Great ResignationDiversity and InclusionCompensationCEO DailyCFO DailyModern Board

That Bombshell Report on Trump’s Taxes May Spark an Investigation by New York Tax Authorities

October 3, 2018, 9:28 AM UTC

On Tuesday the New York Times dropped an investigative bombshell: President Donald Trump got at least $413 million from his father’s real estate empire, much of it through “dubious tax schemes…including instances of outright fraud.”

If true, the allegations not only belie Trump’s assertion that his father, Fred Trump, provided only minimal assistance in his rise to billionaire-dom—they also raise legal questions. And those questions have caught the attention of the New York State Tax Department.

“The Tax Department is reviewing the allegations in the New York Times article and is vigorously pursuing all appropriate avenues of investigation,” department spokesman James Gazzale told Bloomberg.

Trump lawyer Charles Harder said the allegations were “100% false and highly defamatory.”

The Times investigation was conducted over more than year, and a documentary short on the process, entitled “The Family Business: Trump and Taxes,” will air Sunday on Showtime.

According to the exposé, Fred and Mary Trump transferred over $1 billion to their children. However, rather than paying $550 million under the inheritance taxes at the time, the Trumps paid less than a tenth of that amount.

Tax experts told the Times that some tactics—such as the establishment of what seems to have been a shell company for siphoning money from the Trump empire to Donald, his siblings and a cousin—could be characterized as criminal tax fraud. Fred and Mary Trump also appear to have significantly undervalued assets in tax returns. When Fred died, the most valuable item in his estate tax return was “a $10.3 million I.O.U. from Donald Trump, money his son appears to have borrowed the year before he died.”

Harder told the Times that President Trump himself had “virtually no involvement whatsoever with those matters,” and the “affairs were handled by other Trump family members who were not experts themselves and therefore relied entirely upon the aforementioned licensed professionals to ensure full compliance with the law.”

The president has been notoriously recalcitrant regarding his tax affairs, refusing to release his tax returns during his campaign and maintaining that secrecy afterwards.

At the least, the Times investigation does not show Donald Trump in a flattering light. It claims he tried to change his father’s will in 1990, to make Donald the estate’s sole executor, but Fred feared his son would use the empire “as collateral to save his own failing businesses.” It says the $1 million Donald Trump always claimed he received from his father, to build his own empire, was actually more than $60 million. And it claims the president grossly undervalued the empire when he came to sell it in 2004, losing out on hundreds of millions of dollars.

“Fred Trump has been gone for nearly twenty years and it’s sad to witness this misleading attack against the Trump family,” read a White House statement following the report’s publication. The statement noted that the IRS had signed off on the relevant documents.

On a side note, Trump’s time in the White House has not made him richer. In the new Forbes 400 list, Trump’s net worth is $3.1 billion, down from $4.5 billion when he launched his presidential campaign in 2015. He dropped 138 spots on the list during that period.