Tag Archives: Bonds

NYT: We’ve Figured Out How Trump Gamed the Tax System

Mother Jones

A few weeks ago the New York Times got hold of the first page of Donald Trump’s 1995 tax return. It showed a net operating loss of $916 million, which Trump was able to use to offset his income over the next 20 years, thus avoiding millions of dollars in income taxes. But while solving one mystery, it opened another: Just exactly how did Trump manage to declare such a big loss? Several theories made the rounds, but the Times now thinks it has the answer, thanks to a cache of “newly obtained documents.” Here’s the nutshell version of the Times’ explanation:

Trump was a terrible businessman and lost a huge amount of money on his casino operations in the early 90s.
As part of his bankruptcy negotiations in 1991, he persuaded banks to forgive hundred of millions of dollars in loans.
Forgiven loans count as “Cancellation of Debt” income, which should have offset his huge operating losses. But somehow they didn’t. Why?
The Times says it was because Trump used a legally dubious “equity-for-debt” swap. Basically, he swapped the bonds he couldn’t pay for new bonds that he classified as equity shares in the casino partnership.

The Times makes a good case that Trump’s own tax lawyers told him this plan was extremely risky (see the excerpt from the official tax opinion on the right) and would most likely be disallowed by the IRS. But we don’t know if it was. The trail stops cold in 1995.

If I’m reading this right, the basic story is that Trump gave his banks “New Bonds” in place of their old bonds and classified the new bonds as equity shares in the casino partnership. Trump then valued the equity as equal to the old debt, thus showing no net loan forgiveness and therefore no COD income. This despite the fact that, in reality, the equity was close to worthless.

So Trump then had $916 million in operating losses, but no debt forgiveness to offset it. “Even in the opaque, rarefied world of gaming impenetrable tax regulations,” says the Times, “this particular maneuver was about as close as a company could get to waving a magic wand and making taxes disappear.”

At this point, the question of how Trump gamed the tax system is mostly a matter of academic interest. Still, I’ve written about this before, and figured I should follow up with the latest theory. And this is it.

Taken from:

NYT: We’ve Figured Out How Trump Gamed the Tax System

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San Francisco moves to ban plastic water bottles, scoffs at every other sad city

San Francisco moves to ban plastic water bottles, scoffs at every other sad city

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Two big pieces of news out of San Francisco this week: Barry Bonds started a brief stint coaching for the Giants, and the city made significant progress toward outlawing plastic water bottles. As a result, the average level of self-satisfaction exhibited by San Franciscans increased by a factor of three.

And that’s just from Bonds’ ego! Did you really think we were going to shame a city for striving to be more environmentally conscious? Not that we’re ruling out that San Francisco might have done it just a little bit to make every other American city look even worse. (Oh, come on! You were thinking it too!) Still, this is downright cheery news.

On Tuesday, the city’s board of supervisors unanimously approved a ban on selling single-use plastic bottles of water on city property. The ban, which still needs a second vote and the sign-off of San Francisco Mayor Ed Lee, will go into effect in October of this year for indoor events, and 2016 for outdoor events. Sporting events that require excessive water consumption — such as the San Francisco Marathon — could be excluded from these restrictions, but not without first attempting to secure other, more sustainable sources of water.

SFGate reports:

[Supervisor David] Chiu noted that it wasn’t until the 1990s that there was a plastic water bottle industry, which is now a $60 billion a year business. He said one goal of the legislation is to get people thinking about the waste, much like the city’s plastic bag ban, which has dramatically increased the number of consumers who use reusable bags.

“I want to remind people that not long ago, our world was not addicted to plastic water bottles,” he said. “Before (the 1990s), for centuries, everybody managed to stay hydrated.”

At which point, every other city supervisor struggled to recall what life was like at any point before approximately last Thanksgiving.

Chiu, however sassy about it, has a point. Since 1991, U.S. bottled water consumption per capita has tripled. And this is in spite of the fact that bottled water is widely acknowledged as an enormous scam: 25 percent or more of bottled water is just straight tap water, but you pay as much as 2,000 times more for it than the stuff that comes out of your kitchen faucet.

As scams go, bottled water also has an undeniable environmental impact. In 2007, production of water bottles for U.S. consumption alone used up to 54 million barrels of oil. Seventy-five percent of plastic water bottles are not recycled, instead ending up on beaches, in rivers, and partially full of unidentified liquid on nearly all the empty bus seats you’ve ever tried to sit in.

San Francisco, you’ll always be The City That Waits to Die to us. That said, Most Sustainable City in the United States has a pretty nice a ring to it, too.


Source
S.F. supervisors back ban on sale of plastic water bottles, SFGate

Eve Andrews is a Grist fellow and new Seattle transplant via the mean streets of Chicago, Poughkeepsie, and Pittsburgh, respectively and in order of meanness. Follow her on Twitter.

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San Francisco moves to ban plastic water bottles, scoffs at every other sad city

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The Bluebird Effect: Uncommon Bonds with Common Birds

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