ALBANY — The New York State Tax Department said Tuesday it is investigating allegations made in a New York Times article Tuesday that President Donald Trump received $413 million from his father in part through “tax dodges” and “outright fraud.”
The Times report says Trump and his father, Fred, set up a sham corporation to disguise millions of dollars in gifts and undervalue assets to avoid gift and inheritance taxes. The Times said its report was based on more than 100,000 pages of financial documents of Fred Trump’s real-estate empire, including some of his confidential tax returns, canceled checks and bank statements, as well as interviews with his former employees and advisers.
Shortly after the story was published, the state Tax Department said it would investigate.
“The Tax Department is reviewing the allegations in The New York Times article and is vigorously pursuing all appropriate avenues of investigation,” the agency said in a statement. A spokesman said there was no further comment at this time.
A lawyer for the president told The Times “there was no fraud or tax evasion by anyone” and the facts cited in the story are “extremely inaccurate.”
Later Tuesday White House press secretary Sarah Huckabee Sanders accused The Times of a “misleading attack” and being “consumed with attacking the president and his family.”
Many decades ago, “the IRS reviewed and signed off on these transactions,” Sanders said in a statement. She did not address specific details in the article.
The Times said its investigation contradicted Trump’s portrayal of himself as a self-made billionaire who got “peanuts” from his dad and started out with a “small” loan of $1 million. Its probe essentially said the president’s wealth was built on a combination of “inherited wealth and tax dodges” and his finances “were deeply intertwined with, and dependent on, his father’s wealth.”
The Times examined actions by Fred Trump that built his real estate empire and enriched his five children, actions that made Donald a landlord by age 3 and millionaire by age 8. Later, he took actions to make the size of his estate appear smaller for tax purposes while effectively giving large chunks of it to his children, The Times reported.
Among other things found by The Times, Fred Trump’s sprawling business:
• Purchased land in New York City, gave that land to a trust in his children’s names and then had his real estate company lease the land from his children through the trust. That made his then-small children landlords and gave them a steady income stream.
• Transferred ownership of his eight apartment buildings to his children through an array of partnerships and corporations, yet paid no gift taxes on seven of the buildings.
• Submitted tax returns in the 1990s that “grossly” undervalued New York City properties that were eventually sold at exponential markups after his death in 1999 . Lowballing the values allowed Trump to drastically reduce estate taxes when the properties were transferred to a special kind of “annuity trust” that benefited his children. The Times said the value of the Trump buildings was established by his hand-picked appraiser and that nearby properties were appraised at square-foot rate two to four times higher, according to records.
• Formed a supply company to pad expenses to eventually justify imposing rent increases on tenants. The company, All County Building Supply and Maintenance, effectively functioned to allow Fred to give his children large financial gifts, disguised as business transactions in order to avoid gift taxes, The Times said.
• It also said Donald Trump received $177 million in 2004 when the family sold off the empire built by Fred after his death.
Trump has broken with long-standing tradition of presidents by not releasing his personal income tax returns.
Robert Trump, the president’s brother, told The Times: “All appropriate gift and estate tax returns were filed, and the required taxes were paid.” He noted his father’s estate was closed in 2001 by federal and state tax authorities, and his mother’s in 2004. He said the family would have no other comment “on matters that happened 20 years ago.”
The president’s lawyer, Charles Harder, told The Times in a written statement: “The returns and tax positions that The Times now attacks were examined in real time by the relevant taxing authorities. The taxing authorities requested a few minor adjustments, which were made, and then fully approved all of the tax filings. These matters have now been closed for more than a decade.”
With Candice Ferrette