Trump Organization Indictments

In the grand scheme of things $3.5 Million of benefits spread over 13 years for a billion dollar operation is not a huge issue and in probably 99.9% of the cases leads to a civil, not criminal case. However there are some of the charges that are on pretty solid ground while others are tenuous. The charges involving the rent free apartment are the strongest. He and his wife lived in the apartment and clearly the checks for the rents were paid by the Trump Organizations without calling it compensation and his salary was reduced by the rent payments. This leads to the inevitable conclusion that he was receiving a rent free apartment as part of his compensation. The private school tuition payments for his children are on the tenuous side. Those were actually paid by Donald Trump or by his trust. That would tend to make them a gift from Mr. Trump and if they are less than $28,000 per year per child, they don’t even trigger a gift tax calculation. So, that part of the indictment might fail (although apparently there is a plea deal in the works so he will cooperate with an investigation into former President Trump).
So, the lesson from this is that if you are a hard target of those who wish to discredit you, you probably should make sure that all transactions are fully defensible and not bleed into the tax fraud realm. Tax avoidance is acceptable and if there is a business purpose and economic reality to a transaction, it is not fraud. In this case, the rent free apartment is of a possible tenuous business purpose (perhaps he was on 24 hour/day call and needed to be close to the office), but normally that still doesn’t cure the economic reality that he was getting a place to stay courtesy of his employer and his salary was being reduced accordingly. Those two facts push it into the compensation zone and it was taxable and shows intentionality.

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