What Donald Trump’s Tax Returns Will Reveal — And What They Won’t

President Trump’s tax returns have come to represent a kind of rosetta stone for the scandals around his administration: a singular set of documents that could reveal the president’s assorted business dealings, the true extent of his wealth, and the conflicts between his own self interest and his public duties.

But what information would the returns actually show? Apart from the public interest in seeing how much the president pays (or does not pay) in taxes, and Trump’s secrecy in keeping them from the public, it’s not clear that his return would be the smoking gun that people expect.

“I think people will be underwhelmed,” said David Williams, a former IRS investigator who is now a managing director at FTI consulting. “My guess is that his tax return is going to be enormous, a series of LLPs and corporations that flow through to him, and it’s gonna take a tremendous amount of effort to piece everything together.”

While the tax returns may not themselves be a smoking gun, they could provide solid leads for congressional investigators and jumping off points for new probes. Based on TPM’s interviews with multiple tax experts, here’s what to expect.

The Basics

The return will not show how much money Trump actually has, or even all of his income necessarily.

Rather, it will directly show what Trump declared as his taxable income and the deductions and credits he claimed. Along with his gift tax return, the income tax return could also serve as a roadmap for congressional investigators probing Trump’s finances.

“There’s a whole bunch of information we can learn about Trump’s management of the executive branch – is he running it for his benefit or our benefit – and Trump’s return is a starting point,” said Steven Rosenthal, a tax attorney and senior fellow at the Urban-Brookings Tax Policy Center. “But if we want to push even harder, that would take more than just the tax return information.”

In the fullest form, congressional investigators would likely request Trump’s income and gift tax returns, as well as attachments that could provide more detail, and not the base 1040 income tax return that most people file.

The juiciest portion of the income tax return could be the K-1s – the forms issued by businesses in which Trump has a stake that show the income, losses, dividends, and deductions of each member with an interest in the firm. Allen Greenberg, a New York tax attorney at Graubard Miller, told TPM that though the K-1s themselves would stay separate from Trump’s income tax return, the names of entities in which Trump has a stake and his income share would appear on the filing.

Further requests to receive the full K-1 issued by the business would shed more light on other partners in the businesses as well as details about the firm’s activities, while potentially leading investigators to request information from those entities themselves.

Trump has claimed he is prevented from releasing the returns because he is under audit by the IRS. The IRS has stated that an audit does not prevent disclosure.

Signing my tax return…. pic.twitter.com/XJfXeaORbU

— Donald J. Trump (@realDonaldTrump) October 15, 2015

Bart Stupak, a former Democratic congressman from Michigan who chaired the House Energy Committee’s investigations subcommittee, pointed out that even if Congress succeeds in getting ahold of the returns, they would likely remain far away from prying public eyes, and only accessible to committee members and investigators.

“That’s not gonna happen,” Stupak said, referring to a committee potentially releasing the returns to the public. “Not if they do it properly.”

George Yin, a UVA law professor who has written on Congress’ power to obtain individual tax returns, told TPM that the House could eventually vote to release publicly a report based on what was learned from the returns.

Foreign entanglements

Possibly the most useful information on the returns will be whatever foreign income or interests Trump has had, be them Russian, Middle Eastern, or wherever.

U.S. citizens are required to pay taxes on income earned outside the U.S., meaning that Trump would have to declare income he made anywhere in the world. The K-1 reference would, in theory, also show foreign-based entities in which Trump had a stake, and not only U.S. ones.

But Williams, the former IRS attorney, pointed out that it’s a regime of “voluntary” compliance that – in the case of foreign tax compliance – also depends on information received from the non-U.S. country.

“If the IRS doesn’t know about it, we can’t change your taxes,” he said.

That being said, any deduction that Trump claimed on foreign tax that he paid could be a giveaway.

“He has to report the tax to get a credit for it,” Greenberg said, adding that the return would show the country for which the tax credit was claimed.

Williams said that the section could serve as “a useful investigative lead,” but that the information would be limited. If the IRS at some point requested that Trump substantiate a tax credit by asking him to provide a foreign tax return, however, that documentation could become available to congressional investigators after further subpoenas.

“It gets more and more complex with different layers of entities,” Williams said. “One entity may be building a property, another developing it, while another operates it and derives the revenue.”

Loans and deductions

Questions about whether Trump received loans from foreign-owned banks have stoked interest among investigators. By 2008, reports indicate that few banks were willing to lend to Trump, which may have led him to seek alternative funding sources.

However, any interest deductions he may have claimed on loans he was paying off would appear on an income tax return in aggregate, meaning that little information would be discernible from the base filing.

But any interest that Trump earned as income from loans he issued would be broken down as separate sources of income, with corresponding details showing the name of the person or entity paying the interest.

In a sense, that information could be more tantalizing: money that Trump had issued as loans would shed light on people or entities indebted to him, and also people or businesses for which Trump would have an incentive to convince to repay him.

The deductions themselves could also yield immediate investigative fruit. The biggest one would likely be depreciation: Trump deducting taxes owed for the amount of value his buildings lose with time.

How this number is calculated varies, but it can reduce a multi-million tax bill to very little.

“It may not affect him in the long run, but at the end of the day, the reason why Mr Trump’s current taxes are lower or may even be nonexistent is going to be because he has a lot of depreciation and he’s depreciating his property today,” said Steven Goldburd, a tax attorney at Goldburd McCone.

The depreciation deduction could show how aggressively Trump claimed depreciation on properties he owned in a bid to cut down on his tax bill.

Alimony, charity, and gifts

Trump reportedly reached agreements with his two ex-wives to pay them alimony, with Marla Maples claiming that he threatened to withhold payments when she threatened his presidential bid.

Income tax returns may reveal how much alimony Trump agreed to pay, depending on his deduction and on whether the alimony payments were ongoing.

Charitable giving deductions could also reveal whether Trump has ever given significant amounts of money to charity.

A recent New York Times investigation based off of Trump tax returns from the 1990s and those of his father revealed that the president received hundreds of millions of dollars from his father, debunking his tale of being a self-made man.

Much of this was revealed through gift provisions on the tax returns, which force filers to disclose gifts over $15,000.

“The only exception is a gift to a spouse,”said Larry Heller, an attorney at Greenberg Traurig specializing in gift and estate tax law. “If you’re married to a U.S. citizen, then the amount of gift is unlimited.”