Michael Cohen’s Accusations against President Trump in his Statement before the House Committee on Oversight and Reform include arranging for a Straw Bidder to Purchase a Portrait of President Trump at an Auction, using Trump Foundation Funds to Repay the Fake Bidder, and keeping the Art for himself.
As part of the New York Attorney General’s Stipulation Agreement with The Trump Foundation, the Foundation must Sell a Total of Three Trump Portraits it currently owns.
This Stipulation Agreement with the New York Attorney General has Saved the Trump Foundation from a burdensome Penalty Tax in connection with the Involuntary Termination.
The New York Attorney General announced on December 18th, 2018, that its Investigation had Found “a shocking pattern of illegality involving the Trump Foundation – including unlawful coordination with the Trump presidential campaign, repeated and willful self-dealing, and much more.” Under the Stipulation Agreement, the Trump Foundation will Dissolve and Submit to the Court a List of Non-for-Profit Organizations to Receive the Foundation’s Remaining Assets. The Attorney General and the State Court will need to Approve the Organizations that Receive the Trump Foundation’s Funds.
Under the Provision of the Internal Revenue Code Governing Voluntary Termination of Private Foundation Status, a Dissolving Foundation can Distribute its Assets to established Charities. If a Private Foundation has Engaged in “willful repeated acts” or “a willful and flagrant act” resulting in Application of Private Foundation Excise Taxes, it can become Liable for the dreaded and confiscatory Termination Tax. This Tax equals the lesser of:
(1) The Total Tax Benefits from Exemption to the Foundation and its Major Contributors.
(2) The Value of the Net Assets of the Foundation.
Calculating the precise Amount of the Termination Tax is Complicated and Technical. The First Option includes the Value to Substantial Contributors Donors of the Charitable Contribution Deduction. According to a Lawyer for the Trump Foundation, President Trump has Donated $8,250,000 Million and the McMahons Donated $5,000,000 Million to the Trump Foundation.
If we assume that they and no others were substantial Contributors, then the Termination Tax under the First Options would come to $3,300,00 Million.
For the Second Option, the New York Attorney General has represented to the Court that $1.75 Million of Assets remain in the Foundation. The Value of the Remaining Assets is likely to be the Lower of the Two Options and thus gives some sense of the Size of any Federal Termination Tax.
The New York Attorney took the Second Option but will Distribute the $1.75 Million to other Approved Charities.
But added that President Trump can not be on the Board of any New York Nonprofit/Charity for 10 years and his Three Children for One year.
NYC Wins When Everyone Can Vote! Michael H. Drucker
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