So how does one do it, get a $900Meg tax deduction, without actually having to have shelled out $900Meg? I mean your supposed to have a cost basis, which is what you put in, for your Capital Gains reporting. If you lose money, then it is measured relative to that cost basis.
So usually when someone has something like that, its because they are donating something to charity, which the law allows them to count at market retail value, even though they paid far less.
I believe that if you started a company with very little, and it became worth much, then you could get a tax deduction for donating it, at its market value. But this is complex, and I don't really know.
But I have no idea how Trump did what he seems to have done. Sounds like Ivana was the one really following the laws.
" Real estate guys can take advantage of the best loopholes left in the tax code, thanks in part to some aggressive nudging of lawmakers. For starters, real estate investors can take deductions for the ostensible depreciation of the value of their buildings, even though the point of owning buildings is that they generally appreciate.
For another, they often borrow against those properties, and because they hold these investments in partnerships or limited liability companies, the interest payments are tax-deductible.
“If you get close to paying taxes, you just buy another building,” a real estate friend told me. "
This stuff really is way over my head. It seems like to make money you need to have a battery of attorneys, accountants, and financiers. Someone who is just working hard, well they are being taken advantage of financially already. Comrades Marxs and Engels got it right in 1848.
This is a fucked up situation.
SJG
The End of Work and the Case for Universal Basic Income youtube.com
I once bought a 3 family house as an investment. I added two additional apartments in an adjacent building. I depreciated the building for the ten years I owned it and enjoyed the tax break however when I sold it my basis was reduced by the amount depreciated and because it was now a 5 family in real estate parlance, it was now commercial property. Banks would then require a full 25% down payment and charge 1 to 2 % more for a mortgage. I finally found a buyer who subdivided the property the week after he bought it, sold the ordinal 3 family for what he paid for the 5 family, converted the two "new" units into a single family and owed nothing. My tax bill was equivalent to my "profit" leaving me with nothing except a ten year tax write off in exchange for a million hassles collecting rents, evicting deadbeats, midnight calls when there wasn't hot water.