Donald Trump built a business empire and won the presidency proclaiming himself a self-made billionaire, and he has long insisted that his father, the legendary New York City builder Fred Trump, provided almost no financial help. "I built what I built myself," the president has repeatedly said.
But an investigation by the New York Times has revealed that Donald Trump received the equivalent today of at least $413 million from his father's property empire.
Much of this money came to Trump because he helped his parents dodge taxes. He and his siblings set up a sham corporation to disguise millions of dollars in gifts from their parents, records and interviews show.
Records indicate that Trump helped his father take improper tax deductions worth millions more. He also helped formulate a strategy to undervalue his parents’ real estate holdings by hundreds of millions of dollars on tax returns, sharply reducing the tax bill when those properties were transferred to him and his siblings.
In all, the president’s parents transferred well over $1 billion in wealth to their children, which could have produced a tax bill of at least $550 million under the 55 per cent tax rate on gifts and inheritances that was in place at the time. Helped by a variety of tax dodges, the Trumps paid $52.2 million, or about 5 per cent, tax returns show.
The president declined requests over several weeks to comment for this article.
A lawyer for Trump, Charles Harder, provided a written statement. "There was no fraud or tax evasion by anyone. The facts upon which the Times bases its false allegations are extremely inaccurate," he said.
“President Trump had virtually no involvement whatsoever with these matters,” he continued, saying the president had delegated those tasks to relatives and tax professionals. “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.”
In a statement on behalf of the Trump family, the president's brother, Robert Trump, said, "All appropriate gift and estate tax returns were filed, and the required taxes were paid."
Since Donald Trump first refused to release his income tax returns, his campaign and then his presidency have been suffused with questions about the extent and sources of his wealth, questions that have only intensified with the Russia investigation.
The findings are based on interviews with Fred Trump’s former employees and advisers and more than 100,000 pages of documents describing the inner workings and immense profitability of his empire. They include documents culled from public sources – mortgages and deeds, probate records, financial disclosure reports, regulatory records and civil court files.
The investigation also draws on tens of thousands of pages of confidential records – bank statements, financial audits, accounting ledgers, cash disbursement reports, invoices and canceled cheques.
Most notably, the documents include more than 200 tax returns from Fred Trump, his companies and various Trump partnerships and trusts.
While the records do not include the president’s personal tax returns and reveal little about his recent business dealings at home and abroad, dozens of corporate, partnership and trust tax returns offer the first public accounting of the income he received for decades from various family enterprises.
At more than 13,000 words, this is one of the longest investigative articles ever published in the Times and offers the first comprehensive examination of the inherited fortune and tax dodges that guaranteed Trump a gilded life.
Here are some key takeaways.
The Trumps’ tax manoeuvres show a pattern of deception, tax experts say
The line between legal tax avoidance and illegal tax evasion is often murky, and there is no shortage of clever tax-avoidance tricks that have been blessed by either the courts or the Internal Revenue Service itself. The wealthiest Americans rarely pay anything close to full rate. The Trumps' tax manoeuvres met with little resistance from the IRS, the Times found.
But tax experts briefed on its findings said the Trumps appeared to have done more than exploit legal loopholes. They said the conduct described here represented a pattern of deception and obfuscation that repeatedly prevented the IRS from taxing large transfers of wealth to Fred Trump’s children.
Donald Trump began reaping wealth from his father’s property empire as a toddler
In Donald Trump’s version of how he got rich, he was the master dealmaker who broke free from his father’s “tiny” Brooklyn and Queens property operation and built a $10 billion empire that would slap the Trump name on hotels, high-rises, casinos and golf courses the world over.
But the Times' investigation makes clear that in every era of Trump's life, his finances were deeply entwined with, and dependent on, his father's wealth. By the age of three, he was earning $200,000 a year in today's dollars from his father's empire. He was a millionaire by age eight. In his 40s and 50s, he was receiving more than $5 million a year.
There was a clear pattern to this largesse: When his son began expensive new projects, Fred Trump increased his help. In the late 1970s, when Donald Trump crossed the river into the glittering precincts of Manhattan – converting the old Commodore Hotel near Grand Central Terminal into a Grand Hyatt – his father opened a spigot of loans. When he made his first forays into Atlantic City casinos a few years later, his father devised a plan to sharply increase the flow of aid.
That ‘small loan’ of $1m was actually at least $60.7m – much of it never repaid
In Donald Trump’s books and TV shows and on the campaign trail, a central trope of his self-mythology has been that, as he began building his own empire, the only financial help he got from his father was a $1 million loan. Not only that: “I had to pay him back with interest.”
In fact, the Times found, Fred Trump lent his son at least $60.7 million, or $140 million in today's dollars. Much of it was never repaid, records show.
Fred Trump wove a safety net that rescued his son from one bad bet after another
As the 1980s ended, Donald Trump’s big bets began to go bust – Trump Shuttle, the Plaza Hotel, the Atlantic City casinos. But as he careened from one financial disaster to another, family partnerships and companies dramatically increased their payouts.
Between 1989 and 1992, four of the entities that Fred Trump created paid his son today’s equivalent of $8.3 million. And when Donald Trump pleaded with bankers for an emergency line of credit, he used as collateral the stake his father had given him in a group of apartment buildings.
Tax records also reveal that at the peak of Donald Trump's financial distress, in 1990, his father extracted an extraordinary sum – nearly $50 million – from his own empire. While the Times could find no evidence that Fred Trump made any significant debt payments, charitable donations or personal expenditures, there are indications that he wanted plenty of cash on hand to bail out his son if need be.
That was what happened at Trump’s Castle casino, where an $18.4 million bond payment was due in December 1990. Fred Trump dispatched a trusted bookkeeper to Atlantic City with cheques to buy $3.5 million in casino chips without placing a bet. With this ruse – an illegal loan under New Jersey gaming laws, resulting in a $65,000 civil penalty – Donald Trump narrowly avoided defaulting on his bonds.
The Trumps turned an $11m loan debt into a legally questionable tax write-off
By 1987, Donald Trump’s loan debt to his father had grown to at least $11 million. Had Fred Trump simply forgiven the debt, his son would have owed millions in income taxes. They found another solution – one that appears to constitute both an unreported multimillion-dollar gift and an illegal tax write-off.
That December, records show, Fred Trump spent $15.5 million to buy a 7.5 percent stake in Trump Palace, his son’s condo tower rising on the Upper East Side of Manhattan. Four years later, tax returns and financial statements show, Fred Trump sold that stake for just $10,000. The buyer, other documents indicate, was his son.
According to tax experts, with Trump Palace condos selling briskly, selling shares worth $15.5 million to your son for a mere sliver of that would constitute a multimillion-dollar gift under IRS rules. But Fred Trump’s tax returns show no such gift to Donald Trump. What they do reveal is that he used the transaction to declare an enormous tax write-off. That appears to violate federal tax law that prohibits deducting any loss from the sale or exchange of property between family members.
In all, Fred Trump dodged roughly $8 million in gift taxes and $5 million in income taxes on the transaction.
Father and son set out to create the myth of a self-made billionaire
All told, the Times documented 295 distinct streams of revenue Fred Trump created over five decades to channel wealth to his son.
But the partnership between Donald Trump and his father was about more than the pursuit, and the preservation, of riches. They were also confederates in a more ambitious project: creating the myth of Donald Trump, Self-Made Billionaire. If Fred Trump was the silent partner, helping finance the accoutrements of wealth, it was Donald Trump who spun them into a seductive narrative.
Emblematic of this dynamic is Trump Tower, the talisman of privilege that established Donald Trump as a player in New York. Fred Trump's money helped build it. His son recognised and exploited its iconic power as the primary stage for both The Apprentice and his presidential campaign.
Donald Trump tried to change his ailing father’s will, setting off a family reckoning
In December 1990, Donald Trump sent his father a document that left him both angered and alarmed. It was a codicil seeking to make a variety of changes to Fred Trump’s will. Among them: strengthening provisions that made Donald Trump sole executor of his estate. But amid Donald Trump’s financial shambles – it was the month of the $3.5 million Trump’s Castle rescue – Fred Trump feared that the document potentially put his life’s work at risk, that his son might use the empire as collateral to save his own failing businesses, according to depositions given years later during a family dispute.
Fred Trump rebuffed the manoeuvre, refusing to sign the codicil. But the episode prompted a family reckoning: Fred Trump was aging and ailing. Without speedy intervention, he could die leaving a vast estate – not just his property empire, but also tens of millions of dollars in cash – vulnerable to the 55 per cent inheritance tax.
So, with Donald Trump playing a central role, the family formulated a plan that included unorthodox tax strategies that experts told the Times were legally dubious and, in some cases, appeared to be fraudulent.
The Trumps created a company that siphoned cash from the empire
The first major component was creating a company called All County Building Supply & Maintenance. On paper, All County was Fred Trump’s purchasing agent, buying everything from boilers to cleaning supplies. But All County was, in fact, a company only on paper, records and interviews show – a vehicle to siphon cash from Fred Trump’s empire by simply marking up purchases already made by his employees. Those millions in markups, effectively untaxed gifts, then flowed to All County’s owners – Donald Trump, his siblings and a cousin.
Lee-Ford Tritt, a leading expert in gift and inheritance tax law at the University in Florida, said the Trumps’ use of All County was “highly suspicious” and could constitute criminal tax fraud. “It certainly looks like a disguised gift,” he said.
All County also had an insidious downside for Fred Trump’s tenants. He used the padded invoices to justify higher rent increases in rent-regulated buildings, records show.
Harder, the president's lawyer, disputed the Times' reporting: "Should the Times state or imply that President Trump participated in fraud, tax evasion or any other crime, it will be exposing itself to substantial liability and damages for defamation."
The Trump parents dodged hundreds of millions in gift taxes by grossly undervaluing the assets they would pass on
With the cash flowing out of Fred Trump’s empire, the Trumps began transferring ownership of the lion’s share of the empire itself to Donald Trump and his siblings. The vehicle they created to do that was a special kind of trust called a grantor-retained annuity trust, or Grat.
The purpose of a Grat is to pass wealth across generations without paying the 55 per cent inheritance tax. The Trump parents did have to pay gift taxes based on one crucial number: the market value of Fred Trump's empire. But the Times found evidence that they dodged hundreds of millions of dollars in gift taxes by submitting tax returns that grossly undervalued the assets placed in two Grats, one for each parent.
Fred Trump’s 1995 gift tax return claimed that the 25 apartment complexes and other properties in the trusts were worth just $41.4 million. The implausibility of this claim would be made plain in 2004, when banks valued that same real estate at nearly $900 million.
"They play around with valuations in extreme ways," said Tritt, the tax law expert, who was briefed on the Times' findings. "There are dramatic fluctuations depending on their purpose."
Harder, the president’s lawyer, said: “All estate matters were handled by licensed attorneys, licensed CPAs and licensed real estate appraisers who followed all laws and rules strictly.”
After Fred Trump’s death, his empire’s most valuable asset was an IOU from Donald Trump
When Fred Trump died in June 1999 at the age of 93, the vast bulk of his empire was nowhere to be found in his estate – testament to the success of the tax strategies devised by the Trumps in the early 1990s. The single largest item included in his inheritance tax return was a $10.3 million IOU from Donald Trump, money his son appears to have borrowed the year before he died.
As for the remnants of empire left in Fred Trump’s estate, the tax return cited appraisals that once again grossly understated their market values.
As their father’s executors, Donald, Maryanne and Robert Trump were legally responsible for the accuracy of his inheritance tax return. They were obligated not only to give the IRS a complete accounting of the value of his estate’s assets, but also to disclose all the taxable gifts he had made during his lifetime. If they knew anything was wrong and failed to reveal it, tax experts said, they could be in violation of tax law.
Harder, the president's lawyer, defended the tax returns filed by the Trumps. "The returns and tax positions that the Times now attacks were examined in real time by the relevant taxing authorities," he said. "These matters have now been closed for more than a decade."
Donald Trump got a windfall when the empire was sold. But he may have left money on the table
In 2003, once again in financial trouble, Donald Trump began engineering the sale of the empire Fred Trump had hoped would never leave the family. The sale, completed in 2004, brought him his biggest payday ever from his father: His cut was $177.3 million, or $236.2 million in today’s dollars. But as it turned out, banks at the time valued the empire at hundreds of millions more than the sale price. Donald Trump, master dealmaker, had sold low. – New York Times