For example, if I were President of the United States, and my businesses had significant income from puppy kicking, that would not be a line item in my tax returns. Rather, the line item would be profits from Mops Doing Good Things, Inc., owned by me. A large part of the profits would be generated by the puppy kicking division, but that properly is part of that company’s accounting, not my personal accounting.
A lot of people underestimate the tenacity of investigative reporters. Give them a little hint of mystery, and they’ll be uncovering the industrial puppy kicking in no time.
I don’t know much about how the Trump Organization is set up or about tax returns, but it is my understanding that Trump used a number of pass-through entities (LLCs, etc.) for which the owner’s tax return reveals considerably more information than the return of the primary (or only) shareholder of Mops Doing Good Things, Inc would.
There have been many peculiar (to me) claims about what his (or others) individual tax returns might show and I suspect that’s mostly nonsense, but there likely considerably more information about the business activities than for a corporation’s shareholder.
I think this is correct. I have an LLC and it’s just a way to limit your personal liability. All of your income and expenses from the LLC are reported on your personal tax return (similar to an S corporation). This is fundamentally different than an incorporated company, which is its own legal entity, files it own tax returns.
The only thing that incorporated entity owners have to report is when they take profit out of the company.
When you incorporate, the corporation has to pay taxes on income, and the owners have to pay taxes on earnings, so the same profits get taxed twice. Partly for that reason it is uncommon to incorporate if you have no aspirations to go public.
IANAAccountant, but… I would imagine the details say a lot. If it’s a corporation, money into Joe Schmoe’s pocket can come from three things - payments (i.e. rent, licensing fees, consulting fees, etc.); dividends - which must be payed to all shareholders, so presumably declares the amount everyone who holds shares should have gotten; and sale of shares.
There are several issues - officers of the corporation can’t get consulting fees or other sideways payments on top of salary - any monies paid would have to count as income, if they are “employed” in any capacity by that corporation. Some question for example about some Trump offspring and consulting fees were in the news a while ago. Note all “income” has to be reported on the personal tax forms. Who paid, when, how much.
The same applies to non-cash; as Weisselberg has found out. Anything has to appear at fair market value and is taxable income. So if Joe Schmoe obviously lives at 123 Big Tower Place. but property titles indicate it is owned by FunFacts, Inc. - then FunFacts is either getting rent, or the market value of the residence counts as income to Schmoe; if Schmoe holds no position in FunFacts, then I presume it is a gift and must be accounted as such. Not sure the legal implications if Schmoe is a major shareholder but not an officer of FunFacts. Some of this should be discoverable from assorted public records. the Senate is free to subpoena further records from various places to examine the details. AFAIK there are certain accounting reporting rules for corporations.
Dividends from shares have to be recorded by firms and are also listed on personal tax returns when paid.
Finally - I would imagine if a corporation is paying dividends of $1M a share, and A sells to B those shares for $1 - can the IRS go after the recipient for the difference from fair market value as a gift? If I sell you my Ferrari or van Gogh for $1, I would imagine the IRS would consider that a gift. it sure as heck can’t count as a loss (I sold my $1M shares for $1) in any real-world scenario.
So yes, some details are hidden behind LLC books. But the flow of money and the facts that are public will tell some details.
They would contain a lot of meaningful information to any banks or investors who gave him money based on a different set of tax returns that they were given.