I don’t necessarily LIKE Donald Trump … personally

However, I very much respect the man.

TRumpI’m asked all the time if I like Donald Trump and to be frank the answer is … I don’t like his personality and the way he sometimes talks to people and the press (though I can very much understand why he treats the press as he does).

That being said, I have the greatest of respect for him.  You don’t have to “like” a person to “respect” the person or the job the person is doing.

Let’s face it, at last count about a month ago, this is a man that – in spite of the 6 or 7 investigations going on about him and some of his actions – he does not let it slow him down from taking care of his presidential duties.  Like the ever-ready bunny he seems to just keep going and going and going.  Talk about a work-ethic (or maybe a workaholic).  I don’t think anyone around him can outwork him.  I know of no other president that can do and has done as much as he has in the first 20 months of his term.  He has done more in the first 20 months – against all odds – as most presidents have accomplished in a full 8 years.

Is he good for the economy and the stock markets?  You betcha he is.  Take a look at the graphic below:

Market Climate

This graphic represents the Market Climate on a weekly basis since January 30, 2017 (he took office on January 20, 2017).

The purple area represents the S&P 500 Index.  It has gone from 2,238.83 to 2,913.98 as of the end of last week.  That is a 30% increase in about 20 months.

The green area represents corporate earnings of the S&P 500 stocks.  As of the end of last week these climbed to $5.88 per share from a starting value of $4.72 per share – or – an increase of 25% over this period of 20 months.

As for wages, at this time there has been no real increase to speak of … even though more people are employed.  With Jeff Bezos, founder and CEO of Amazon, making the decision and announcing yesterday that the minimum wage at Amazon would be increased to $15.00 per hour from $9.00 per hour (a 67% increase), I think you will see some dramatic wage increases for everyone else in the future.

When we consider the Gross Domestic Product (GDP) this is what we see:

GDP Obama Trump

Of course, if you go out and Google this information you are likely not going to find it on the first page of hits because Google, like most news outlets, tends to lean to the left and not the right.  I just wished all news outlets would remain in the center … because to be frank I tend to get upset with some of the claims I hear on Fox News and Fox Business News as well as they always lean to the right … but I’m getting off track.

Trump, even with everyone seemingly against him in the media and on the political left (and yes some on the right) continues to get the job done.  It’s like he has a two-track mind“What’s good for Trump and What’s good for the American People.”  I’m not really sure which he places the highest importance on and at this time I really don’t care as long as “What’s good for America” is high in his thought processes – and it appears to be (at least to me).

Now he’s facing yet another obstacle:

The New York Times and ABC News is trying to say the Donald Trump helped his parents Evade Taxes on their Billion Dollar Empire when they died.  The president’s parents died in 1999 and 2000 (father Fred first followed by mother Mary Anne).  In the 80’s and 90’s I worked a lot in the area of Estate Planning as a financial advisor.

Now I don’t know the journalist at the New York Times or ABC that is making the claims of tax evasion … but after being an expert in the field … I can tell you that a lot of tax avoidance schemes that were perfectly legal in the 80’s and 90’s have since been stopped by new IRS rules.  Thus, if the Trump’s used legal schemes when they did their estate planning then it is likely that Donald Trump may be once again innocent of any tax evasion as it relates to his parents wealth.

Here’s just one example of a scheme that used to be perfectly legal:

Many in the real estate business would set up what is known as a Family Limited Partnership (FLP) and transfer real estate properties into this partnership.  The parents would maintain (usually) 1-2% of General Partnership Interest and gift the remaining 98-99% of Limited Partnership Interests to children and grandchildren.  Income from the properties would transfer to the General Partners (the parents) and growth or shrinkage of asset would automatically transfer to the Limited Partners (outside of the taxable estate of the general partners).

Because property was transferred into a Family Limited Partnership it was automatically provided some pretty deep discounts in Fair Market Value by the Internal Revenue Service Codes.  I’m talking about 50% to 70% discounts.  Therefore, if the property would be valued at say $1 Billion dollars outside and FLP … once transferred into the FLP it could be re-valued at between $300 Million and $500 Million.  This one technique alone would reduce taxation at 55% from $550,000,000 to about $165,000,000 to $302,500,000.  Now to the novice this may look like “Tax Evasion” when it is in-fact “Tax Avoidance.”  The IRS did approve of these vehicles back then and still today – though they have become much more regulated as to what can and cannot be transferred into them and how discounts will work.  However, the IRS historically does not grandfather any changes to anything done before new laws are written.

When you use this tax avoidance scheme with others, such as Generation Skipping Trust (which also was very lucrative at one time) and Charitable Trust or Personal Charitable Foundations … it would be relatively easy (yet expensive due to needing attorneys to make it all work) to bring a $550 million tax bill reduced to $52 Million (which is what has been reported by the New York Times and ABC News.

Have many of the laws since changed since his parents estate plan was done?  Yes, they have … but what does the left want him to do … resurrect his parents and redo the estate plan?  As great as he thinks he is … even he could not do this.

Learned Hand

Billings Learned Hand (27 January 1872 – 18 August 1961), usually called simply Learned Hand, was an American judge famous as an avid supporter of free speech and for applying economic reasoning to American tort law. He is noted as one of the most influential American judges to have never served on the Supreme Court of the United States.

 

I put this gentleman’s information here for one purpose and that is this:

Helvering v. Gregory, 69 F.2d 809, 810 (2d Cir. 1934), aff’d, 293 U.S. 465 (1935)

In this particular court proceeding Judge Hand had this to say …

“Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”

In other words if there are “Legal Means” to avoid taxes, a person is allowed and should even be expected to use them.

Here’s an extreme example to help you understand the difference:  Assume there are two ways for you to get to work.  You could go over a new bridge that charges a toll of say $5.00 and reduce your drive time by about 10 minutes … or you could drive three miles down the road and cross and older, more bumpy bridge that does not charge a toll.  Your reward is the $5.00 you saved.

If you choose Option B – the older bumpy bridge – you have avoided a tax and not broken any laws.  However, if you choose Option A – the new toll bridge, but rather stopping and paying a toll you crash through the toll gate without paying the tax – you have just evaded taxes and broken the law and should be punished.

So, the question remains on the Trump Family … Did they use legitimate avoidance loopholes that were legal then or did they actually evade taxes which was and is illegal.  I think the former since it has been two decades and the IRS apparently is satisfied that everything was done correctly. Believe me, I’m quite certain the IRS would have audited the Estate Tax Return of one Fred and Mary Anne Trump if they were as well off as the New York Times says they were.

But is there a statute of limitations?  The answer is yes:  For Criminal Tax Fraud or evasion the normal time is 3 years and can be adjusted to 6 years (seem’s like we are past that).  For Civil Tax Fraud there is no Statute of Limitations … but rarely will the IRS go back further than 6 years because it has a high enough burden of proof to meet in fraud cases without having to deal with the added difficulties of proving older charges.  You can read more here or Google it yourself.

The Bottom Line is this:  Even with these new charges and what will eventually be one more investigation on our US President … Donald J Trump will continue to do his job and will likely continue to donate his Presidential Salary to various charities.  Yea, I know you heard he only takes $1 per year … but that is not true … he takes all $400,000 but donates it to Charity.  You can read about that here as well.

How can you not respect a person like this even if you don’t like him as a person?

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