5 Comments
User's avatar
⭠ Return to thread
Gerip's avatar

To pay a consulting fee is unusual when it's to an employee, isn't it? If the fee is 1099 income, there is no social security tax paid. Do you think Ivanka may take full advantage of tax avoidance shelters? This apple hasn't fallen far from the tree. I'm also wondering if you find it curious that a bank who was not only stiffed but also sued by one of its clients to try to wriggle out of paying a loan would then turn around and lend that client a couple hundred million dollars?

Expand full comment
ih8edjfkjr's avatar

First, the criticism isn't that Ivanka was paid as a consultant versus an employee. It's that Trump deducted the expenses of paying here. Either form of compensation would be deductible by Trump. Second, there is a multi-factor test for whether a person is acting as an employee or contractor and neither you nor I know the facts necessary to perform that analysis. In fact, it isn't even accurate to say the consulting fees were paid to Ivanka. They were paid to an entity owned by Ivanka that is taxed on a pass-through basis. We can't even say the consulting services were personally performed by Ivanka. This is pure speculation on my part, but my guess is that Ivanka has a girlfriend that provides design or marketing or PR services, Ivanka formed a company, hired her and caused her dad to engage her services. Just a guess, but I doubt this has anything to do with tax avoidance strategies at all. Finding a way to pay someone that gets taxed as personal income rather than carried interest or cap gains is just not a feature of tax structuring.

What existing lender was stiffed and then sued by Trump? Did the loan they currently have with Trump pre-exist this lawsuit or was it made after? I'm not saying it hasn't happened, I just want to understand the allegation, because when it comes to Trump, there is an awful lot of sloppy analysis.

Expand full comment
Gerip's avatar

Sorry this took so long, I didn't realize you responded. You're right, it doesn't matter for the deduction whether it's employee pay or as an independent contractor; but if it's the latter, the company pays no social security tax. That's significant with these kinds of figures. I was audited twice in the early 90s (came out owing no money) because the IRS was targeting travel businesses as they were infamous for listing their employees as independent contractors rather than employees to avoid paying the tax. The lender is Deutsche Bank - Trump sued to get out of paying a 300million+ loan for his building in Chicago. The bank countersued and settled in 2010, long before his current situation. I agree that LOTS of information is twisted in the mainstream media but this report was in multiple media outlets including Rueters, WSJ, business insider.

Expand full comment
ih8edjfkjr's avatar

I don't believe avoiding employer-side social security taxes is why he paid consulting fees to his daughter's company. First of all, social security taxes are capped at like $8,600. Once the employee makes more than something around $130,000, there are no further social security taxes payable. As an executive officer of the Trump Organization, I'm sure she maxed out the social security taxes already.

I don't know the details well, but roughly it looks like he had a $40MM personal guarantee on the building which amortized on certain milestones. Deutsche, post-Lehman, wasn't going to extend the maturity when condo sales slowed. Ultimately, it was settled when Deutsche Bank extended the maturity on the personal guarantee. It's worth noting that the suit seems to have been relatively amicable because Deutsche Bank made loans under the senior revolver for the building throughout the suit and the loan was repaid in full when refinanced by Ladder in 2016. One obvious thing to point out for all these conspiracy theorists about Deutsche Bank/Trump - they haven't made a loan to him since 2015. Let's be candid, absolutely no one thought Trump would be president before 2016.

Expand full comment
Gerip's avatar

While you're probably right about the SS issue, I simply don't agree that the president and his companies didn't/don't do whatever they can to avoid paying taxes. Not that they're any different, just that the president said he was going to drain the swamp that he wallows in. Nor do I agree that no one thought he could be president before 2016. I, for one, did. The presidency is not a chance event, going to the highest number of voters; it goes to the highest bidders, and just like Trump, the bases are covered in both directions, right and left.

Expand full comment