A Friday report by New York Times stated that Jared Kushner, US President Donald Trump’s son-in-law and a senior White House adviser, reportedly paid little or no federal income taxes for seven years, between 2009-2016.
Peter Mirijanian, a spokesman for Jared Kushner’s lawyer Abbe Lowell, said that the White House adviser properly filed and paid all US taxes in accordance to legislation.
Speaking to reporters, he refused to comment on “assumptions, taken from incomplete documents obtained in violation of the law and standard business confidentiality agreements,”
“Always following the advice of numerous attorneys and accountants, Mr. Kushner properly filed and paid all taxes due under the law and regulations,” he declared.
Citing confidential financial documents, the New York Times report published Friday stated that Kushner’s tax forms reflect the widespread use of deprecation, which allows real estate investors to deduct part of the cost of maintaining their property from their taxable income.
“In theory, the depreciation provision is supposed to shield real estate developers from having their investments whittled away by wear and tear on their buildings,” the New York Times (NYT) explains. The law presumes that buildings lose value over time, while in reality they normally gain value.
What this means is that, technically, neither “Kushner or his company broke the law,” according to the report.
The confidential documents in question were prepared in cooperation with Kushner, as part of a review of his finances by an institution that was considering lending him money, according to Reuters.
The NYT report did not specify how much Kushner paid the Internal Revenue Service (IRS) each year, but included figures on how much he owed — a figure described as ‘income taxes payable’ — and how much he paid in anticipation of taxes he would owe, called ‘prepaid taxes.’ For most years, both figures were zero, with one exception of 2013, where the former figure was listed at $1.12 million.
“As far as the Internal Revenue Service is concerned, the Kushners have been losing money for years,” NYT says, noting that in reality, Kushner’s business is nothing but profitable.
One way in which the US tax system is formatted, owners of companies can report losses for tax purposes, which surpass the company’s income. Such a loss, called a ‘net operating loss’ can wipe out taxes that the company would otherwise owe, and sometimes win the company a compensation in the form of deferred tax credits over time.
While the deprecation mechanism is not unique to the US, in other countries it does not include borrowed money, NYT notes.
“If I had to live my life over again, I would have been in the real estate business,” the report quotes Jonathan Blattmachr, a trust and estate lawyer, now a principal at Pioneer Wealth Partners. Blattmachr was among those who reviewed the Kushner documents.
“It’s fantastic. You get tax deductions for things you don’t pay for,” he noted.