Former President Donald Trump is under scrutiny for questionable tax breaks claimed from his Chicago tower, according to an IRS inquiry. The dispute could result in a tax bill exceeding $100 million.
The 92-story skyscraper is Trump’s last major construction project. It suffered significant losses due to cost overruns and the Great Recession. However, the IRS argues that Trump improperly wrote off these losses twice on his tax returns.
In 2008, Trump claimed his investment in the tower was “worthless,” resulting in reported losses of up to $651 million. In 2010, he executed a maneuver that declared $168 million in additional losses over the next decade, which has drawn years of IRS inquiry.
The IRS undertook a high-level legal review during Trump’s presidency. ProPublica and The New York Times estimate that the IRS revision could lead to a new tax bill of over $100 million, plus interest and potential penalties.
Trump’s tax records have been a subject of speculation since the 2016 presidential campaign. He has refused to release his returns, citing a long-running audit. The IRS is disputing a $72.9 million tax refund that Trump claimed starting in 2010.
The outcome of Trump’s dispute could set a precedent for wealthy individuals seeking tax benefits from complex partnership laws. The audit represents another potential financial threat for Trump, who has recently been ordered to pay significant sums in a defamation case and a civil fraud case.
Reporting by the Times has found that Trump has often used aggressive accounting maneuvers to avoid paying taxes. His Chicago accounting maneuvers are considered questionable and unlikely to withstand scrutiny by tax experts.
Trump acquired land for the Chicago tower in 2001. Despite initial plans for the world’s tallest building, he unveiled a more modest tower in 2003. As cost estimates increased, Trump borrowed up to $770 million for the project. However, he defaulted on his loans in 2008 after failing to sell enough units to pay off his loans.
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