@AbaraXas Hard to tell what you're referring to regarding his financial background. Are all Wharton B-school grads being audited?
I would venture to say most. What I mean by 'his financial background' is someone who has highly complex and highly valuable asset and liability holdings, especially when they also run tax exempt foundations are hitting all the red flags for audit. In addition, other red flags he mostly likely has include foreign accounts, writing of many property and vehicle expenses as business expenses, reporting losses in some areas of his business to reduce tax bills, and being in the highest income category. Add to that being incorporated in New York State where you have a double chance of a State tax audit as well. If you look at the 'red flags' that trigger IRS audits for high income earners, he checks off every single one.
Trump has around 500 separate companies. But that does not mean he has that many business enterprises as that includes multiple companies set up for one property or business. For instance, there might be one company set up for the initial development phase, another for the construction phase, another for management, a separate one for any licensing agreements, one to collect rents, and one just for payroll. I had read somewhere (can’t find it right now) that while it would not be unusual in the real estate biz to have more than one company set up per property, the sheer number of them that Trump has raises some eyebrows. The speculation is that this would cause anyone attempt to sue great problems in trying to determine which company to sue or having to sue them all.
And as they are all closely held LLC’s or partnerships, they would have tie ins to his personal return.
Some things that would be red flags that would trigger an audit include:
Taking unusual or an unusually high number of deductions vs. income. Also a large amount of carry forward losses.
Reporting a net loss in more than two out of five years.
Family members on payroll – while not certainly not illegal the IRS would look at it in terms of it not being a way to deduct salary expenses were the work performed is less than the value of the salary paid, i.e. gifting to family members.
Having a large number of “independent contractors” that may actually be employees.
Unreasonably high salaries paid to shareholders who are also employees.
Excessive deductions for business meals, travel and entertainment. Keep in mind that Trump lives in two homes that are also businesses – Trump Tower and Mar A Largo and he owns his own jet. The IRS might want to examine trips written off as business expenses that were actually personal travel.
Foreign income and foreign debts.
Depreciation schedules that do not tie out from one year to the next (and I worked at a company that had that problem and I worked for months trying to unravel so returns could be corrected and amended).
Why would Donald Trump get audited 12 years in a row?http://finance.yahoo.com/news/donald-trump-tax-audited-12-years-in-a-row-161055545.htmlThe odds of getting audited 12 years in a row are slim, but not impossible, experts say.
Less than 1% of Americans get audited every year, and that number shrinks each year as the IRS workforce and budget has slimmed down. But among "high net-worth individuals," the rate is higher: Nearly 7% get audited. And Trump is certainly a high net-worth individual.
"As your income increases, your chances of being audited go up significantly," says John Petosa, a CPA and professor at Syracuse University's Whitman School of Management. "If you think about it, it makes sense—is the IRS going to spend time and money and resources auditing somebody who makes $30,000 a year? Or are they going to spend their time auditing someone who makes billions of dollars? There is probably more tax revenue to collect from a guy like Donald Trump, especially if he's being aggressive in his deductions." (As the campaign cycle has proven, there are few areas in which Trump is not aggressive.)
The IRS actually has a rule, in its agent manual, that if a person is audited and receives an assessment of zero (that is, does not owe additional money), the IRS cannot audit them again for two years. That means if Trump is telling the truth, then the IRS has repeatedly found discrepancies in his returns.
Until recently, it was typical for big corporations to get audited every year. This was called the Coordinated Examination Program. Many big public corporations even had rooms specifically designated for use by visiting IRS agents. But as the IRS's budget has been slashed, it has shrunk the program.
Trump's Golf Course Tax Shelter Likely Target In IRS Audithttp://www.forbes.com/sites/ashleaebeling/2016/06/15/trumps-golf-course-tax-shelter-likely-target-in-irs-audit/#77df9e5a47e5While from the late ‘80’s, if this is any indication of Trump’s methodology in accounting, it could also trigger the IRS to come sniffing around.
"Unusual" accounting: Inside a Trump business audithttp://www.cbsnews.com/news/inside-a-donald-trump-audit-missing-books-and-unusual-accounting/
