Some comments on the New York Times story about Donald Trump's tax returns - John Hempton. Debt parking
Here is how debt parking works. Suppose the debtor (in this case The Donald) is going to get his debt cancelled for (say) 1c in the dollar. When he gets the debt wiped out the debtor (ie The Donald) will have to report assessable income equal to the debt wiped out (in this case 99 percent of $916 million).
The alternative though is for the debtor to set up a dummy party. The dummy party might be his wife or children or some company or trust set up by them or more likely some completely opaque offshore trust.
And that dummy party goes and buys the debt for say 1.1 cents in the dollar. Then they just sit there.
They don't force the debtor (ie The Donald) to repay. They don't make a profit or loss on the debt. And because the debtor never has his debt forgiven he never gets the assessment on debt forgiveness and he gets to keep his NOLs even though the losses did not come out of his pocket. In summary, the system is rigged in favor of the rich. Shall I put my surprise face on now?
"The liberals can understand everything but people who don't understand them."
Lenny Bruce
"The cleverest of all, in my opinion, is the man who calls himself a fool at least once a month."
Dostoevsky
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