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Archive for the tag “Jack Mitnick”

The Trump Tower: Some of Trump’s ethical conundrums concerning tax on his “flag-ship” enterprise!

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This is just another day, another dig into the mess of a business-man, the so-called billionaire Donald J. Trump and his Trump Organization; with the dozens of companies and unsettled taxes and regulated operations that can be scrutinized at any second and certainly most of his businesses has been taken to court of maladministration, tax-fraud, tax-aviation or not-paying dues to contractors or sub-contractors. There been reports 1000s of court cases under the Trump Organizations. What is so special with this here, is the way the stifling conduct been done the Trump Tower, the big skyscraper, the one thing he might eventually actually able to pull off. The one giant footprint on the Manhattan Skyline; the dream of the Bronx kid that came into life; and now is there!

It is this Tower and the shady tax story of his favourite building, the building that first carried his name and his so-called fortune. The glory of the Trumps and their enterprises as the epitome of the marble and gold; the one place that settled his rise to build a so-called empire! It is these stakes and these enormous steps to either brilliance or doom that the stories show from the Trump Tower.

Donald Trump, wouldn’t like this piece, not because their my words, but because the harshness of the old documents showing his ruthless misbehaving and not conducting fair business in the Trump Tower and towards the tax-man of his beloved New York. So here it is. Some might be forgotten, and some is still fresh. Here is my take!

About the Condominium:

The Trump-Equitable Fifth Avenue Company was formed, an equal partnership. Equitable put in the fee. Mr. Trump contributed the lease, two small units he acquired on East 57th Street, and the air rights to Tiffany’s on the corner, which he needed for a zoning change to build a high-rise apartment house. The Trump Organization is sales and managing agent for the building, and Mr. Trump was able to put the family name over the four-story portal in colossal bronze letters – and two giant bronze Ts in the atrium” (…) “Chase Manhattan financed his $24 million purchases of the various leases and rights, and the bank also formed a syndicate for the $150 million construction loan” (…) “Anticipated condominium revenues of $260 million (85 percent of the 263 apartments have been sold) have effectively paid off the construction loan, leaving Trump Tower unencumbered by mortgages. The partnership retains ownership of the retail space and the 13 floors of office space, not yet rented, that are sandwiched in between. This commercial portion of the building is projected to yield rentals of $28 million a year” (…) “Mr. Trump expected that Trump Tower would qualify for a residential tax abatement. But after construction started, the city denied the exemption, estimated to be worth $15 million to $20 million, claiming it was intended to encourage low- and middle-income housing – not the deluxe apartments of the Tower. The city is now appealing a State Supreme Court ruling in Mr. Trump’s favor last June” (Bender, 1983).

As we see the Trump big man dream of 1980s and the braggadocios building came to life on loans from Chase Manhattan and leases not even built on Trumps own monies. Therefore it was an investment in the trusts of others capital something he would continue to do as business in the future with less intelligence and less of ability to land with a great deal. As shown in other pieces. Still, the result of Trump Tower was not as anticipated as the value of the floors and the denied exemption makes it more expensive to rent and have stores in the Trump Tower. Something that was a loss for the millionaire… and also promises not kept to the state of New York.

Supreme Court on the Tax-Exemption on the Condominium:

“During the pendency of the court challenges to the City’s denial of section 421-a tax benefits, petitioner paid the City’s tax assessments under protest. After the Court of Appeals ruled petitioner was entitled to receive section 421-a tax benefits, the City gave petitioner a refund check in March 1986 and then issued a set of remission letters in April 1986 concerning the payment of certain refunds for the overpayment of tax assessments for the 1981-82 through 1983-84 tax years. The refund, however, was based on an application of section 421-a tax exemption benefits to that portion of Trump Tower which consisted of residential units calculated to be 64.6% of the building’s aggregate floor area. Petitioner maintains the correct amount of residential units is 66.31% of aggregate floor area” (…) “The City contends that the July 1988 remission letters properly distributed the 12% exemption for commercial space allowed by RPTL 421-a among all units in the building and properly charged the remaining liability for excess nonexempt commercial space to the commercial unit alone” (…) “Judge Simons concluded that the Legislature intended all properties, regardless of the type of ownership, to receive the benefit of the exemption and that “the exemption is to be applied to the building as a whole, to the extent permitted, and not to parts of it” (supra, at 345). Moreover, the court went on to state that: “In the case of condominium units that means that the mini tax assessment must be applied to the entire building and the assessment then apportioned on a unit-by-unit basis as required by Real Property Law § 339-y. The failure to do so effectively excises from the statute buildings held in condominium ownership and applies the exemption differently depending on the type of ownership” (supra, at 345)” (…) “Order and judgment (one paper), Supreme Court, New York County, entered on September 7, 1989, unanimously modified, on the law, to the extent of striking the City’s computation concerning the floor ratio between the residential and commercial condominium units of Trump Tower, recalculating the proportionate tax benefits and tax liabilities among the units, declaring petitioner entitled to interest on additional refunds computed from the date of payment and modifying the last decretal paragraph to direct the payment of interest on said additional refunds pursuant to General Municipal Law § 3-a, and otherwise affirmed, without costs and without disbursements” (Supreme Court of New York, 1990).

As of the court date years on end as the proof of it after and the show of dubious numbers and changing facts from the Trump Organization towards the tax-man. This is proven with the different numbers for the 421- in building towards the business end of the operation in the towers, that we’re differing from the applications that we’re accepted by the great state of New York. So the Trump violated the trust between him as a builder and the state that let him build and gave him favourable tax to get investors investing in his project and skyscraper. This proves the malicious and dubious businessman in the making, when he does it even on his flag-ship enterprise in Manhattan. Take a look at the continuation of it!

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Tax Case on the Condominium 1996:

Equitable Life Assurance Society of the United States(“Equitable”) and Petitioner (collectively referred to as the “Venturers”) entered in a joint venture agreement, dated January30, 1980 (the “Venture Agreement”) to form the Trump-Equitable Fifth Avenue Company (the “Venture”) to develop a luxury mixed-use building located at 721-725 Fifth Avenue (“Trump Tower”). The purpose of the Venture was to: (a) acquire title to certain land and existing buildings; (b) demolish the existing buildings; (c) construct a new building — Trump Tower — to be owned in condominium form; (d) sell residential condominium units therein; and (e) lease office retail and other commercial condominium space therein. Venture Agreement section” (…) “The only witness to testify on behalf of Petitioner as to what his activities were with respect to the Venture was his representative and accountant, Jack Mitnick” (…) “Mr. Mitnick testified that Petitioner was compensated for the following services that he performed for the Venture: (a) the demolition of the preexisting buildings; (b) the construction of Trump Tower; (c) the promotion and sale of condominium units in Trump Tower; (d) the rental of commercial condominium units; and(e) the selling of residential condominium units” (…) “Mr. Mitnick also testified that the “Trump Corporation” performed sales and advertising services under the Development, Sales and Leasing Agreement and reported the resulting income in a City General Corporation Tax return according to Mr. Mitnick’s testimony, the Venture paid a “development fee” directly to Petitioner in his individual capacity which Petitioner reported as “[personal] income” and which was[also] “reported [on the Venture’s UBT return] as compensation of a partner. . .;” i.e., which was not deducted on the Venture’s UBT return” (…) “On March 31, 1984, nineteen days after he exercised the Option, Petitioner sold the Condominium for $3,000,000” (…) “On the Schedule D attached to Petitioner’s Federal income tax return for the Tax Year, Petitioner reported a $2,365,352 capital gain from the sale of the Condominium (the “Gain”). The sale of the Condominium was the only direct sale of real property during the Tax Year by Petitioner that was evinced in the record. The record indicates that much of Petitioner’s other real estate activities were conducted through related entities, particularly corporations” (…) “Petitioner filed a City UBT return for the Tax Year (the “Return”) in which he reported his principal business activity as “consulting.” The Return reported negative taxable business income of $619,227. Schedule C of Petitioner’s Federal personal income tax return (Form 1040), upon which the Return was based, indicates that Petitioner had total deductions of $626,264, even though he had no income or receipts from his business activity” (…) “By transmittal letter dated July 24, 1992 (which mistakenly lists the year as 1994 instead of 1992), another of the Commissioner’s representatives produced the original Return –which did not have an Extension Request attached to it – and requested that it be entered into evidence. No request was ever made to extend the June 18, 1992 date set at the hearing for the production of the original Return and the close of the record” (…) “CONCLUSIONS OF LAW:” (…) “However, the problem at issue is not one of double taxation, but of no taxation. Because the Condominium was sold by Petitioner and not the Venture, the Gain cannot be taxed to the Venture. Therefore, if Petitioner is correct that he is not taxable on the Gain, the income realized from highly appreciated inventory property extracted from the Venture only days before its sale would escape all taxation under the UBT” (…) “Petitioner admits, on of his supplemental reply brief, that: “Trump provided management services to the Partnership [Venture].” Petitioner’s accountant testified that Petitioner received payments for development services provided to the Venture which he took into income for personal income tax purposes. By virtue of the pro-vision of such services to the Venture, Petitioner is found to have been engaged in a taxable trade or business for UBT purposes” (…) “Respondent asserts that because Petitioner and Equitable each owned the same interest in the partnership [the Venture]” and Petitioner received more Options than Equitable, the Option was granted in exchange for services. This conclusion is questionable. The provision in the Venture Agreement which indicates that there was to be an equal profit split, expressly states that it is subject to other provisions in that agreement — such as the provision granting the Excess “Options. Thus, effectively, the Venture Agreement grants each Venturer a 50% profits interest in those Condominiums not subject to the Options and a 100% profits interest in those Condominiums as to which that Venturer held an option” (…) “Respondent submitted the original Return after the date set in the stipulation without any explanation why the stipulation – the agreement his representative entered into — should not been forced. Parties must be bound by the representations that they make to this forum absent a compelling reason to the contrary. As no such compelling reason was provided, the stipulation will been forced. Respondent is therefore deemed to have waived the late filing penalty” (…) “As Petitioner held and exercised the Option as part of his unincorporated trade or business, the Gain was connected with that trade or business and is subject to the UBT” (…) “The Petition of Donald Trump is denied except to the extent that the deficiency asserted in the Notice of Determination, dated November 18, 1987, is to be modified to eliminate the 25% late filing penalty” (New York Tax Appeal Court, 1996).

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Just as a decade has gone, but the Donald Trump didn’t give and wouldn’t give into the tax-man of New York State, even after the Supreme Court of New York judged in favor of a new tax-plan for the Trump Tower. This proves how he used business associates and fellow businessman to vouch for him and not take the blame as the Mr. Mitnick we’re in charge of selling a condominium at the Tower, but didn’t register the sale as the Corporation was not yet filed in the State. Therefore tried to circumvent the laws and get away with paying tax for the gain and the profits stemmed from sales of property at the Tower. This is another case than the initial Tax-Exemption that Trump tried to keep, even as he didn’t keep his promise of space of commercial versus housing in the tower and therefore we’re viable for more tax on the property.

The same kind of trick done here just years as he tries to avoid paying tax on selling property in the tower and also filling the form late therefore getting a 25% tax penalty on the case. That he also wanted to be axed. Also the use of different years in the filing trying to cover up the bogus attempt of not paying tax on the $3m sale of property where he earned about $2.4m directly as the deductions we’re about $600k shows the level of carelessness and trying to directly avoid any sort taxation by state. Trump Organization we’re interested in the sale, but not properly filling in the taxes or the previous owner as the direct sale without a entity we’re used to seal the away instead of getting direct tax of profits.

The Copy of the 1994 tried to fill in the profits, instead of 1992, therefore the New York Commissionaire had during trial come with an original Tax Return to show the real numbers of the transaction and the gain of the individual Trump, who we’re to be taxed for the sale of the Condominium, which he diligently tried to not to pay.

That is enough for now. Has more on his taxes later. This man is just too dishonest. It is so strange that the GOP accepted the man as their candidate for President. Peace.  

Reference:

Bender, Marylin – ‘THE EMPIRE AND EGO OF DONALD TRUMP’ (07.08.1983) link: http://www.nytimes.com/1983/08/07/business/the-empire-and-ego-of-donald-trump.html?pagewanted=all

New York City Tax Appeals Tribunal – ‘DONALD TRUMP – DETERMINATION – 10/11/96In the Matter for DONALD TRUMPTAT(H) 93-216(UB) – DETERMINATION’ (10.11.1996).

Supreme Court of New York – ‘TRUMP-EQUITABLE FIFTH AVENUE COMPANY, RESPONDENT-APPELLANT, v. CITY OF NEW YORK ET AL., APPELLANTS-RESPONDENTS’ (26.07.1990) link: http://ny.findacase.com/research/wfrmDocViewer.aspx/xq/fac.19900726_0049356.NY.htm/qx

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