An old article, but it gives a lot of insight into Trump's mindset and background.
Special Investigation Trump Engaged in Suspect Tax Schemes as He Reaped Riches From His Father Oct. 2, 2018
The president has long sold himself as a self-made billionaire, but a Times investigation found that he received at least $413 million in today’s dollars from his father’s real estate empire, much of it through tax dodges in the 1990s.
President Trump participated in dubious tax schemes during the 1990s, including instances of outright fraud, that greatly increased the fortune he received from his parents, an investigation by The New York Times has found.
Much of this money came to Mr. 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 Mr. 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.
These maneuvers met with little resistance from the Internal Revenue Service, The Times found. The president’s parents, Fred and Mary Trump, 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 percent tax rate then imposed on gifts and inheritances.
The Trumps paid a total of $52.2 million, or about 5 percent, tax records show.
There is no time limit, however, on civil fines for tax fraud.
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.
Much of his giving was structured to sidestep gift and inheritance taxes using methods tax experts described to The Times as improper or possibly illegal. Although Fred Trump became wealthy with help from federal housing subsidies, he insisted that it was manifestly unfair for the government to tax his fortune as it passed to his children. When he was in his 80s and beginning to slide into dementia, evading gift and estate taxes became a family affair, with Donald Trump playing a crucial role, interviews and newly obtained documents show.
The line between legal tax avoidance and illegal tax evasion is often murky, and it is constantly being stretched by inventive tax lawyers.
The manipulation of values to evade taxes was central to one of the most important financial events in Donald Trump’s life. In an episode never before revealed, Mr. Trump and his siblings gained ownership of most of their father’s empire on Nov. 22, 1997, a year and a half before Fred Trump’s death. Critical to the complex transaction was the value put on the real estate. The lower its value, the lower the gift taxes. The Trumps dodged hundreds of millions in gift taxes by submitting tax returns that grossly undervalued the properties, claiming they were worth just $41.4 million.
The same set of buildings would be sold off over the next decade for more than 16 times that amount.
The most overt fraud was All County Building Supply & Maintenance, a company formed by the Trump family in 1992. All County’s ostensible purpose was to be the purchasing agent for Fred Trump’s buildings, buying everything from boilers to cleaning supplies. It did no such thing, records and interviews show. Instead All County siphoned millions of dollars from Fred Trump’s empire by simply marking up purchases already made by his employees. Those millions, effectively untaxed gifts, then flowed to All County’s owners — Donald Trump, his siblings and a cousin. Fred Trump then used the padded All County receipts to justify bigger rent increases for thousands of tenants.
After this article was published on Tuesday, a spokesman for the New York State Department of Taxation and Finance said the agency was “reviewing the allegations” and “vigorously pursuing all appropriate areas of investigation.”
The Times could find no evidence that the Trump children had to come up with money of their own to buy their father’s mortgages. Most were purchased from Fred Trump’s banks by trusts and partnerships that he set up and seeded with money.
Co-op sales, mortgage payments, ground leases — Fred Trump was a master at finding ways to enrich his children in general and Donald Trump in particular. Some ways were like slow-moving creeks. Others were rushing streams. A few were geysers. But as the decades passed they all joined into one mighty river of money. By 1990, The Times found, Fred Trump, the ultimate silent partner, had quietly transferred today’s equivalent of at least $46.2 million to his son.
Donald Trump took on a mien of invincibility. The stock market crashed in 1987 and the economy cratered. But he doubled down thanks in part to Fred Trump’s banks, which eagerly extended credit to the young Trump princeling. He bought the Plaza Hotel in 1988 for $407.5 million. He bought the Eastern Airlines shuttle fleet in 1989 for $365 million and called it Trump Shuttle. His newest casino, the Trump Taj Mahal, would need at least $1 million a day just to cover its debt.
The skeptics who questioned the wisdom of this debt-fueled spending spree were drowned out by one magazine cover after another marveling at someone so young taking such breathtaking risks. But whatever Donald Trump was gambling, not for one second was he at risk of losing out on a lifetime of frictionless, effortless wealth. Fred Trump had that bet covered.
As the 1980s ended, Donald Trump’s big bets began to go bust. Trump Shuttle was failing to make loan payments within 15 months. The Plaza, drowning in debt, was bankrupt in four years. His Atlantic City casinos, also drowning in debt, tumbled one by one into bankruptcy.
What didn’t fail was the Trump safety net. Just as Donald Trump’s finances were crumbling, family partnerships and companies dramatically increased distributions to him and his siblings. Between 1989 and 1992, tax records show, four entities created by Fred Trump to support his children paid Donald Trump today’s equivalent of $8.3 million.
Fred Trump’s generosity also provided a crucial backstop when his son pleaded with bankers in 1990 for an emergency line of credit. With so many of his projects losing money, Donald Trump had few viable assets of his own making to pledge as collateral. What has never been publicly known is that he used his stakes in the mini-empire and the high-rise for the elderly in East Orange as collateral to help secure a $65 million loan.
