A YTMP Exclusive

There had to be a practical takeaway from Mary Trump’s Too Much and Never Enough: How My Family Created the World’s Most Dangerous Man beyond “Siblings don’t let your niece grow up to be an English major clinical psychologist”. While my brother and sister accountants on #TaxTwitter were coping with April in July, I was reading Ms. Trump’s book while once again celebrating my retirement from active tax practice.

Not Enough Finance

It reminds me a bit of how I used to be when I was twelve or so and reading racy novels that my much older brother left around the house. The Spy Who Loved Me comes to mind. I was always trying to figure out exactly what it was that they were doing. Well from that point of view, i.e. tax/financial porn, Too Much fails.

The other problem with the book is that in creating a seamless narrative Mary Trump blends in much that is common knowledge/belief about President Trump with her own observations which are episodic. She is frank about that in the Author’s Note. It just made for a little frustration as I was trying to sort out what was new in the book.

She refers us to the 2018 New York TimesNYT piece Trump Engaged in Suspect Tax Schemes as He Reaped Riches From His Father. So I had to reread that and pretty much have the same impression I had the first time I read it. It is a kind of “There’s gambling at Rick’s” sort of story

The moves that the family made to push wealth down to the next generation while avoiding transfer taxes were aggressive and sketchy.

“Sunnyside was bought for $2.5 million in 1968 by Midland Associates, a partnership Fred Trump formed with his children for the transaction. In his 1969 tax return, he reported giving each child 15 percent of Midland Associates. Based on the amount of cash put up to buy Sunnyside, the value of this gift should have been $93,750. Instead, he declared a gift of only $6,516.”

Further on in the article, they did have something about minority discounts. There is also something about the interest-free loans that Fred made to Donald (as she refers to him), but no mention that prior to the Dickman decision in 1984, this was arguably a legitimate technique.

I should not minimize it too much. The information in the story was enough for there to be an investigation opened on Maryanne Trump Barry, who being a federal judge and all, should not have been engaging in those sort of shenanigans.

Regardless what the book has that I was not aware of is how the New York Times investigative team got all the juicy documents that let them paint a picture that if not damning would certainly merit some serious time in Purgatory.

Background

Some of this is not new information, but it is useful for context. Fred Trump had five children Maryanne Trump Barry (1937), Frederick Trump Jr.(1938-1981), Elizabeth Trump Grau (1942), Donald Trump (1946) and Robert Trump(1948).

Mary Trump (1965) is Fred Jr.’s daughter. Her only sibling is Frederick Trump III. There was some effort made to push property down to the next generation early on which Fred Jr. befitted from with the income from those properties continuing to go to Mary and Fred III after his death, but they did not participate in any transfers after that. (I’m doing some reading between the lines there)

When Fred Sr. died in 1999, he left $200,000 to each grandchild and the balance was split between the four surviving children. A plain vanilla will would have split the residue five ways with Mary and Fred III splitting their father’s share.

The family drama that led up to this is the bulk of the book and it is actually a heart-rending story. Mary Trump is the adult child of an alcoholic. She lost her father when he was 42 and she was 16. I put that in front of some of my annoyance with her entitled attitude.

She and her brother decided to contest the will. That is the part of the story that is really intriguing, although details that she withholds are a little annoying.

The Will Contest

The will contest began when she and her brother refused to sign off. And this is where an odd coyness enters the narrative.

“…we were included in a bequest made separately to all of the grandchildren, an amount that proved to be less than a tenth of 1 percent of what my aunts and uncles had inherited.” (Emphasis added)

The “amount” was reported in the Daily News in 2000 as being $200,000 (The NYT story would have been sure to add $300,000 in “today’s dollars”). Why leave that out?

In describing her conversations with Robert Trump, who was apparently the point man in convincing them to sign off, she relates asking about Midland Associates which held the earlier round of asset transfers.

“I knew very little about it – none of my trustees had ever explained what role it played or how money was generated – but I received a check every few months”

I would have a better understanding of the story if I had some notion of how much that check tended to be.

The Litigation

As you might expect the family was upset at her and her brother and given that Donald was involved there was an extra dose of vindictiveness as they cut off payments of medical bills for the baby William, her brother’s son. (There was a lot of ink spilled on that at the time.)

She was less than satisfied with the attorney who represented her – a pompous self-satisfied man in her words. After two years, they agreed to settle, but as part of the settlement, they had to sell the real estate interests that they had inherited from their father.

Again there is the coyness. What was the payday to her and her brother? Inquiring minds would like to know.

The aunts and uncles submitted a property valuation and the attorneys negotiated based on that. Her attorney commented that “We know they’re lying, but it’s ‘He said, she said.’ Besides your grandfather’s estate is only worth around thirty million dollars.”

Where Were The Accountants?

In 2017, Mary was approached by the New York Times. She told them that she did not have any documentation, but they suggested that the attorney might. As it turned out there was a trove of documents, which she turned over to the Times.

According to her account, those documents would prove that her grandfather’s estate was worth a billion dollars.

Taking this at face value, the question is why were there not forensic accountants and independent appraisers going through those boxes before settlement? No offense to the Times, but they probably would have figured it out a lot quicker than a team of investigative reporters.

It Takes All Kinds

I spoke with my former CCR partner Catherine Parente of Sansiveri, Kimball & Co LLP. She works in litigation support and valuation. The reason lawyers hire her is that some of them know what they don’t know. A really good litigator might not know the difference between a balance sheet and an income statement.

I had a lawyer friend who did not understand the difference between gross revenue and net profit, but that didn’t stop me from hiring him to handle my divorce. Forensic accountants close the knowledge gap for attorneys. And I think it goes without saying that in a case like this money spent on your own appraisers would be money well spent.

Catherine told me that the reason attorneys don’t bring in forensic accountants is a matter of ego and cost. Some attorneys have big egos. I mean, who knew?

Another View

My outreach to TaxTwitter did not produce a lot of results. They are mostly in recovery right now. I did hear from one other accountant. Eric Santa Maria is a CPA who also has AICPA credentials in forensics and valuation.

He tells me that it is not unusual for attorneys to agree on a neutral team for forensics. He indicated that it would be unusual in this sort of case. He has not read the book, but based on my descriptions he indicated that it would seem reckless to accept the other side’s numbers.

One possibility would be if she was strong-armed, which is actually part of the account. She and her brother probably were in a very weak position with their 20% interest. I once did litigation support for someone who inherited a partnership interest that was controlled by a sibling. All she ever got from it was taxable income.

There is an indication that that sort of thing might have been threatened. As the dispute developed she quotes Robert as saying “Listen, if you don’t sign this will, if you think of suing us, we will bankrupt Midland Associates and you be paying taxes on money you don’t have for the rest of your lives.”

That is the part of the story that I would really like to dive into. I am not sure exactly how that would have worked, but Mary Trump leaves it at that. This book so needs financial annotations.

Regardless, the other moral of the story is don’t own part of a flow-through entity without having any control over distributions.

Overall

I really appreciated the family drama part of the book. Her stated purpose in writing the book is to warn us about her Uncle Donald’s pathologies.

“No one knows how Donald came to be who he is better than his own family. Unfortunately, almost all of them remain silent out of loyalty or fear. I’m not hindered by either of those.”

She concludes:

“ The country is now suffering from the same toxic positivity that my grandfather deployed specifically to drown out his ailing wife, torment his dying son, and damage past healing the pscyhe of his favorite child, Donald J. Trump.”

Unfortunately, I don’t think she really adds anything to the national conservation.

When I think about all the families I have known well enough to give a sort of dysfunctionality score, taking her account at face value I would probably give the Trumps a seven or so on a scale of ten.

It is disgusting that someone having a casual lunch with his wife and his adult niece who happens to be wearing a bathing suit would comment on her “rack”, but we certainly have more egregious remarks by our President.

Is The Book Helpful?

It makes me think of the cartoon of the auditorium with two smiling people sitting among hundreds of empty seats. The banner above reads “Welcome Adult Children of Normal Families”. I tried one of my surveys and was disappointed by the small response, but percentage wise it is kind of what I expected:

Currently “Worse than the worst” is running close to even with “Pretty bad but seen worse” at 28% and 24% respectively. “Same old same old” is at 44% and “Pretty together” is at 4%. I’m giving it more time, because #TaxTwitter is still in recovery from the last deadline.

Unfortunately, I fear the book may be counterproductive as the author frequently comes across as an entitled resentful trustafarian. The drama of an eccentric curmudgeonly founder and family inside the business resenting family that is not and visa versa along with the generational issues is actually pretty commonplace in the high net worth world.

A Good Review

The review that comes closest to my evaluation of the book overall is by Chris Taylor – We read Mary Trump’s book about Donald Trump so you don’t have to.

“Are the 225 pages of this slim volume going to turn fast enough to justify your attention, especially during a year that demands almost all of it?

Answer: It depends. Yes, if you need to be shocked out of the notion that rich families are happy or even interesting to the rest of us. Yes, if you like the idea of a book that reads like bad Succession fan fiction, with little plot and less dialogue. Yes if you love the documentary Grey Gardens, about wealthy relatives living squalid little lives in a disintegrating gothic mansion. And yes, if you like books with an unreliable narrator.”

“Unreliable narrator” is of course a literary trope and it is indicative of reading the book as if it were a novel, but the first college English course I ever took was about the thin line between fiction and nonfiction.

“Self-contradictions are small but legion. She tells rather than shows. Anecdotes, when they arrive, are delivered in haste and left half finished, with not even speculation to answer the questions they raise.  

To show rather than tell: In one early chapter, Mary gets a Christmas gift from Donald and his first wife Ivana. It’s a single gold lamé shoe with a four-inch heel. The heel contains plastic-wrapped candy. Was there supposed to be another? Mary quickly moves on without noting whether or not it was ever explained. We are left, literally, waiting for the other shoe to drop.”

I agree with the conclusion.

“We do not need Mary Trump to provide more evidence of the needy moral vacuum; we’re all living it. But we can at least be grateful that she’s moved the needle on the definitive Donald Trump biography that will be written one day, when the full extent of his criminal past, present, and future has been revealed.”

Note

I wrote to the attorney that Mary Trump describes as a “pompous self-satisfied man” for comment and did not receive any response. If you want to know who it is I think you may have to read the book.

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Peter J Reilly is a CPA with over forty years of experience. He is retired from active practice, but available for consulting. He writes about things that are tax-related focusing on matters that are of practical significance, humorous or indicative of the relationship of how tax relates to other areas.  Non-tax posts sometimes creep in.  He is the managing member of Risorgimento Productions LLC.

Follow him on Twitter or LinkedIn. Most up to date tax coverage is on Forbes.com. Merchandise available at yourTMP.  Contact at yourtaxmatterspartner@gmail.com.