What’s Hiding in Trump’s Tax Returns and Where to Find It


Donald Trump refuses to release his tax returns, concerned that tax attorneys like me will scour it for hidden gems, such as what percentage of his income comes from foreign sources and how much does he really earn? Speculation abounds that Trump’s worth is only a fraction of what he claims, and that his projects are financed in large part by foreign countries (Chinese banks) and corrupt Russian and Ukrainian officials and oligarchs. 1

Reviewing Trump’s tax return is vital, because it is signed under penalty of federal perjury, so he cannot later deny that the information is accurate without incurring a risk of criminal perjury charges.

So What Is In His Tax Returns?

Because Trump’s tax return has not made public, we do not know his true earnings, charitable contributions or his foreign holdings and income. But if he makes them available, where should you look for the golden nuggets and, perhaps a smoking gun or two? We have roadmap for dissecting Trump’s tax return from Mitt Romney, another extremely rich individual with substantial international holdings.

Last election, I wrote extensively about Romney’s Tax World and how he used tax loopholes and dubious tax planning to save millions. Compared to Romney, Trump’s holdings appear more complex and voluminous; it is estimated that he has interests in about 500 business entities throughout the globe, mostly involving real estate deals and licensing of his name.

Where to Start?

Basically, Trump’s tax return is comprised of Form 1040, a two-page summary of a person’s income, credits, deductions and taxes paid or owed. There are forms and schedules attached to Form 1040 that furnish more specific information about the sources of income and deductions, and those documents are usually supplemented with notes, calculations and explanations. If Trump supplies his returns, here is the set of forms that should merit close scrutiny.

Form 8938 (Statement of Specified Foreign Financial Assets).  Look at the first page of this form. Parts I and II will list all Trump’s foreign assets and their value. 2 Part III shows the foreign income earned and where it appears on the tax return.

A comparison of Trump’s foreign income to his total income should prove interesting. For instance, Romney’s foreign income ($6 million) was a whopping 44% of his 2011 total income.

Schedule E. This schedule contains directly-owned real estate income, listed in Part I and income from partnerships and S corporations listed in Part II. Unfortunately, Schedule E, Part II contains only the net income or loss from the partnership or S corporation, which can produce a huge distortion from the actual income earned.

Example: Assume Trump owns 25% of XX Partnership and is entitled to 25% of the income and deductions. XX Partnership has $10 million in income, but a $5 million depreciation deduction, an accounting (paper deduction), not an actual expenditure. Thus, the partnership’s taxable income is only $5.0 million and Trump’s share of reportable income would be $1.25 million; however, he may have actually received $2.5 million (double the amount reported) due to the depreciation deduction.

Because of the depreciation deduction, real estate professionals like Trump routinely pay little or no tax on their income. In fact, many real estate ventures produce losses and Trump may apply those losses against his non-real estate income, including royalty and licensing fees, as well as income from other business ventures.

The upshot, we need to analyze the tax returns of each Trump entity to comprehend his true income and deductions – Schedule E does not provide enough information.

Charitable Deductions. Charitable contributions are listed on Form 1040, Schedule A, separated into cash contributions and non-cash donations. Non-cash charitable deductions are listed on Form 8283, including contributions of publicly-traded stock. 3

Cash donations are not listed in the tax return, but taxpayers are required to maintain a record of the contribution, such as a cancelled check or written record from the charity. Consequently, while the amount of charitable giving is stated on the tax return, the cash contributions are not. Form 8283 could make interesting reading if Trump made non-cash charitable contributions.

Foreign Bank and Financial Accounts.  Interests in foreign bank and financial accounts are contained in Part III of Schedule B to Form 1040. Taxpayers must confirm whether they have a foreign bank or financial account, including signatory authority over an account not in their name, and list the countries where the accounts are located. 4

Although not part of the tax returns, taxpayers must file Foreign Bank and Financial Account Reports (FBARS) with respect to these assets. Disclosure of FBARS would greatly enhance the public’s understanding of Trump’s foreign investments and holdings.

Forms 5471 and 8865.  If Trump has a direct or indirect ownership of 10% or more in a foreign corporation, partnership or limited liability company, he is forced to disclose a wealth of information about the entities on his personal tax returns, something that does not occur with domestic entities listed on Schedule E. Taxpayers who have a 10% or greater shareholder interest in a foreign corporation must file Form 5471.

For ownership in a partnership or LLC, in some circumstances, taxpayers file Form 8865. Look for these forms as they contain an entity’s income and expenses, assets and liabilities, and any transactions between the entity and Trump.


We are waiting, perhaps in vain, for the release of Trump’s tax returns. As discussed in this article, we know where to look, if and when his returns become public.

Because the returns were already filed, they cannot be changed for political reasons, but don’t be surprised if the returns are partially redacted (blacked out) to prevent important or embarrassing information from surfacing. Stay tuned.

Show 4 footnotes

  1. His former campaign manager was heavily involved in Russian and Ukrainian business and political matters.
  2. Note: direct interests in foreign real estate are not listed, but ownership of real estate in partnership, trusts, limited liability companies and corporations will be entered there.
  3. Romney used appreciated stock contributed to his own charitable organization to generate large charitable deductions.
  4. A foreign account is defined extremely broadly and includes cash-value life insurance, individually controlled retirement accounts, securities and brokerage accounts and accounts holding precious metals (although direct ownership of the actual precious metal is excluded).
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