Welcome to DU!
The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards.
Join the community:
Create a free account
Support DU (and get rid of ads!):
Become a Star Member
Latest Breaking News
General Discussion
The DU Lounge
All Forums
Issue Forums
Culture Forums
Alliance Forums
Region Forums
Support Forums
Help & Search
Tax attorney on the certified letter Cheeto sent about his taxes
(FB post of a friend of mine who is a tax attorney, and teaches tax law.)
Last week, Trump gave the media a "certified letter" from his tax attorneys summarizing their view of his tax position for 10 years. It was obviously written to alleviate concerns that he is indebted to Russians in a way that would compromise his presidency.
For context, tax opinion letters are used to help a taxpayer avoid liability (and potentially shift it to the law firm) in the event the IRS decides a position is abusive. As such, the language is chosen very carefully and well-understood by every attorney and IRS agent looking at it. That means someone not in this world looking at it is going to miss the meaning of much of what is written. So, for example, if a tax attorney writes that there is "substantial authority" for a position, he is opining that there is about a 40% chance the taxpayer's position will prevail on audit; less than "more likely than not" (just over 50%) but more than where there is a "reasonable basis (~1/3 chance). Without knowing that it is coded language, though, each of these might superficially mean the same thing as "should"prevail (~60%) but they don't.
1. The Dillon/Nelson letter uses "immaterial" to describe the amounts Trump has received from Russian sources which is a meaningless term: If the intent is to state that it is so small as to be able to be disregarded, the term would be "de minimis" and the attorneys know this, so they were intentionally giving a meaningless opinion.
2. Definitions are everything in opinion letters and unless a term is defined broadly, it should be read exceedingly narrowly. The letter repeatedly refers to "Russian sources", "Russian lenders", "Russian entity" without defining Russian. As such, a non-lawyer reading the letter might think that a Russian includes ones controlled by Russians, but it does not--unless there is a different definition (and there isn't), it means entities incorporated in Russian and excludes entities incorporated elsewhere even if all the funding and ownership is from Russians. Since, like many Americans, Russian oligarchs choose to incorporate their businesses in countries with more favorable tax laws or where their home governments can't seize the assets when the person is arrested for criminal wrongdoing (think "offshore accounts"
, NONE of the income or loans from these people would be included as Russian-sourced in the opinion letter--yet it is this very income/debt people that is at the heart of the issue.
3. When an opinion letter is given in connection is given in connection with a transaction or handed over to the IRS on audit, the back-up info is ALWAYS provided. Without the back-up info, it's worthless and would be ignored. The back-up info for this letter is Trump's tax returns for a decade. By releasing this letter, he has likely waived attorney-client privilege with respect to the returns, so there is now not even a pretense of an excuse for not releasing them publicly so we can see what fills the many holes carefully created by the letter.
4. The letter defines TTO (the Trump Organizations to which it applies) to include only entities in which Trump is the sole or principal owner. So it excludes the many licensing deals and such under which Trump receives royalties, which are thought to be his primary source of income--as far as this letter is concerned, they could be 100% from Russian sources without being disclosed.
Of course, there are also the many other items noted by others--why the 2 month delay between having the letter written and providing it? The letterhead creates the impression that it is the opinion of Dillon/Nelson, not the firm--is that accurate and, if so, that says a lot about how much it is worth (even less than a blank sheet of paper).
Interestingly, the direct links to the letter that used to exist seem to have been broken, so I'm linking to an article that embeds a copy of the letter instead of directly to the original source. Happy to sub it out if someone else has a working direct link.
https://www.theguardian.com/us-news/2017/may/12/law-firm-russia-trump-morgan-lewis
For context, tax opinion letters are used to help a taxpayer avoid liability (and potentially shift it to the law firm) in the event the IRS decides a position is abusive. As such, the language is chosen very carefully and well-understood by every attorney and IRS agent looking at it. That means someone not in this world looking at it is going to miss the meaning of much of what is written. So, for example, if a tax attorney writes that there is "substantial authority" for a position, he is opining that there is about a 40% chance the taxpayer's position will prevail on audit; less than "more likely than not" (just over 50%) but more than where there is a "reasonable basis (~1/3 chance). Without knowing that it is coded language, though, each of these might superficially mean the same thing as "should"prevail (~60%) but they don't.
1. The Dillon/Nelson letter uses "immaterial" to describe the amounts Trump has received from Russian sources which is a meaningless term: If the intent is to state that it is so small as to be able to be disregarded, the term would be "de minimis" and the attorneys know this, so they were intentionally giving a meaningless opinion.
2. Definitions are everything in opinion letters and unless a term is defined broadly, it should be read exceedingly narrowly. The letter repeatedly refers to "Russian sources", "Russian lenders", "Russian entity" without defining Russian. As such, a non-lawyer reading the letter might think that a Russian includes ones controlled by Russians, but it does not--unless there is a different definition (and there isn't), it means entities incorporated in Russian and excludes entities incorporated elsewhere even if all the funding and ownership is from Russians. Since, like many Americans, Russian oligarchs choose to incorporate their businesses in countries with more favorable tax laws or where their home governments can't seize the assets when the person is arrested for criminal wrongdoing (think "offshore accounts"
, NONE of the income or loans from these people would be included as Russian-sourced in the opinion letter--yet it is this very income/debt people that is at the heart of the issue.
3. When an opinion letter is given in connection is given in connection with a transaction or handed over to the IRS on audit, the back-up info is ALWAYS provided. Without the back-up info, it's worthless and would be ignored. The back-up info for this letter is Trump's tax returns for a decade. By releasing this letter, he has likely waived attorney-client privilege with respect to the returns, so there is now not even a pretense of an excuse for not releasing them publicly so we can see what fills the many holes carefully created by the letter.
4. The letter defines TTO (the Trump Organizations to which it applies) to include only entities in which Trump is the sole or principal owner. So it excludes the many licensing deals and such under which Trump receives royalties, which are thought to be his primary source of income--as far as this letter is concerned, they could be 100% from Russian sources without being disclosed.
Of course, there are also the many other items noted by others--why the 2 month delay between having the letter written and providing it? The letterhead creates the impression that it is the opinion of Dillon/Nelson, not the firm--is that accurate and, if so, that says a lot about how much it is worth (even less than a blank sheet of paper).
Interestingly, the direct links to the letter that used to exist seem to have been broken, so I'm linking to an article that embeds a copy of the letter instead of directly to the original source. Happy to sub it out if someone else has a working direct link.
https://www.theguardian.com/us-news/2017/may/12/law-firm-russia-trump-morgan-lewis
28 replies
= new reply since forum marked as read
= new reply since forum marked as read
are flinging another handful of republican monkey poo in the face of America's decent, tax-paying citizens. That sucks. Sad. Deplorable.
* republican Draft-Dodger-in-Chief
Just put on his lawyering suit.
