Looks Like Trump Paid Ivanka $747,622 To Consult Herself
One of the shadier revelations in the New York Times's report on Trump's tax returns is that it sure looks like he paid Ivanka $747,622 in "consulting fees," which he then wrote off as a business expense. The consulting fees were paid in connection with hotel projects in Hawaii and Vancouver ... that she was already managing as an executive of the Trump organization.
So it looks like she was doing her regular job, for which she got paid $480,000 a year, and then got paid $747,622 to consult herself on ... her job?
The records show that between 2010 and 2018, Donald Trump wrote off $26 million in consulting fees, which he claimed as "business expenses." This usually amounted to about 1/5 the cost of whatever project he was on at the time, and for the most part, no one has any idea who that money actually went to. (This is also considered "quite large" and even an automatic red flag.) However, the records also show a payment of $747,622, and Ivanka Trump reported that exact amount as a payment from the consulting company that she co-owns, so it's pretty clear that particular chunk of change went to her.
As sketchy as it seems, it's not clear that this is totally illegal. Rich people are very good at getting out of paying taxes in ways that won't get them sent straight to prison. Vulture capitalists who take over struggling companies are known to do the same kind of thing while they are running said companies into the ground. Michael Ferro, the former chairman of Tronc, the company that owned the Chicago Tribune, the Los Angeles Times and the New York Daily News, hired the consulting firm that he also owns for $15 million a year, "to provide certain management expertise and technical services." Also to allow him to spend more money on using his private jet without needing to do an SEC filing, as a large portion of this fee is meant to go towards covering that particular expense. Similar things happened with Toys'R'Us and Sears.
However, as the Times notes, people have gotten in trouble with the IRS before for doing similar things to evade taxes:
The I.R.S. has pursued civil penalties against some business owners who devised schemes to avoid taxes by paying exorbitant fees to related parties who were not in fact independent contractors. A 2011 tax court case centered on the I.R.S.'s denial of almost $3 million in deductions for consulting fees the partners in an Illinois accounting firm paid themselves via corporations they created. The court concluded that the partners had structured the fees to "distribute profits, not to compensate for services."
There could also be another purpose here. It gives Trump the deduction, which he wants, but it also allows him to funnel money to his kid without triggering a gift tax/estate tax. Right now, anything he leaves to them over $11 million (both he and Melania can leave them $11 million each) will be taxed, federally, at 40 percent. As we learned back in the day, this is something his own father did in order to get out of paying estate taxes on what he was leaving Donald and his siblings.
A Times investigation in 2018 found that Mr. Trump's late father, Fred Trump, employed a number of legally dubious schemes decades ago to evade gift taxes on millions of dollars he transferred to his children. It is not possible to discern from this newer collection of tax records whether intra-family financial maneuverings were a motivating factor.
However, the fact that some of the consulting fees are identical to those reported by Mr. Trump's daughter raises the question of whether this was a mechanism the president used to compensate his adult children involved with his business. Indeed, in some instances where large fees were claimed, people with direct knowledge of the projects were not aware of any outside consultants who would have been paid.
Like father like son? Maybe. Probably. Almost definitely.
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Robyn Pennacchia is a brilliant, fabulously talented and visually stunning angel of a human being, who shrugged off what she is pretty sure would have been a Tony Award-winning career in musical theater in order to write about stuff on the internet. In addition to her work at Wonkette, she also has a biweekly column at Dame. Follow her on Twitter at @RobynElyse