What Americans could learn from Donald Trump's financial records
There's a lot you can learn from a person's financial documents: How much or how little they make, their business relationships, the property they own, and even romantic entanglements.
While the Supreme Court this week effectively sealed the financial records of the Trump family's business from public view, it allowed the Manhattan district attorney to see them as part of a criminal investigation. Those will remain tightly guarded unless there is a public trial. And there is a lot that can be learned from them, financial experts and tax attorneys told CBS News.
Here's what Americans can — and can't — expect to find from the documents.
What's he worth?
The minimal Trump family documents that have been revealed to date in the past show several years of business losses. What they haven't done is establish the worth of a man who likes to tout his billionaire status.
"It's very hard to ascertain what a person's net worth will be" from documents such as a tax return, said Bruce Dubinsky, managing director of Disputes and Investigations at Duff & Phelps, a corporate advisory firm. "When we do investigations to look at people's net worth, we look at several years of tax returns." (Dubinsky, like all the experts interviewed for this piece, made his assessment based on media reports about Mr. Trump's wealth and his own knowledge of the tax code.)
While the Internal Revenue Service has a method to estimate an individual's net worth, it is an estimate, Dubinsky emphasized. For instance, if a person has high lifestyle expenses such as cars, boats and airplanes, "You can figure out what the payments are and how much income you need to own an airplane—I could back into that," Dubinsky said.
This is where underlying documents come in. The banking documents sought by Manhattan prosecutors could include such items as loan applications and agreements, which would lay out the applicant's net worth. Loan applications, for instance, typically list financial history, income and property owned, in order to show a person's ability to repay borrowed money.
Several banks reportedly shared financial records with New York State investigators as well as House committees last year.
The value of assets
Along with putting specific numbers to Trump family assets, investigators will be interested in comparing those numbers across various documents. If the same building had one value on a loan application but a different value on a tax appeal, that's a red flag.
"Recall that Michael Cohen, the president's former lawyer, testified that president inflated assets for one purpose and deflated them for another purpose. That's the kind of thing that one would look at," said Jeff Robbins, co-chair of the Congressional Investigations practice at the law firm Saul Ewing Arnstein & Lehr.
Exaggeration in either direction can be a crime, Robbins said. "Suppose that [in] seeking financing, you say the value of an asset is $500 million… But when you're paying taxes, you're saying the assets are worth much less. You've either lied to the IRS or lied to the bank. Pick your poison."
The countries that those assets are located in would also be of interest to Congress, Robbins noted. Their locations are part of the information given to a bank in loan applications.
Charitable giving
Details of someone's charitable giving are relatively easy to find on a tax return. But when the person filing taxes is very wealthy, those details tend to be scarce.
The ultra-rich are less likely to donate directly to charities, often setting up their own charitable foundations or trusts through which they direct their philanthropy. (While the Trump Foundation shut down in 2017, the family could have other trusts set up for charitable purposes.)
When a person transfers money or assets to their trust, those transfers appear on tax documents, but the funding patterns aren't always consistent. "People may start a foundation, fund it initially and then fund it every couple of years. You would need to go to every single tax return" to get a full picture, Dubinsky said.
And finding out how exactly how a trust spends money is a challenge, Dubinsky said. The public can find out basic information such as how much money the foundation raised and spent in a given year, as well as its staff expenses. But the information on what specific causes the trust supports, and how much it gives to them, are only available within the IRS.
Non-charitable giving
The IRS requires people to report gifts any time they give away cash or goods valued at more than $15,000, and report it on a separate form from the IRS Form 1040. The tax return for such gifts is obscure enough that it's only a concern for the wealthy.
But the exceptionally wealthy like Mr. Trump can avoid reporting those gifts altogether by channeling them through, for example, one of the more than 500 limited-liability companies he controls. They can also be disguised as consulting payments or business expenses, Dubinsky said. That would be one area of interest for the Manhattan DA, who is investigating whether the Trump camp paid "hush money" made to women during the campaign.
"He's going to focus on two things: Did the Trump organizations make payments to either of these women, and [did they] perpetrate tax fraud by deducting a non-deductible expense?" Dubinsky said.
Dubinsky didn't opine on whether such a payment was made. However, he noted that any payments to individuals would be "highly unlikely" to appear on Mr. Trump's tax forms, simply because real-estate partnerships have other ways of distributing money that require less disclosure. Investigators would need to comb through bank records, for instance, to see how a business or its partners spent money.
"If tomorrow, Donald Trump's 1040 were put on the front page of CBS News or the Wall Street Journal, people could tell, 'Oh, he made less money that he said, oh, he didn't give as much to charity as he said.,'" said Dubinsky. "They're not going to see a line that says, 'Payment to Stormy Daniels.'"
