ELI5: How does Trump benefit from overvaluating his assets?
ELI5: How does Trump benefit from overvaluating his assets?
I've been trying to keep up with it but I just don't understand how he profits from this scheme?
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If you have a business asset, you can take out loans using that asset as collateral, and then use the loaned money to go do other business things. If you exaggerate the value of the asset, you can take out bigger loans.
(Even if you repay the loans later, you've taken advantage of the banks who made the loans, because they only have so much money to lend out to businesses.)
If you own real-estate, you owe property tax on it. If you understate the value of your real-estate, you can (for a while) get away with paying less in taxes.
Mr. Trump and his companies did both of these things. They exaggerated the value of their assets when it came time to get loans, and they understated the value of those same assets when it came time to pay taxes on them.
OMG 🤦 Thank you for explaining this. Now I get why he keeps saying that no banks were harmed. And now it makes sense why they believe he owes so much in taxes.
Okay, I'm tracking like a VCR
Now you just playin'
Now I get why he keeps saying that no banks were harmed.
which is true only until the business he needed the borrowed money for goes sideways, he doesn't have the money to pay back and the bank finds that the collateral doesn't have the value he claimed when borrowing the money.
edit:, oh f..k, i am replying into a year old thread, well... 🤷
Hah 😂 no worries friend. So much of this bizarro-world shit show has happened in that time.
Even if you repay the loans later, you exposed them to more risk than they agreed to take.
And they probably gave him a lower interest rate due to the perceived lower risk.
Anna Sorokin went to prison for this.