How Trump Used the Chicago Tower to Avoid Taxes

On May 11, 2024, ProPublica published an article titled "IRS Audit of Trump Could Cost Former President More Than $100 Million." The brilliance of this report lies in ProPublica's ability to obtain Trump's tax returns (which he has never made public) through various channels and combine them with other publicly available information to infer how the former president managed to avoid taxes. After all, the case involves the highly controversial Trump, prompting professional organizations like ProPublica to invest significant resources in investigating his tax avoidance strategies, giving us a glimpse into how wealthy Americans evade taxes.

Since his presidential campaign in 2016, Trump's tax records have been a hot topic of discussion. He broke decades of precedent by refusing to disclose his tax returns, citing a long-standing audit by the IRS as his reason. In 2020, The New York Times first revealed details of Trump's tax audit: the IRS disputed his claim for a $72.9 million tax refund filed since 2010, primarily due to losses from his past casino operations. For more details, please read our article "Trump Paid Only $750 in Taxes."

This time, ProPublica disclosed another failed investment: commercial real estate, specifically the Trump International Hotel and Tower in Chicago (referred to as the Chicago Tower). What makes the Chicago Tower special is that Trump not only used the losses from this investment to offset taxes but also claimed excessive deductions and then repeated those deductions.

ProPublica's report reveals the second part of the dispute between Trump and the IRS. The conclusions were drawn from a series of public documents, including the New York Attorney General's lawsuit against Trump in 2022, references to tax audits in congressional reports from the same year, and a previously unknown IRS technical memorandum from 2019 that explored the legality of certain accounting maneuvers. Such memoranda are rarely issued and are typically reserved for legally ambiguous cases, requiring extensive review by senior IRS attorneys. Only two other such memoranda were released in that year. Although the memorandum did not disclose Trump's identity (referring to him only as "A" to protect taxpayer information), these documents, along with tax records obtained by The New York Times and other reports, indicate that the former president is the focus of the investigation.