too, that might have allowed Mr. Trump to deduct the loans but never have to report them as income.
Real estate developers are also uniquely able to realize losses as soon as they occur, but defer gains, often indefinitely, through such tactics as like-kind exchanges. “It’s heads Trump wins, and tails the government loses,” [law professor Michael] Knoll said.
Large as the loss was, Mr. Trump didn’t even need to use any of his loss carry-over in 1995. As I previously suggested, he was also able to use the tax breaks available to active real estate developers to report a loss of nearly $16 million from “rental real estate, royalties, partnerships, S corporations, trusts, etc.,” which are the forms in which Mr. Trump holds most of his assets.... The rest of us can’t do that, unless we fit the narrow criteria for active real estate developers.