Fitch Revises Russia-Based Home Credit & Finance Bank's Outlook to Stable; Affirms IDR at 'BB-' - Fitch Ratings

Fitch Revises Russia-Based Home Credit & Finance Bank's Outlook to Stable; Affirms IDR at 'BB-' - Fitch Ratings

Fitch Revises Russia-Based Home Credit & Finance Bank's Outlook to Stable; Affirms IDR at 'BB-' - Fitch Ratings

Posted: 29 Sep 2020 09:00 AM PDT

Trump's Taxes Show Chronic Losses and Years of Income Tax Avoidance - The New York Times

Posted: 27 Sep 2020 02:07 PM PDT

The Times obtained Donald Trump's tax information extending over more than two decades, revealing struggling properties, vast write-offs, an audit battle and hundreds of millions in debt coming due.

Donald J. Trump paid $750 in federal income taxes the year he won the presidency. In his first year in the White House, he paid another $750.

He had paid no income taxes at all in 10 of the previous 15 years — largely because he reported losing much more money than he made.

As the president wages a re-election campaign that polls say he is in danger of losing, his finances are under stress, beset by losses and hundreds of millions of dollars in debt coming due that he has personally guaranteed. Also hanging over him is a decade-long audit battle with the Internal Revenue Service over the legitimacy of a $72.9 million tax refund that he claimed, and received, after declaring huge losses. An adverse ruling could cost him more than $100 million.

The tax returns that Mr. Trump has long fought to keep private tell a story fundamentally different from the one he has sold to the American public. His reports to the I.R.S. portray a businessman who takes in hundreds of millions of dollars a year yet racks up chronic losses that he aggressively employs to avoid paying taxes. Now, with his financial challenges mounting, the records show that he depends more and more on making money from businesses that put him in potential and often direct conflict of interest with his job as president.

The New York Times has obtained tax-return data extending over more than two decades for Mr. Trump and the hundreds of companies that make up his business organization, including detailed information from his first two years in office. It does not include his personal returns for 2018 or 2019. This article offers an overview of The Times's findings; additional articles will be published in the coming weeks.

The returns are some of the most sought-after, and speculated-about, records in recent memory. In Mr. Trump's nearly four years in office — and across his endlessly hyped decades in the public eye — journalists, prosecutors, opposition politicians and conspiracists have, with limited success, sought to excavate the enigmas of his finances. By their very nature, the filings will leave many questions unanswered, many questioners unfulfilled. They comprise information that Mr. Trump has disclosed to the I.R.S., not the findings of an independent financial examination. They report that Mr. Trump owns hundreds of millions of dollars in valuable assets, but they do not reveal his true wealth. Nor do they reveal any previously unreported connections to Russia.

The President's Taxes

In response to a letter summarizing The Times's findings, Alan Garten, a lawyer for the Trump Organization, said that "most, if not all, of the facts appear to be inaccurate" and requested the documents on which they were based. After The Times declined to provide the records, in order to protect its sources, Mr. Garten took direct issue only with the amount of taxes Mr. Trump had paid.

"Over the past decade, President Trump has paid tens of millions of dollars in personal taxes to the federal government, including paying millions in personal taxes since announcing his candidacy in 2015," Mr. Garten said in a statement.

With the term "personal taxes," however, Mr. Garten appears to be conflating income taxes with other federal taxes Mr. Trump has paid — Social Security, Medicare and taxes for his household employees. Mr. Garten also asserted that some of what the president owed was "paid with tax credits," a misleading characterization of credits, which reduce a business owner's income-tax bill as a reward for various activities, like historic preservation.

The tax data examined by The Times provides a road map of revelations, from write-offs for the cost of a criminal defense lawyer and a mansion used as a family retreat to a full accounting of the millions of dollars the president received from the 2013 Miss Universe pageant in Moscow.

Together with related financial documents and legal filings, the records offer the most detailed look yet inside the president's business empire. They reveal the hollowness, but also the wizardry, behind the self-made-billionaire image — honed through his star turn on "The Apprentice" — that helped propel him to the White House and that still undergirds the loyalty of many in his base.

Ultimately, Mr. Trump has been more successful playing a business mogul than being one in real life.

"The Apprentice," along with the licensing and endorsement deals that flowed from his expanding celebrity, brought Mr. Trump a total of $427.4 million, The Times's analysis of the records found. He invested much of that in a collection of businesses, mostly golf courses, that in the years since have steadily devoured cash — much as the money he secretly received from his father financed a spree of quixotic overspending that led to his collapse in the early 1990s.

"The Apprentice," along with endorsements and other income that sprang from his growing fame, brought Donald Trump $427.4 million. Rob DeLorenzo/Zuma Press

Indeed, his financial condition when he announced his run for president in 2015 lends some credence to the notion that his long-shot campaign was at least in part a gambit to reanimate the marketability of his name.

As the legal and political battles over access to his tax returns have intensified, Mr. Trump has often wondered aloud why anyone would even want to see them. "There's nothing to learn from them," he told The Associated Press in 2016. There is far more useful information, he has said, in the annual financial disclosures required of him as president — which he has pointed to as evidence of his mastery of a flourishing, and immensely profitable, business universe.

In fact, those public filings offer a distorted picture of his financial state, since they simply report revenue, not profit. In 2018, for example, Mr. Trump announced in his disclosure that he had made at least $434.9 million. The tax records deliver a very different portrait of his bottom line: $47.4 million in losses.

Tax records do not have the specificity to evaluate the legitimacy of every business expense Mr. Trump claims to reduce his taxable income — for instance, without any explanation in his returns, the general and administrative expenses at his Bedminster golf club in New Jersey increased fivefold from 2016 to 2017. And he has previously bragged that his ability to get by without paying taxes "makes me smart," as he said in 2016. But the returns, by his own account, undercut his claims of financial acumen, showing that he is simply pouring more money into many businesses than he is taking out.

The picture that perhaps emerges most starkly from the mountain of figures and tax schedules prepared by Mr. Trump's accountants is of a businessman-president in a tightening financial vise.

Most of Mr. Trump's core enterprises — from his constellation of golf courses to his conservative-magnet hotel in Washington — report losing millions, if not tens of millions, of dollars year after year.

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His revenue from "The Apprentice" and from licensing deals is drying up, and several years ago he sold nearly all the stocks that now might have helped him plug holes in his struggling properties.

The tax audit looms.

And within the next four years, more than $300 million in loans — obligations for which he is personally responsible — will come due.

Against that backdrop, the records go much further toward revealing the actual and potential conflicts of interest created by Mr. Trump's refusal to divest himself of his business interests while in the White House. His properties have become bazaars for collecting money directly from lobbyists, foreign officials and others seeking face time, access or favor; the records for the first time put precise dollar figures on those transactions.

At the Mar-a-Lago club in Palm Beach, Fla., a flood of new members starting in 2015 allowed him to pocket an additional $5 million a year from the business. In 2017, the Billy Graham Evangelistic Association paid at least $397,602 to the Washington hotel, where the group held at least one event during its four-day World Summit in Defense of Persecuted Christians.

The Times was also able to take the fullest measure to date of the president's income from overseas, where he holds ultimate sway over American diplomacy. When he took office, Mr. Trump said he would pursue no new foreign deals as president. Even so, in his first two years in the White House, his revenue from abroad totaled $73 million. And while much of that money was from his golf properties in Scotland and Ireland, some came from licensing deals in countries with authoritarian-leaning leaders or thorny geopolitics — for example, $3 million from the Philippines, $2.3 million from India and $1 million from Turkey.

In the Philippines, where Mr. Trump licensed his name to a Manila tower, he or his companies paid $156,824 in taxes in 2017. Hannah Reyes Morales for The New York Times

He reported paying taxes, in turn, on a number of his overseas ventures. In 2017, the president's $750 contribution to the operations of the U.S. government was dwarfed by the $15,598 he or his companies paid in Panama, the $145,400 in India and the $156,824 in the Philippines.

Mr. Trump's U.S. payment, after factoring in his losses, was roughly equivalent, in dollars not adjusted for inflation, to another presidential tax bill revealed nearly a half-century before. In 1973, The Providence Journal reported that, after a charitable deduction for donating his presidential papers, Richard M. Nixon had paid $792.81 in 1970 on income of about $200,000.

The leak of Mr. Nixon's small tax payment caused a precedent-setting uproar: Henceforth, presidents, and presidential candidates, would make their tax returns available for the American people to see.

The contents of thousands of personal and business tax records fill in financial details that have been withheld for years.

"I would love to do that," Mr. Trump said in 2014 when asked whether he would release his taxes if he ran for president. He's been backpedaling ever since.

When he ran, he said he might make his taxes public if Hillary Clinton did the same with the deleted emails from her private server — an echo of his taunt, while stoking the birther fiction, that he might release the returns if President Barack Obama released his birth certificate. He once boasted that his tax returns were "very big" and "beautiful." But making them public? "It's very complicated." He often claims that he cannot do so while under audit — an argument refuted by his own I.R.S. commissioner. When prosecutors and congressional investigators issued subpoenas for his returns, he wielded not just his private lawyers but also the power of his Justice Department to stalemate them all the way to the Supreme Court.

Mr. Trump's elaborate dance and defiance have only stoked suspicion about what secrets might lie hidden in his taxes. Is there a financial clue to his deference to Russia and its president, Vladimir V. Putin? Did he write off as a business expense the hush-money payment to the pornographic film star Stormy Daniels in the days before the 2016 election? Did a covert source of money feed his frenzy of acquisition that began in the mid-2000s?

The Times examined and analyzed the data from thousands of individual and business tax returns for 2000 through 2017, along with additional tax information from other years. The trove included years of employee compensation information and records of cash payments between the president and his businesses, as well as information about ongoing federal audits of his taxes. This article also draws upon dozens of interviews and previously unreported material from other sources, both public and confidential.

All of the information The Times obtained was provided by sources with legal access to it. While most of the tax data has not previously been made public, The Times was able to verify portions of it by comparing it with publicly available information and confidential records previously obtained by The Times.

To delve into the records is to see up close the complex structure of the president's business interests — and the depth of his entanglements. What is popularly known as the Trump Organization is in fact a collection of more than 500 entities, virtually all of them wholly owned by Mr. Trump, many carrying his name. For example, 105 of them are a variation of the name Trump Marks, which he uses for licensing deals.

Fragments of Mr. Trump's tax returns have leaked out before.

Transcripts of his main federal tax form, the 1040, from 1985 to 1994, were obtained by The Times in 2019. They showed that, in many years, Mr. Trump lost more money than nearly any other individual American taxpayer. Three pages of his 1995 returns, mailed anonymously to The Times during the 2016 campaign, showed that Mr. Trump had declared losses of $915.7 million, giving him a tax deduction that could have allowed him to avoid federal income taxes for almost two decades. Five months later, the journalist David Cay Johnston obtained two pages of Mr. Trump's returns from 2005; that year, his fortunes had rebounded to the point that he was paying taxes.

In 1995, the year Mr. Trump broke ground on the Trump International Hotel and Tower in New York, he would declare losses of $915.7 million — a sum so large, it could be carried forward to cancel out taxable income for years. Francis Specker/New York Post Archives, via NYP Holdings, Inc., via Getty Images

By 2005, his fortunes had turned and he was paying income taxes: He had exhausted the tax-reducing power of that nearly $1 billion loss just as he began to see a surge of celebrity income after "The Apprentice" debuted. Michael Nagle/Getty Images

The vast new trove of information analyzed by The Times completes the recurring pattern of ascent and decline that has defined the president's career. Even so, it has its limits.

Tax returns do not, for example, record net worth — in Mr. Trump's case, a topic of much posturing and almost as much debate. The documents chart a great churn of money, but while returns report debts, they often do not identify lenders.

The data contains no new revelations about the $130,000 payment to Stephanie Clifford, the actress who performs as Stormy Daniels — a focus of the Manhattan district attorney's subpoena for Mr. Trump's tax returns and other financial information. Mr. Trump has acknowledged reimbursing his former lawyer, Michael D. Cohen, who made the payoff, but the materials obtained by The Times did not include any itemized payments to Mr. Cohen. The amount, however, could have been improperly included in legal fees written off as a business expense, which are not required to be itemized on tax returns.

No subject has provoked more intense speculation about Mr. Trump's finances than his connection to Russia. While the tax records revealed no previously unknown financial connection — and, for the most part, lack the specificity required to do so — they did shed new light on the money behind the 2013 Miss Universe pageant in Moscow, a subject of enduring intrigue because of subsequent investigations into Russia's interference in the 2016 election.

The records show that the pageant was the most profitable Miss Universe during Mr. Trump's time as co-owner, and that it generated a personal payday of $2.3 million — made possible, at least in part, by the Agalarov family, who would later help set up the infamous 2016 meeting between Trump campaign officials seeking "dirt" on Mrs. Clinton and a Russian lawyer connected to the Kremlin.

In August, the Senate Intelligence Committee released a report that looked extensively into the circumstances of the Moscow pageant, and revealed that as recently as February, investigators subpoenaed the Russian singer Emin Agalarov, who was involved in planning it. Mr. Agalarov's father, Aras, a billionaire who boasts of close ties to Mr. Putin, was Mr. Trump's partner in the event.

Emin Agalarov, left, a Russian singer whose family was involved in planning the 2013 Miss Universe pageant in Moscow. Mr. Trump made $2.3 million from that year's pageant, the records show. Irina Bujor/, via Associated Press

The committee interviewed a top Miss Universe executive, Paula Shugart, who said the Agalarovs offered to underwrite the event; their family business, Crocus Group, paid a $6 million licensing fee and another $6 million in expenses. But while the pageant proved to be a financial loss for the Agalarovs — they recouped only $2 million — Ms. Shugart told investigators that it was "one of the most lucrative deals" the Miss Universe organization ever made, according to the report.

That is borne out by the tax records. They show that in 2013, the pageant reported $31.6 million in gross receipts — the highest since at least the 1990s — allowing Mr. Trump and his co-owner, NBC, to split profits of $4.7 million. By comparison, Mr. Trump and NBC shared losses of $2 million from the pageant the year before the Moscow event, and $3.8 million from the one the year after.

Losses reported by businesses Mr. Trump owns and runs helped wipe out tax bills on hundreds of millions of dollars in celebrity income.

While Mr. Trump crisscrossed the country in 2015 describing himself as uniquely qualified to be president because he was "really rich" and had "built a great company," his accountants back in New York were busy putting the finishing touches on his 2014 tax return.

After tabulating all the profits and losses from Mr. Trump's various endeavors on Form 1040, the accountants came to Line 56, where they had to enter the total income tax the candidate was required to pay. They needed space for only a single figure.


For Mr. Trump, that bottom line must have looked familiar. It was the fourth year in a row that he had not paid a penny of federal income taxes.

Mr. Trump's avoidance of income taxes is one of the most striking discoveries in his tax returns, especially given the vast wash of income itemized elsewhere in those filings.

Mr. Trump's net income from his fame — his 50 percent share of "The Apprentice," together with the riches showered upon him by the scores of suitors paying to use his name — totaled $427.4 million through 2018. A further $176.5 million in profit came to him through his investment in two highly successful office buildings.

So how did he escape nearly all taxes on that fortune? Even the effective tax rate paid by the wealthiest 1 percent of Americans could have caused him to pay more than $100 million.

The answer rests in a third category of Mr. Trump's endeavors: businesses that he owns and runs himself. The collective and persistent losses he reported from them largely absolved him from paying federal income taxes on the $600 million from "The Apprentice," branding deals and investments.

That equation is a key element of the alchemy of Mr. Trump's finances: using the proceeds of his celebrity to purchase and prop up risky businesses, then wielding their losses to avoid taxes.

Throughout his career, Mr. Trump's business losses have often accumulated in sums larger than could be used to reduce taxes on other income in a single year. But the tax code offers a workaround: With some restrictions, business owners can carry forward leftover losses to reduce taxes in future years.

That provision has been the background music to Mr. Trump's life. As The Times's previous reporting on his 1995 return showed, the nearly $1 billion in losses from his early-1990s collapse generated a tax deduction that he could use for up to 18 years going forward.

The newer tax returns show that Mr. Trump burned through the last of the tax-reducing power of that $1 billion in 2005, just as a torrent of entertainment riches began coming his way following the debut of "The Apprentice" the year before.

For 2005 through 2007, cash from licensing deals and endorsements filled Mr. Trump's bank accounts with $120 million in pure profit. With no prior-year losses left to reduce his taxable income, he paid substantial federal income taxes for the first time in his life: a total of $70.1 million.

As his celebrity income swelled, Mr. Trump went on a buying spree unlike any he had had since the 1980s, when eager banks and his father's wealth allowed him to buy or build the casinos, airplanes, yacht and old hotel that would soon lay him low.

When "The Apprentice" premiered, Mr. Trump had opened only two golf courses and was renovating two more. By the end of 2015, he had 15 courses and was transforming the Old Post Office building in Washington into a Trump International Hotel. But rather than making him wealthier, the tax records reveal as never before, each new acquisition only fed the downward draft on his bottom line.

Consider the results at his largest golf resort, Trump National Doral, near Miami. Mr. Trump bought the resort for $150 million in 2012; through 2018, his losses have totaled $162.3 million. He has pumped $213 million of fresh cash into Doral, tax records show, and has a $125 million mortgage balance coming due in three years.

Trump National Doral near Miami, Mr. Trump's largest golf resort. Since 2000, he has reported losing $315.6 million at his golf courses. Scott McIntyre for The New York Times

His three courses in Europe — two in Scotland and one in Ireland — have reported a combined $63.6 million in losses.

Over all, since 2000, Mr. Trump has reported losses of $315.6 million at the golf courses that are his prized possessions.

For all of its Trumpworld allure, his Washington hotel, opened in 2016, has not fared much better. Its tax records show losses through 2018 of $55.5 million.

And Trump Corporation, a real estate services company, has reported losing $134 million since 2000. Mr. Trump personally bankrolled the losses year after year, marking his cash infusions as a loan with an ever-increasing balance, his tax records show. In 2016, he gave up on getting paid back and turned the loan into a cash contribution.

Mr. Trump has often posited that his losses are more accounting magic than actual money out the door.

Last year, after The Times published details of his tax returns from the 1980s and 1990s, he attributed the red ink to depreciation, which he said in a tweet would show "losses in almost all cases" and that "much was non monetary."

"I love depreciation," Mr. Trump said during a presidential debate in 2016.

Depreciation, though, is not a magic wand — it involves real money spent or borrowed to buy buildings or other assets that are expected to last years. Those costs must be spread out as expenses and deducted over the useful life of the asset. Even so, the rules do hold particular advantages for real estate developers like Mr. Trump, who are allowed to use their real estate losses to reduce their taxable income from other activities.

What the tax records for Mr. Trump's businesses show, however, is that he has lost chunks of his fortune even before depreciation is figured in. The three European golf courses, the Washington hotel, Doral and Trump Corporation reported losing a total of $150.3 million from 2010 through 2018, without including depreciation as an expense.

To see what a successful business looks like, depreciation or not, look no further than one in Mr. Trump's portfolio that he does not manage.

After plans for a Trump-branded mini-city on the Far West Side of Manhattan stalled in the 1990s, Mr. Trump's stake was sold by his partner to Vornado Realty Trust. Mr. Trump objected to the sale in court, saying he had not been consulted, but he ended up with a 30 percent share of two valuable office buildings owned and operated by Vornado.

His share of the profits through the end of 2018 totaled $176.5 million, with depreciation factored in. He has never had to invest more money in the partnership, tax records show.

Among businesses he runs, Mr. Trump's first success remains his best. The retail and commercial spaces at Trump Tower, completed in 1983, have reliably delivered more than $20 million a year in profits, a total of $336.3 million since 2000 that has done much to help keep him afloat.

Mr. Trump has an established track record of stiffing his lenders. But the tax returns reveal that he has failed to pay back far more money than previously known: a total of $287 million since 2010.

The I.R.S. considers forgiven debt to be income, but Mr. Trump was able to avoid taxes on much of that money by reducing his ability to declare future business losses. For the rest, he took advantage of a provision of the Great Recession bailout that allowed income from canceled debt to be completely deferred for five years, then spread out evenly over the next five. He declared the first $28.2 million in 2014.

Once again, his business losses mostly absolved his tax responsibilities. He paid no federal income taxes for 2014.

Mr. Trump was periodically required to pay a parallel income tax called the alternative minimum tax, created as a tripwire to prevent wealthy people from using huge deductions, including business losses, to entirely wipe out their tax liabilities.

Mr. Trump paid alternative minimum tax in seven years between 2000 and 2017 — a total of $24.3 million, excluding refunds he received after filing. For 2015, he paid $641,931, his first payment of any federal income tax since 2010.

As he settled into the Oval Office, his tax bills soon returned to form. His potential taxable income in 2016 and 2017 included $24.8 million in profits from sources related to his celebrity status and $56.4 million for the loans he did not repay. The dreaded alternative minimum tax would let his business losses erase only some of his liability.

Each time, he requested an extension to file his 1040; and each time, he made the required payment to the I.R.S. for income taxes he might owe — $1 million for 2016 and $4.2 million for 2017. But virtually all of that liability was washed away when he eventually filed, and most of the payments were rolled forward to cover potential taxes in future years.

To cancel out the tax bills, Mr. Trump made use of $9.7 million in business investment credits, at least some of which related to his renovation of the Old Post Office hotel, which qualified for a historic-preservation tax break. Although he had more than enough credits to owe no taxes at all, his accountants appear to have carved out an allowance for a small tax liability for both 2016 and 2017.

When they got to line 56, the one for income taxes due, the amount was the same each year: $750.

"The Apprentice" created what was probably the biggest income tax bite of Mr. Trump's life. During the Great Recession bailout, he asked for the money back.

Testifying before Congress in February 2019, the president's estranged personal lawyer, Mr. Cohen, recalled Mr. Trump's showing him a huge check from the U.S. Treasury some years earlier and musing "that he could not believe how stupid the government was for giving someone like him that much money back."

In fact, confidential records show that starting in 2010 he claimed, and received, an income tax refund totaling $72.9 million — all the federal income tax he had paid for 2005 through 2008, plus interest.

The legitimacy of that refund is at the center of the audit battle that he has long been waging, out of public view, with the I.R.S.

The records that The Times reviewed square with the way Mr. Trump has repeatedly cited, without explanation, an ongoing audit as grounds for refusing to release his tax returns. He alluded to it as recently as July on Fox News, when he told Sean Hannity, "They treat me horribly, the I.R.S., horribly."

And while the records do not lay out all the details of the audit, they match his lawyers' statement during the 2016 campaign that audits of his returns for 2009 and subsequent years remained open, and involved "transactions or activities that were also reported on returns for 2008 and earlier."

Mr. Trump harvested that refund bonanza by declaring huge business losses — a total of $1.4 billion from his core businesses for 2008 and 2009 — that tax laws had prevented him from using in prior years.

But to turn that long arc of failure into a giant refund check, he relied on some deft accounting footwork and an unwitting gift from an unlikely source — Mr. Obama.

Business losses can work like a tax-avoidance coupon: A dollar lost on one business reduces a dollar of taxable income from elsewhere. The types and amounts of income that can be used in a given year vary, depending on an owner's tax status. But some losses can be saved for later use, or even used to request a refund on taxes paid in a prior year.

Until 2009, those coupons could be used to wipe away taxes going back only two years. But that November, the window was more than doubled by a little-noticed provision in a bill Mr. Obama signed as part of the Great Recession recovery effort. Now business owners could request full refunds of taxes paid in the prior four years, and 50 percent of those from the year before that.

Mr. Trump had paid no income taxes in 2008. But the change meant that when he filed his taxes for 2009, he could seek a refund of not just the $13.3 million he had paid in 2007, but also the combined $56.9 million paid in 2005 and 2006, when "The Apprentice" created what was likely the biggest income tax bite of his life.

The records reviewed by The Times indicate that Mr. Trump filed for the first of several tranches of his refund several weeks later, in January 2010. That set off what tax professionals refer to as a "quickie refund," a check processed in 90 days on a tentative basis, pending an audit by the I.R.S.

His total federal income tax refund would eventually grow to $70.1 million, plus $2,733,184 in interest. He also received $21.2 million in state and local refunds, which often piggyback on federal filings.

Whether Mr. Trump gets to keep the cash, though, remains far from a sure thing.

Refunds require the approval of I.R.S. auditors and an opinion of the congressional Joint Committee on Taxation, a bipartisan panel better known for reviewing the impact of tax legislation. Tax law requires the committee to weigh in on all refunds larger than $2 million to individuals.

Records show that the results of an audit of Mr. Trump's refund were sent to the joint committee in the spring of 2011. An agreement was reached in late 2014, the documents indicate, but the audit resumed and grew to include Mr. Trump's returns for 2010 through 2013. In the spring of 2016, with Mr. Trump closing in on the Republican nomination, the case was sent back to the committee. It has remained there, unresolved, with the statute of limitations repeatedly pushed forward.

Precisely why the case has stalled is not clear. But experts say it suggests that the gap between the sides remains wide. If negotiations were to deadlock, the case would move to federal court, where it could become a matter of public record.

The dispute may center on a single claim that jumps off the page of Mr. Trump's 2009 tax return: a declaration of more than $700 million in business losses that he had not been allowed to use in prior years. Unleashing that giant tax-avoidance coupon enabled him to receive some or all of his refund.

The material obtained by The Times does not identify the business or businesses that generated those losses. But the losses were a kind that can be claimed only when partners give up their interest in a business. And in 2009, Mr. Trump parted ways with a giant money loser: his long-failing Atlantic City casinos.

Mr. Trump announced in 2009 that he was abandoning his stake in his Atlantic City casino business. Mark Makela for The New York Times

After Mr. Trump's bondholders rebuffed his offer to buy them out, and with a third round of bankruptcy only a week away, Mr. Trump announced in February 2009 that he was quitting the board of directors.

"If I'm not going to run it, I don't want to be involved in it," he told The Associated Press. "I'm one of the largest developers in the world. I have a lot of cash and plenty of places I can go."

The same day, he notified the Securities and Exchange Commission that he had "determined that his partnership interests are worthless and lack potential to regain value" and was "hereby abandoning" his stake.

The language was crucial. Mr. Trump was using the precise wording of I.R.S. rules governing the most beneficial, and perhaps aggressive, method for business owners to avoid taxes when separating from a business.

A partner who walks away from a business with nothing — what tax laws refer to as abandonment — can suddenly declare all the losses on the business that could not be used in prior years. But there are a few catches, including this: Abandonment is essentially an all-or-nothing proposition. If the I.R.S. learns that the owner received anything of value, the allowable losses are reduced to just $3,000 a year.

And Mr. Trump does appear to have received something. When the casino bankruptcy concluded, he got 5 percent of the stock in the new company. The materials reviewed by The Times do not make clear whether Mr. Trump's refund application reflected his public declaration of abandonment. If it did, that 5 percent could place his entire refund in question.

If the auditors ultimately disallow Mr. Trump's $72.9 million federal refund, he will be forced to return that money with interest, and possibly penalties, a total that could exceed $100 million. He could also be ordered to return the state and local refunds based on the same claims.

In response to a question about the audit, Mr. Garten, the Trump Organization lawyer, said facts cited by The Times were incorrect, without citing specifics. He did, however, write that it was "illogical" to say Mr. Trump had not paid taxes for those three years just because the money was later refunded.

"While you claim that President Trump paid no taxes in 10 of the 15 previous years," Mr. Garten said, "you also assert that President Trump claimed a massive refund for tens of millions for taxes he did pay. These two claims are entirely inconsistent and, in any event, not supported by the facts."

House Democrats who have been in hot pursuit of Mr. Trump's tax returns most likely have no idea that at least some of the records are sitting in a congressional office building. George Yin, a former chief of staff for the joint committee, said that any identifying information about taxpayers under review was tightly held among a handful of staff lawyers and was rarely shared with politicians assigned to the committee.

It is possible that the case has been paused because Mr. Trump is president, which would raise the personal stakes of re-election. If the recent Fox interview is any indication, Mr. Trump seems increasingly agitated about the matter.

"It's a disgrace what's happened," he told Mr. Hannity. "We had a deal done. In fact, it was — I guess it was signed even. And once I ran, or once I won, or somewhere back a long time ago, everything was like, 'Well, let's start all over again.' It's a disgrace."

Helping to reduce Mr. Trump's tax bills are unidentified consultants' fees, some of which can be matched to payments received by Ivanka Trump.

Examining the Trump Organization's tax records, a curious pattern emerges: Between 2010 and 2018, Mr. Trump wrote off some $26 million in unexplained "consulting fees" as a business expense across nearly all of his projects.

In most cases the fees were roughly one-fifth of his income: In Azerbaijan, Mr. Trump collected $5 million on a hotel deal and reported $1.1 million in consulting fees, while in Dubai it was $3 million with a $630,000 fee, and so on.

Mysterious big payments in business deals can raise red flags, particularly in places where bribes or kickbacks to middlemen are routine. But there is no evidence that Mr. Trump, who mostly licenses his name to other people's projects and is not involved in securing government approvals, has engaged in such practices.

Rather, there appears to be a closer-to-home explanation for at least some of the fees: Mr. Trump reduced his taxable income by treating a family member as a consultant, and then deducting the fee as a cost of doing business.

The "consultants" are not identified in the tax records. But evidence of this arrangement was gleaned by comparing the confidential tax records to the financial disclosures Ivanka Trump filed when she joined the White House staff in 2017. Ms. Trump reported receiving payments from a consulting company she co-owned, totaling $747,622, that exactly matched consulting fees claimed as tax deductions by the Trump Organization for hotel projects in Vancouver and Hawaii.

Eric, Ivanka and Donald Trump Jr. with their father at an announcement of the Vancouver hotel project in 2013. Ms. Trump appears to have both managed that deal, and another in Hawaii, as a salaried Trump Organization executive, and also been paid as a "consultant" on them. Jonathan Hayward/The Canadian Press, via Associated Press

Ms. Trump had been an executive officer of the Trump companies that received profits from and paid the consulting fees for both projects — meaning she appears to have been treated as a consultant on the same hotel deals that she helped manage as part of her job at her father's business.

When asked about the arrangement, the Trump Organization lawyer, Mr. Garten, did not comment.

Employers can deduct consulting fees as a business expense and also avoid the withholding taxes that apply to wages. To claim the deduction, the consulting arrangement must be an "ordinary and necessary" part of running the business, with fees that are reasonable and market-based, according to the I.R.S. The recipient of the fees is still required to pay income tax.

The I.R.S. has pursued civil penalties against some business owners who devised schemes to avoid taxes by paying exorbitant fees to related parties who were not in fact independent contractors. A 2011 tax court case centered on the I.R.S.'s denial of almost $3 million in deductions for consulting fees the partners in an Illinois accounting firm paid themselves via corporations they created. The court concluded that the partners had structured the fees to "distribute profits, not to compensate for services."

There is no indication that the I.R.S. has questioned Mr. Trump's practice of deducting millions of dollars in consulting fees. If the payments to his daughter were compensation for work, it is not clear why Mr. Trump would do it in this form, other than to reduce his own tax liability. Another, more legally perilous possibility is that the fees were a way to transfer assets to his children without incurring a gift tax.

A Times investigation in 2018 found that Mr. Trump's late father, Fred Trump, employed a number of legally dubious schemes decades ago to evade gift taxes on millions of dollars he transferred to his children. It is not possible to discern from this newer collection of tax records whether intra-family financial maneuverings were a motivating factor.

However, the fact that some of the consulting fees are identical to those reported by Mr. Trump's daughter raises the question of whether this was a mechanism the president used to compensate his adult children involved with his business. Indeed, in some instances where large fees were claimed, people with direct knowledge of the projects were not aware of any outside consultants who would have been paid.

On the failed hotel deal in Azerbaijan, which was plagued by suspicions of corruption, a Trump Organization lawyer told The New Yorker the company was blameless because it was merely a licenser and had no substantive role, adding, "We did not pay any money to anyone." Yet, the tax records for three Trump L.L.C.s involved in that project show deductions for consulting fees totaling $1.1 million that were paid to someone.

In Turkey, a person directly involved in developing two Trump towers in Istanbul expressed bafflement when asked about consultants on the project, telling The Times there was never any consultant or other third party in Turkey paid by the Trump Organization. But tax records show regular deductions for consulting fees over seven years totaling $2 million.

Ms. Trump disclosed in her public filing that the fees she received were paid through TTT Consulting L.L.C., which she said provided "consulting, licensing and management services for real estate projects." Incorporated in Delaware in December 2005, the firm is one of several Trump-related entities with some variation of TTT or TTTT in the name that appear to refer to members of the Trump family.

Like her brothers Donald Jr. and Eric, Ms. Trump was a longtime employee of the Trump Organization and an executive officer for more than 200 Trump companies that licensed or managed hotel and resort properties. The tax records show that the three siblings had each drawn a salary from their father's company — roughly $480,000 a year, jumping to about $2 million after Mr. Trump became president — though Ms. Trump no longer receives a salary. What's more, Mr. Trump has said the children were intimately involved in negotiating and managing his projects. When asked in a 2011 lawsuit deposition whom he relied on to handle important details of his licensing deals, he named only Ivanka, Donald Jr. and Eric.

On Ms. Trump's now-defunct website, which explains her role at the Trump Organization, she was not identified as a consultant. Rather, she has been described as a senior executive who "actively participates in all aspects of both Trump and Trump branded projects, including deal evaluation, predevelopment planning, financing, design, construction, sales and marketing, and ensuring that Trump's world-renowned physical and operational standards are met.

"She is involved in all decisions — large and small."

Hair stylists, table linens, property taxes on a family estate — all have been deducted as business expenses.

Private jets, country clubs and mansions have all had a role in the selling of Donald Trump.

"I play to people's fantasies," he wrote in "Trump: The Art of the Deal." "People want to believe that something is the biggest and the greatest and the most spectacular. I call it truthful hyperbole. It's an innocent form of exaggeration — and a very effective form of promotion."

If the singular Trump product is Trump in an exaggerated form — the man, the lifestyle, the acquisitiveness — then everything that feeds the image, including the cost of his businesses, can be written off on his taxes. Mr. Trump may be reporting business losses to the government, but he can still live a life of wealth and write it off.

Take, for example, Mar-a-Lago, now the president's permanent residence as well as a private club and stage set on which Trump luxury plays out. As a business, it is also the source of millions of dollars in expenses deducted from taxable income, among them $109,433 for linens and silver and $197,829 for landscaping in 2017. Also deducted as a business expense was the $210,000 paid to a Florida photographer over the years for shooting numerous events at the club, including a 2016 New Year's Eve party hosted by Mr. Trump.

Mar-a-Lago, where a flood of new members starting in 2015 allowed Mr. Trump to pocket an additional $5 million a year from the business, is also a source of millions in tax deductions. Saul Martinez for The New York Times

Mr. Trump has written off as business expenses costs — including fuel and meals — associated with his aircraft, used to shuttle him among his various homes and properties. Likewise the cost of haircuts, including the more than $70,000 paid to style his hair during "The Apprentice." Together, nine Trump entities have written off at least $95,464 paid to a favorite hair and makeup artist of Ivanka Trump.

In allowing business expenses to be deducted, the I.R.S. requires that they be "ordinary and necessary," a loosely defined standard often interpreted generously by business owners.

Perhaps Mr. Trump's most generous interpretation of the business expense write-off is his treatment of the Seven Springs estate in Westchester County, N.Y.

Seven Springs is a throwback to another era. The main house, built in 1919 by Eugene I. Meyer Jr., the onetime head of the Federal Reserve who bought The Washington Post in 1933, sits on more than 200 acres of lush, almost untouched land just an hour's drive north of New York City.

"The mansion is 50,000 square feet, has three pools, carriage houses, and is surrounded by nature preserves," according to The Trump Organization website.

Mr. Trump had big plans when he bought the property in 1996 — a golf course, a clubhouse and 15 private homes. But residents of surrounding towns thwarted his ambitions, arguing that development would draw too much traffic and risk polluting the drinking water.

Mr. Trump instead found a way to reap tax benefits from the estate. He took advantage of what is known as a conservation easement. In 2015, he signed a deal with a land conservancy, agreeing not to develop most of the property. In exchange, he claimed a $21.1 million charitable tax deduction.

Mr. Trump classified the Seven Springs estate as an investment property, not a personal residence, allowing for certain tax savings. Meanwhile, Eric Trump has called it a "home base," and the Trump Organization website describes it as a "retreat for the Trump family." Tony Cenicola/The New York Times

The tax records reveal another way Seven Springs has generated substantial tax savings. In 2014, Mr. Trump classified the estate as an investment property, as distinct from a personal residence. Since then, he has written off $2.2 million in property taxes as a business expense — even as his 2017 tax law allowed individuals to write off only $10,000 in property taxes a year.

Courts have held that to treat residences as businesses for tax purposes, owners must show that they have "an actual and honest objective of making a profit," typically by making substantial efforts to rent the property and eventually generating income.

Whether or not Seven Springs fits those criteria, the Trumps have described the property somewhat differently.

In 2014, Eric Trump told Forbes that "this is really our compound." Growing up, he and his brother Donald Jr. spent many summers there, riding all-terrain vehicles and fishing on a nearby lake. At one point, the brothers took up residence in a carriage house on the property. "It was home base for us for a long, long time," Eric told Forbes.

And the Trump Organization website still describes Seven Springs as a "retreat for the Trump family."

Mr. Garten, the Trump Organization lawyer, did not respond to a question about the Seven Springs write-off.

The Seven Springs conservation-easement deduction is one of four that Mr. Trump has claimed over the years. While his use of these deductions is widely known, his tax records show that they represent the lion's share of his charitable giving — about $119.3 million of roughly $130 million in personal and corporate charitable contributions reported to the I.R.S.

The Trump National Golf Club in Los Angeles, another site where Mr. Trump has claimed a conservation-easement deduction. Bryan Denton for The New York Times

Two of those deductions — at Seven Springs and at the Trump National Golf Club in Los Angeles — are the focus of an investigation by the New York attorney general, who is examining whether the appraisals on the land, and therefore the tax deductions, were inflated.

Another common deductible expense for all businesses is legal fees. The I.R.S. requires that these fees be "directly related to operating your business," and businesses cannot deduct "legal fees paid to defend charges that arise from participation in a political campaign."

Yet the tax records show that the Trump Corporation wrote off as business expenses fees paid to a criminal defense lawyer, Alan S. Futerfas, who was hired to represent Donald Trump Jr. during the Russia inquiry. Investigators were examining Donald Jr.'s role in the 2016 Trump Tower meeting with Russians who had promised damaging information on Mrs. Clinton. When he testified before Congress in 2017, Mr. Futerfas was by his side.

Mr. Futerfas was also hired to defend the president's embattled charitable foundation, which would be shut down in 2018 after New York regulators said it had engaged in "a shocking pattern of illegality."

The Trump Corporation paid Mr. Futerfas at least $1.9 million in 2017 and 2018, tax records show. Also written off was at least $259,684 paid to Williams & Jensen, another law firm brought in during the same period to represent Donald Trump Jr.

Deals in countries led by strongmen, tenants who have business before the federal government, and hotels and clubs that draw those seeking access or favor.

In May, the chairman of a trade group representing Turkish business interests wrote to Commerce Secretary Wilbur Ross urging support for increased trade between the United States and Turkey. The ultimate goal was nothing less than "reorienting the U.S. supply chain away from China."

The letter was among three sent to cabinet secretaries by Mehmet Ali Yalcindag, chairman of the Turkey-U.S. Business Council, who noted that he had copied each one to Mr. Trump.

The president needed no introduction to Mr. Yalcindag: The Turkish businessman helped negotiate a licensing deal in 2008 for his family's company to develop two Trump towers in Istanbul. The tax records show the deal has earned Mr. Trump at least $13 million — far more than previously known — including more than $1 million since he entered the White House, even as his onetime associate now lobbies on behalf of Turkish interests.

Mr. Yalcindag said he had "remained friendly" with Mr. Trump since their work together years ago, but that all communications between his trade group and the administration "go through formal channels and are properly disclosed."

Mehmet Ali Yalcindag, pictured with the Trumps in 2012, helped negotiate a licensing deal in Istanbul that brought Mr. Trump at least $13 million. He now lobbies on behalf of Turkish business interests. Trump Organization, via PR Newswire

The ethical quandaries created by Mr. Trump's decision to keep his business while in the White House have been documented. But the full financial measure of his extraordinary confluence of interests — a president with a wealth of business entanglements at home and in myriad geopolitical hot spots — has remained elusive.

The tax records for Mr. Trump and his hundreds of companies show precisely how much money he has received over the years, and how heavily he has come to rely on leveraging his brand in ways that pose potential or direct conflicts of interest while he is president. The records also provide the first reliable window onto his finances before 2014, the earliest year covered by his required annual disclosures, showing that his total profits from some projects outside the United States were larger than indicated by those limited public filings.

Based on the financial disclosures, which report much of his income in broad ranges, Mr. Trump's earnings from the Istanbul towers could have been as low as $3.2 million. In the Philippines, where he licensed his name to a Manila tower nearly a decade ago, the low end of the range was $4.1 million — less than half of the $9.3 million he actually made. In Azerbaijan, he collected more than $5 million for the failed hotel project, about twice what appeared on his public filings.

It did not take long for conflicts to emerge when Mr. Trump ran for president and won. The Philippines' strongman leader, Rodrigo Duterte, chose as a special trade envoy to Washington the businessman behind the Trump tower in Manila. In Argentina, a key person who had been involved in a Uruguayan licensing deal that earned Mr. Trump $2.3 million was appointed to a cabinet post.

The president's conflicts have been most evident with Turkey, where the business community and the authoritarian government of President Recep Tayyip Erdogan have not hesitated to leverage various Trump enterprises to their advantage. When Turkish-American relations were at a low point, a Turkish business group canceled a conference at Mr. Trump's Washington hotel; six months later, when the two countries were on better terms, the rescheduled event was attended by Turkish government officials. Turkish Airlines also chose the Trump National Golf Club in suburban Virginia to host an event.

More broadly, the tax records suggest other ways in which Mr. Trump's presidency has propped up his sagging bottom line. Monthly credit card receipts, reported to the I.R.S. by third-party card processing firms, reflect the way certain of his resorts, golf courses and hotels became favored stomping grounds, if not venues for influence-trading, beginning in 2015 and continuing into his time in the White House.

The credit card data does not reflect total revenue, and is useful mainly for showing short-term ups and downs of consumer interest in a business. While two of Mr. Trump's marquee draws — the Washington hotel in the Old Post Office and the Doral golf resort — are loaded with debt and continue to lose money, both have seen credit card transactions rise markedly with his political ascent.

Though the Trump International Hotel in Washington is loaded with debt and losing money, its credit card transactions have risen with Mr. Trump's political ascent. Al Drago for The New York Times

At the hotel, the monthly receipts grew from $3.7 million in December 2016 shortly after it opened, to $5.4 million in January 2017 and $6 million by May 2018. At Doral, after Mr. Trump declared his candidacy in June 2015, credit card revenue more than doubled, to $13 million, for the three months through August, compared with the same period the year before.

One Trump enterprise that has been regularly profitable, and is a persistent source of concern about ethical conflicts and national security lapses, is the Mar-a-Lago club. Profits there rose sharply after Mr. Trump declared his candidacy, as courtiers eagerly joining up brought a tenfold rise in cash from initiation fees — from $664,000 in 2014 to just under $6 million in 2016, even before Mr. Trump doubled the cost of initiation in January 2017. The membership rush allowed the president to take $26 million out of the business from 2015 through 2018, nearly triple the rate at which he had paid himself in the prior two years.

Some of the largest payments from business groups for events or conferences at Mar-a-Lago and other Trump properties have come since Mr. Trump became president, the tax records show.

At Doral, Mr. Trump collected a total of at least $7 million in 2015 and 2016 from Bank of America, and at least $1.2 million in 2017 and 2018 from a trade association representing food retailers and wholesalers. The U.S. Chamber of Commerce paid Doral at least $406,599 in 2018.

Beyond one-time payments for events or memberships, large corporations also pay rent for space in the few commercial buildings Mr. Trump actually owns. Walgreens, the pharmacy giant that resolved an antitrust matter before federal regulators in 2017, pays $3.4 million a year for a lease at 40 Wall Street, a Trump-owned office building in Manhattan.

Another renter at 40 Wall, for $2.5 million a year, is Atane Engineers, which changed its name in 2018 after a corruption scandal that culminated in two former top executives' pleading guilty to paying bribes for city infrastructure contracts. Despite the criminal case — which landed the company on New York State's list of "non-responsible entities" that require a waiver to obtain state contracts — the newly christened Atane registered as an eligible federal contractor with no restrictions listed in its file.

Rental income over all at 40 Wall has risen markedly, from $30.5 million in 2014 to $43.2 million in 2018. The tax records show that the cost of existing leases there has risen, and at least four law firms appear to have moved in since Mr. Trump ran for president.

Mr. Trump has a 30 percent stake in two valuable office towers, including one in Midtown Manhattan, shared with and managed by Vornado Realty Trust. Dave Sanders for The New York Times

The other tower, in San Francisco, co-owned with Vornado, whose C.E.O. is a Trump ally and whose tenants include firms that lobby the federal government. Jim Wilson/The New York Times

In addition to buildings he owns outright, there is the president's stake in the Vornado partnerships that control two valuable office towers — 1290 Sixth Avenue in Manhattan and 555 California Street in San Francisco. Vornado's chief executive, Steven Roth, is a close Trump ally recently named to the White House economic recovery council. Last year, the president appointed Mr. Roth's wife, Daryl Roth, to the Kennedy Center board of trustees.

Vornado tenants include a roster of blue-chip firms paying multimillion-dollar leases, many of whom regularly do business with, lobby or are regulated by the federal government. Among the dozens of leases paid in 2018 to Mr. Trump's Vornado partnerships, according to his tax records, were $5.8 million from Goldman Sachs; $3.1 million from Microsoft; $32.7 million from Neuberger Berman, an investment management company; and $8.8 million from the law firm Kirkland & Ellis.

Threats are converging: mounting business losses, the looming I.R.S. audit and personally guaranteed debts coming due.

When Mr. Trump glided down a gilded Trump Tower escalator to kick off his presidential campaign in June 2015, his finances needed a jolt.

His core businesses were reporting mounting losses — more than $100 million over the previous two years. The river of celebrity-driven income that had long buoyed them was running dry.

If Mr. Trump hoped his unlikely candidacy might, at least, revitalize his brand, his barrage of derogatory remarks about immigrants quickly cost him two of his biggest and easiest sources of cash — licensing deals with clothing and mattress manufacturers that had netted him more than $30 million. NBC, his partner in Miss Universe — source of nearly $20 million in profits — announced that it would no longer broadcast the pageant; he sold it soon after.

Now his tax records make clear that he is facing a battery of threats to his business and his own financial well-being.

Over the past decade, he appears to have filled the cash-flow gaps with a series of one-shots that may not be available again.

In 2012, he took out a $100 million mortgage on the commercial space in Trump Tower. He took nearly the entire amount as a payout, his tax records show. His company has paid more than $15 million in interest on the loan, but nothing on the principal. The full $100 million comes due in 2022.

In 2013, he withdrew $95.8 million from his Vornado partnership account.

And in January 2014, he sold $98 million in stocks and bonds, his biggest single month of sales in at least the last two decades. He sold $54 million more in stocks and bonds in 2015, and $68.2 million in 2016. His financial disclosure released in July showed that he had as little as $873,000 in securities left to sell.

Mr. Trump's businesses reported cash on hand of $34.7 million in 2018, down 40 percent from five years earlier.

What's more, the tax records show that Mr. Trump has once again done what he says he regrets, looking back on his early 1990s meltdown: personally guaranteed hundreds of millions of dollars in loans, a decision that led his lenders to threaten to force him into personal bankruptcy.

This time around, he is personally responsible for loans and other debts totaling $421 million, with most of it coming due within four years. Should he win re-election, his lenders could be placed in the unprecedented position of weighing whether to foreclose on a sitting president.

There is, however, a tax benefit for Mr. Trump. While business owners can use losses to avoid taxes, they can do so only up to the amount invested in the business. But by taking personal responsibility for that $421 million in debt, Mr. Trump would be able to declare that amount in losses in future years.

The balances on those loans had not been paid down by the end of 2018. And the businesses carrying the bulk of the debt — the Doral golf resort ($125 million) and the Washington hotel ($160 million) — are struggling, which could make it difficult to find a lender willing to refinance it.

The unresolved audit of his $72.9 million tax refund hangs over his head.

The broader economy promises little relief. Across the country, brick-and-mortar stores are in decline, and they have been very important to Trump Tower, which has in turn been very important to Mr. Trump. Nike, which rented the space for its flagship store in a building attached to Trump Tower and had paid $195.1 million in rent since the 1990s, left in 2018.

The president's most recent financial disclosure reported modest gains in 2019. But that was before the pandemic hit. His already struggling properties were shut down for several months earlier this year. The Doral resort asked Deutsche Bank to allow a delay on its loan payments. Analysts have predicted that the hotel business will not fully recover until late 2023.

The President's Taxes

Mr. Trump still has assets to sell. But doing so could take its own toll, both financial and to Mr. Trump's desire to always be seen as a winner. The Trump family said last year that it was considering selling the Washington hotel, but not because it was losing money.

In Mr. Trump's telling, any difficulty in his finances has been caused by the sacrifices made for his current job.

"They say, 'Trump is getting rich off our nation,'" he said at a rally in Minneapolis last October. "I lose billions being president, and I don't care. It's nice to be rich, I guess, but I lose billions."

Personal Finance 101: How to indulge in a little discretionary spending without breaking the bank - Pittsburgh Post-Gazette

Posted: 29 Sep 2020 04:00 AM PDT

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House Democrats Keep Marijuana Banking Protections In Revised COVID Bill After Delaying Legalization Vote - Marijuana Moment

Posted: 29 Sep 2020 06:43 AM PDT

With the 2020 presidential election underway, people interested in legalizing marijuana and ending the war on drugs may find themselves wondering which candidate will do more to advance their causes: Democratic presidential nominee Joe Biden or incumbent President Donald Trump.

While Trump has not pursued a full-scale crackdown of state-legal cannabis programs and has voiced tentative support for modest reform legislation, his administration has made a number of hostile anti-marijuana actions—from rescinding Obama-era guidance on cannabis prosecutions to implementing policies making immigrants ineligible for citizenship if they consume marijuana or work in the cannabis industry.

Put simply, the president is a drug policy enigma. His past comments on drug policy, attitude toward state-level legalization efforts and administrative actions as president offer a dizzying portrait of a person who once said all drugs should be legal but who also appointed a vociferous anti-cannabis attorney general as one of his first acts in the White House.

Over the course of his first term in office, reform advocates have struggled to peg the president. On the one hand, he has not launched an all-out offensive on state-legal cannabis businesses and, in fact, said it was his administration's policy that they could continue to operate unencumbered by the federal government despite prohibition remaining on the books. Trump also signed a bill federally legalizing hemp following decades of its prohibition. On the other hand, he's declined to use his power to enact changes to legitimize the industry and has appointed several officials who hold hostile views toward reform.

In any case, the Trump reelection campaign has made clear it wants to depict the president as the criminal justice reform candidate, repeatedly attacking Biden over his record as an "architect" of punitive drug laws during his decades in the Senate, for example.

To help sort out where Trump stands on marijuana and drug policy in general, here's an overview of policy actions his administration has taken and remarks he's made both before and during his presidency.

Policy Actions And Comments As President

Support for states' rights.

In 2018, the president gave advocates reason to celebrate. Asked whether he supports a bipartisan bill filed by Sens. Cory Gardner (R-CO) and Elizabeth Warren (D-MA), which would allow states to set their own marijuana policies, Trump said "I really do."

"I know exactly what he's doing. We're looking at it," he said, referring to Gardner. "But I probably will end up supporting that, yes."

He reiterated his support for a states' rights approach to marijuana in August 2019, saying it's "a very big subject and right now we are allowing states to make that decision. A lot of states are making that decision, but we're allowing states to make that decision."

Gardner, who held up Justice Department nominations in protest of then-Attorney General Jeff Sessions's move in order to generate a cannabis commitment from the president, told Marijuana Moment in an interview that Trump typically makes "very supportive" comments about cannabis reform when they've talked.

"It's all been positive. And I think we're seeing that," he said. "Had they wanted to do something, they'd do what Jeff Sessions did and mess around with that and they haven't."

Current Attorney General William Barr has said that he's not interested in upsetting "settled expectations" as it concerns policies in place while the Cole memo was still effective.

"However, I think the current situation is untenable and really has to be addressed. It's almost like a backdoor nullification of federal law," he said during a hearing last year, later adding that he would prefer that Congress pass legislation codifying protections for states that have legalized cannabis rather than maintain the status quo of conflicting state and federal policies.

To date, no large-scale marijuana raids against licensed businesses in legal states have taken place under the Trump administration.

Trump's personal opinion on cannabis consumption and drug policy reform is a mixed bag.

Despite his pledged support for states' rights to legalize, Trump evidently holds some negative views toward cannabis consumption, as evidenced in a recording from 2018 that was leaked two years later. In that recording, the president said that using marijuana makes people "lose IQ points."

In August 2020, Trump weighed in on Sen. Kamala Harris's (D-CA) prior comments on marijuana shortly after she was announced as Joe Biden's vice presidential running mate. While the president declined to explicitly discuss the senator's cannabis policy positions, he said "she lied" and "said things that were untrue" when presented with details about an interview she gave last year in which she discussed smoking marijuana in college.

He also urged Republicans not to place marijuana legalization initiatives on state ballots out of concern that it could increase Democratic turnout in elections. A Republican strategist told The Daily Beast that, as far as Trump is concerned, the "pot issue is one of many that he thinks could be a danger."

"He once told me it would be very 'smart' for the Democrat[ic] Party to get as many of these on the ballot as they could," the source said.

In February 2020, the president applauded countries that impose the death penalty for people who sell drugs—a point he has repeatedly made. "I don't know that our country is ready for that," Trump said in the more recent comment, "but if you look throughout the world, the countries with a powerful death penalty—death penalty—with a fair but quick trial, they have very little if any drug problem."

That said, the president in 2019 seemed to acknowledge the failure of policies prohibiting drugs during a meeting on vaping, stating that banned products are "going to come here illegally" even if they're prohibited.

Curiously, Trump proposed mandating that he and Biden take drug tests prior to participating in general election debates.

The president signed "right to try" legislation in 2018 that allows terminal patients to access drugs that haven't been approved by the Food and Drug Administration (FDA) but have cleared a phase one trial—a move that some advocates say could let a limited number of people use marijuana, psilocybin and MDMA for therapeutic reasons.

Administrative marijuana and drug policy actions.

One of the administration's most widely publicized actions—and one that caused acute panic among marijuana advocates and stakeholders—happened in January 2018, when Sessions rescinded the Obama-era Cole memo. Under that policy, federal prosecutors were advised to generally not pursue action against individuals for state-legal cannabis-related activity, except under a limited set of circumstances.

Its revocation worried many that a federal crackdown was looming, especially with longtime prohibitionist Sessions at the helm of the Justice Department. However, that fear was not realized—and according to Gardner, Trump personally opposed the move and said "we need undo this."

"This sounds like something my grandpa said in the 1950s," Trump reportedly said, referencing Sessions's rhetoric when rescinding the policy.

The Justice Department recently asked a federal court to force California marijuana regulators to disclose documents about certain licensed cannabis businesses, and a federal court ruled that they must comply.

Another controversial administrative action concerns immigrants and marijuana. In April 2019, U.S. Citizenship and Immigration Services issued a memo stating that using marijuana or engaging in cannabis-related "activities" such as working for a dispensary—even in states where it's legal—makes immigrants ineligible for citizenship because it means they don't have "good moral character."

In December 2019, the Justice Department issued a notice that it was seeking to make certain marijuana offenses, including misdemeanor possession, grounds to deny asylum to migrants.

That month, officials with Trump's U.S. Department of Veterans Affairs also testified against several pieces of legislation that would increase access to medical cannabis for service members and also require the department to conduct clinical research into the therapeutic benefits of marijuana for conditions that commonly afflict veterans.

Using funds provided by a salary donation from Trump, the Surgeon General issued and publicized a warning in August 2019, cautioning against marijuana use by adolescents and pregnant women. The notice also suggested that the state-level cannabis legalization movement was enticing young people to consume marijuana by normalizing the plant.

BuzzFeed News reported in 2018 that the Trump administration created a secret committee that requested agencies across the federal government submit memos on how to combat public support for cannabis reform.

Trump's Justice Department in 2019 sided with a Mississippi student who filed a lawsuit against his school after he was allegedly prevented from talking about the issue earlier this year, arguing that the First Amendment protects students who discuss legalization and that restrictive policies prohibiting such free expression at public schools are unconstitutional.

FDA under Trump has on several occasions solicited public comments to help inform the country's position on the potential global reclassification of marijuana.

The Internal Revenue Service in September 2020 released updated guidance on tax policy for the marijuana industry, including instructions on how cannabis businesses that don't have access to bank accounts can pay their tax bills using large amounts of cash.

Administration's hemp regulatory actions following Trump signing legalization into law.

One of the most significant cannabis developments to occur under the Trump administration was the federal legalization of hemp that was accomplished when he signed the 2018 Farm Bill—unleashing a massive market for a crop that had been prohibited for more than 80 years as a federally controlled substance. The move elicited bipartisan praise, and Trump's U.S. Department of Agriculture has put significant resources into implementing the reform.

That said, advocates, lawmakers and industry stakeholders have raised several concerns about proposed rules for hemp such as requiring that the crop be tested for THC contents by only Drug Enforcement Administration (DEA)-certified labs.

DEA also released proposed rules for hemp and CBD in August 2020 to put the federal agency officially in compliance with the 2018 Farm Bill. However, some industry players suspect that the agency is really setting the stage to crack down on the newly legal market.

In September 2020, USDA announced that hemp farmers could qualify for coronavirus relief loans, reversing an earlier decision to exclude the crop based on price decline data amid the pandemic.

Also in 2020, the department made hemp farmers eligible for relief programs if they've experienced damage or losses due to a natural disaster.

White House officials met with several hemp industry groups in the summer of 2020 to discuss pending FDA guidance on enforcement policies for CBD products.

Speaking of FDA, the agency has similarly been in the process of developing regulations for CBD to be marketed as a food item or dietary supplement. In the meantime, it has used enforcement discretion to keep the market in check.

The agency has continued to issue warnings to cannabis businesses in certain cases—such as instances in which companies claimed CBD could treat or cure coronavirus—and provide public notices about recalls.

FDA also recently closed a comment period on separate draft guidance on developing cannabis-derived medications.

Cannabis and the Trump budget.

While Trump has spoken out in favor of medical cannabis legalization, on several occasions he has released signing statements on spending legislation stipulating that he reserves the right to ignore a long-standing rider that prohibits the Justice Department from using its funds to interfere with state-legal medical marijuana programs.

He also proposed deleting the rider altogether in multiple annual budget proposals to Congress, though Obama did the same thing when he was in office.

In 2019, the White House released a budget request that proposed slightly scaling back restrictive language that has prevented Washington, D.C. from spending its own tax dollars to legalize and regulate the sale of recreational marijuana.

Under several budget proposals, the administration has called for significant cuts to the White House Office of National Drug Control Policy, a central agency when it comes to setting federal drug policy and upholding prohibition.

Trump administration personnel and cannabis.

A top spokesperson for Trump's reelection campaign raised eyebrows in February 2020 when he said that the administration's policy is that currently illicit drugs, including cannabis, "need to be kept illegal."

During a press briefing in July 2018, then-Press Secretary Sarah Huckabee Sanders was asked about the newly elected Mexican president's suggestion that legalizing and regulating drugs could curtail cartels. She said the administration didn't have any policy announcements to that end; however, "I can say that we would not support the legalization of all drugs anywhere and certainly wouldn't want to do anything that would allow more drugs to come into this country."

The president also named then-Rep. Mark Meadows (R-NC), as his chief of staff in March 2020. As a member of Congress, Meadows consistently voted against marijuana reform amendments and was one of only a handful of lawmakers who cheered Sessions's move to rescind the Obama-era cannabis guidance.

Trump's stance on cannabis legalization became the jumping off point for a spat between a top White House aide, Republican operatives and a reporter in June after Meadows laughed off a question about the prospects of broad marijuana reform advancing before the election in November.

In April 2020, Trump hired a new press secretary, Kayleigh McEnany, who has a long record of speaking out against legalization.

Barr, the current attorney general, allegedly directed the Justice Department's Antitrust Division to carry out investigations into 10 marijuana mergers out of personal animus for the industry. A whistleblower who testified before a key House committee claimed the investigations were unnecessary and wasted departmental resources. But the assistant attorney general for the Antitrust Division later argued that the investigations were actually "consistent with protecting consumers' access to cannabis products, not with animosity toward the industry."

During a speech at the 2020 Republican National Convention at which Trump was renominated for a second term, the granddaughter of Evangelical preacher Billy Graham took issue with Democratic governors who designated cannabis dispensaries as essential services amid the coronavirus pandemic while imposing restrictions on churches. In a separate convention speech, an advisory board member for Trump's reelection campaign claimed that Democrats' push for universal health care is really about ensuring a right to cannabis access.

Meanwhile, the head of the Republican National Committee (RNC), who was recommended for the position by Trump, dodged a question about where the party stands on medical marijuana and stressed that the issue should be addressed at the state level.

After House leadership announced in August 2020 that the chamber would be voting on a bill to federally legalize marijuana, the director of press communications for the president's reelection campaign tweeted, "House Dems—more worried about pot dealers than providing relief for the American people." (That vote was ultimately postponed.)

Pre-Presidency Comments

It might come as a surprise, but 30 years ago, Trump argued in favor of legalizing all drugs.

"We're losing badly the war on drugs. You have to legalize drugs to win that war. You have to take the profit away from these drug czars," he said. "What I'd like to do maybe by bringing it up is cause enough controversy that you get into a dialogue on the issue of drugs so people will start to realize that this is the only answer; there is no other answer."

Then, 25 years later, he was at the Conservative Political Action Conference stating that he thinks marijuana legalization is "bad" and that he feels "strongly about that."

"They've got a lot of problems going on right now in Colorado, some big problems," he said.

But the candidate clarified that he supports states' rights to set their own marijuana laws, saying, "If they vote for it, they vote for it."

"Medical marijuana is another thing," he added. "I think medical marijuana, 100 percent."

"Medical I agree with. Medical I like," he said similarly in 2016. "Medical is OK."

"I think medical should happen, right? Don't we agree? I mean I think so," he said at a 2015 rally in Nevada. "I know people that are very, very sick and for whatever reason, the marijuana really helps them."

He went on to say that "I really believe you should leave it up to the states" when it comes to recreational legalization. "It should be a state situation… In terms of marijuana and legalization, I think that should be a state issue, state by state."

Trump reiterated in a radio interview in 2016 that adult-use legalization has "got to be a state decision."

"Colorado did it as you know and I guess it's very mixed right now, they haven't really made a final determination," he said. "There seems to be certain health problems with it and that would be certainly bothersome."

"I do like it, you know, from a medical standpoint — it does do pretty good things," he added "But from the other standpoint, I think that should be up to the states. Certainly, from a medical standpoint, a lot of people are liking it."

Legalization of drugs is "something that should be studied and maybe should continue to be studied," Trump told ABC's This Week in 2015.

"But it's not something I'd be willing to do right now," he added. "I think it's something that I've always said maybe it has to be looked at because we do such a poor job of policing. We don't want to build walls. We don't want to do anything. And if you're not going to want to do the policing, you're going to have to start thinking about other alternatives. But it's not something that I would want to do. But it's something that certainly has been looked at and I looked at it. If we police properly, we shouldn't do that."

In a 2016 radio interview with Hugh Hewitt, Trump seemed more skeptical about cannabis legalization, saying that "there are a lot of bad things happening in Colorado with people's health. And if you look at the results, you know, they're getting some pretty bad results."

"Plus, it's being taken all over the place. I mean, I would have to look at it very seriously," he said. "Now I think if you talk about medical, you're talking about a different ball of wax. But there are a lot of bad results happening in Colorado, and people are talking about it. I'm reading about it. So I would be looking at a couple of different things, but I really would want to study it further, because they're doing a lot of studies. But you know, some bad medical reports and some bad, bad things are happening with what's going on in Colorado."

Discussing legalization during a Fox News interview, Trump said that "in Colorado, the book isn't written on it yet."

"There's a lot of difficulty in terms of illness and what's going on with the brain and the mind and what it's doing," he said. "In some ways I think it's good and in other ways it's bad."

But he reiterated that he supports medical cannabis, saying that "I know people that have serious problems and they did that and it really does help them."

"By the way, medical marijuana—medical—I am in favor of it 100 percent," he said.

At a Wisconsin campaign rally in 2016, Trump said he is "watching Colorado very carefully, see what's happening out there. I'm getting some very negative reports, I'm getting some OK reports, but I'm getting some very negative reports coming out of Colorado as to what's happening, so we'll see what happens."

"There's a lasting negative impact [from marijuana use]. You do too much of it… There's a loss of something, so that book has not been written yet but it's gonna be written pretty soon and I'm not hearing very positive things," he said, adding that on medical cannabis, "I think I am basically for that. I've heard some wonderful things in terms of medical."

Trump told MSNBC in 2015 that "I don't really think" people should go to jail for marijuana. However, he added that "I think that maybe the dealers have to be looked at very strongly."

"You have states all of a sudden legalizing it. So it's sort of hard to say that you're in one side of the border and you go to jail and you're on the other side and can you go into a store and buy it," he said. "So there is going to be changes made there, Joe, and there has to be… That is a very tough subject nowadays, especially since it's been legalized and will continue to be legalized."

In another interview with Fox News, he drew a contrast between recreational and medical marijuana consumption.

The former is "a big problem" that has "tremendously damaging effects to the mind, to the brain, to everything," he said. But he also said he's "all for medical marijuana and its help."

In July 2016, Trump was asked whether he would allow former New Jersey Gov. Chris Christie (R) crack down on legal marijuana states if he were to become attorney general.

"I wouldn't do that, no," Trump said. "I think it's up to the states. I'm a states person. I think it should be up to the states, absolutely."

Personal Experience With Marijuana

Trump said in a radio interview in 2016 that "I never have smoked it."

He also wrote in one of his books, "The America We Deserve," that's he's never used cannabis or any other drug. "I've never taken drugs of any kind, never had a glass of alcohol. Never had a cigarette, never had a cup of coffee," he said.

In an interview with Fox News in 2016, Trump said, "No I have not [smoked marijuana]. I would tell you 100 percent because everyone else seems to admit it nowadays… I've never smoked a cigarette either."

Part of his aversion to drug use seems to be linked to his brother's death from alcoholism. "He had a profound impact on my life, because you never know where you're going to end up," Trump said.

That said, the president said on several occasions during his first election bid that he personally knows people who have benefitted from using medical cannabis.

Marijuana Under A Second Trump Term

It's hard to say how Trump will approach marijuana policy if elected to a second term. The past four years have given good reason to assume that a federal crackdown is unlikely, but at the same time, the president hasn't signaled at any point that he'd be proactive at pursuing reform. From an administrative standpoint, it seems possible that the status quo would be maintained.

What the second term's impact on cannabis may largely come down to is the makeup of Congress. If Democrats hold the House and retake control of the Senate, there's broad expectations that they will advance some form of marijuana reform legislation to the president's desk—whether it be occupied by Trump or Biden. It's not clear whether Trump would sign or veto a far-reaching bill that House Democrats have signaled they want to advance which would deschedule cannabis and fund social equity efforts to repair some of the harms of the war on drugs. If Republicans maintain their Senate majority, a more limited bipartisan bill to simply exempt state-legal marijuana activity could get a shot—and the incumbent president has already indicated he would support it.

Then again, this president has been inconsistent in his views on marijuana and drug policy over the years, so it's hard to predict where he might come down on the issue if given another four years in the White House.

Where Presidential Candidate Joe Biden Stands On Marijuana

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.

Snowflake, Homebuilders, Money Girl, and More - The Motley Fool

Posted: 28 Sep 2020 11:46 AM PDT

In this episode of Motley Fool Money, Chris Hill chats with Motley Fool analysts Jason Moser and Andy Cross about the latest headlines from Wall Street. They go through some recent IPOs of note. They've got news from the homebuilding industry, a big deal in the semiconductor industry, stocks hitting all-time highs, and stocks going down on rumors. They also share some stocks to put on your watch list and much more.

Also, Chris chats with Laura Adams from the Money Girl podcast about her latest book, Money‑Smart Solopreneurs: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on September 18, 2020.

Chris Hill: We've got the latest headlines from Wall Street. Money expert Laura Adams is our guest. And as always, we have a couple of stocks on our radar. But we begin with the biggest software IPO ever; Snowflake (NYSE:SNOW), a cloud software business, went public on Wednesday at $120/share, and by the end of the day it closed at $255/share. Jason, Snowflake has immediately become a $60 billion company, so you tell me, on the spectrum of "This makes sense," to "This is crazy," where is Snowflake right now?

Jason Moser: Man, that's a tough one. Let's just start with Snowflake has a lot going for it; I'm going to try to be as glass half full here as I can. It holds tremendous mindshare in its market as a quality offering. The native cloud architecture the business is built on, the multi-cloud strategy is ideal, operational simplicity, customers are happy using it. That said, this is not a buy at any price business, in my opinion, and so maybe it's more toward the crazy side of the spectrum. I'd say, it's certainly unbridled enthusiasm maybe, it's in the business of cloud database management systems. And anytime you talk about cloud, people get excited, and that's understandable. But when you look at this market, Gartner estimates that this database management systems market exceeded $55 billion in revenue in 2019. It's on track to reach close to $100 billion in 2023, and close to $115 billion in 2024, as more of these management systems move to the cloud.

All of that said, clearly, it's a very big market opportunity. Today Oracle, Microsoft, AWS, IBM, and SAP together hold 85% share of this market by revenue. So, Snowflake is a small company. I mean, it's on track to probably bring in somewhere in the neighborhood of $500 million in revenue this year; that pegs the stock at around 120X sales, not profitable, of course. So, again, it's a good business, they've got a lot going for them, but I think there is one key challenge they're going to have to deal with here, and this is based on customer feedback, it actually is in the business model itself, so that actually is pretty concerning, it's their pricing strategy. Typically, these SaaS businesses, one of the attractive parts of SaaS businesses is that they are subscriptions, right? It's reliable, you know, customers can predict how that's going to impact their budgets. And Snowflake prices a little bit differently, they price on a consumption-based model, which makes price predictability very difficult and that's something that actually bothers their customers a lot. So, I suspect we'll see them work on that here in the coming year. Neat business, they're good at what they do, it's not a buy at any price though, and the valuation today is begging for interested investors to just be patient and wait.

Hill: Andy, can I interest you in a $60 billion unprofitable business?

Andy Cross: Hey, it's a heck of a business with plenty of growth ahead of it, but I think this is just, again, the excitement around the IPO market. We've seen it now. We've seen more and more IPOs, we've seen the SPAC market really warm up, which is a special-purpose acquisition company market warm up. I mean, there are a lot of SPACs coming out, much more than there were in the past couple of years. So, I think the IPO market that went through this freeze during the COVID quarantine in February, March, and April has clearly thawed and there are a lot of investors chasing a lot of dollars very quickly. And you see this in the result of something like Snowflake on day one. We also have to remember, Fools, day-one trading isn't really individual day trading, but certainly on these IPO markets there's so much algorithm dollars chasing those and pushing those prices. So, be patient, make sure you're buying for the long term when you're investing in these businesses.

Hill: Shares of Adobe (NASDAQ:ADBE) fell a bit this week despite the fact that Adobe's third quarter profits were higher than expected and revenue was a record $3.25 billion. Andy, I feel like Adobe has entered that atmosphere where only a perfect quarter is going to move the stock higher. [laughs]

Cross: Yeah, that's true, Chris. It was a really nice quarter, CEO Shantanu Narayen said that -- this was the line in the call that really got me going -- which is he said, content creation and consumption are exploding in a world where connecting visually has become even more essential. I think that's so true. You saw this in Adobe's business. Really across the board their revenues were up 14% to a record. EPS was up 25% on a non-GAAP level, that was far ahead of estimates, they've done a really nice job managing their cost savings. The big growth in the digital media segment, that's their Photoshop, the Lightroom, Illustrator, Premiere Pro was up 19%; now, a full 72% of revenues. Creative Cloud and Document Cloud growth. Digital media annual recurring revenue was up 24%.

The digital experience, which is the advertising business, was up 14% if you back out some of the changes they're making in their Advertising Cloud business on their transactions, they're kind of moving away from one-off transactions and moving much more to subscriptions. So, 93% of their revenues are now coming from subscriptions. So, their performance obligations are healthy.

But still, Chris, like you said, a really nice quarter, very nice growth, beating the estimates, continue to be a leader in the space, it's just that there's so much now pricing to these companies, if you're not absolutely really [laughs] exceeding by a mammoth amount and really guiding to big growth in the next quarter, the stock is just not going to move. And I'm OK with that. I think long-term Adobe is a great business, we own it in our top stock service and recommend it. And I just think they really continue to get it done, and playing in a space where innovation and growth is super-important.

Hill: I'm glad you mentioned Shantanu Narayen, he's been CEO for nearly 13 years, doesn't really get the media exposure, the accolades of other big tech CEOs, but the stock is up 10X in value since he's been in the corner office. You got to be so thrilled, if you're a shareholder, that he's running things.

Cross: Chris, absolutely. It's one of those business that just get more and more efficient, they focus on the rate growth, they make these acquisitions that are timely and appropriate and they get them into the Adobe network, they make changes to that platform, they continue to get more and more efficient in the way that they are spending and marketing using AI and attribution technology and analytics to really drive sales and renewals across their platform, which they continue to build out. So, he's really pushed them in the right direction, encouraged them properly, and it shows in the results.

Hill: From software to housing, shares of Lennar Corp (NYSE:LEN) (NYSE:LEN.B) hovering around an all-time high this week after third quarter profits came in higher than expected. The homebuilder showed improving gross margins too. And Jason, you never want to read too much into a single company's earnings report, but with a homebuilder of Lennar's size, I have to feel that this indicates some amount of strength in the housing industry.

Moser: Yeah, absolutely. I mean, biggest home builder by revenues. And again, you mentioned the margins, I think that really is the big story for the quarter. The company itself, they're really focusing on margins and controlling the construction costs, right? Certainly, in a pandemic economy where cost-controlling is more important now than ever. And they're doing a good job of that, they're reducing the years' owned supply of home sites, for example; that's down to 3.8 years from 4.4 years a year ago. And then when you look at the actual performance, the numbers there. I mean, listen, revenue was relatively flat, earnings were up 33%, so that tells you a lot right there. Deliveries up 2%, new orders were up 16%. They have a strong backlog still, which is good. And again, it does show that the fundamentals in the housing market really do remain strong. I mean, record low interest rates and there is actually an undersupply of new and existing inventory. And so, I think that you'll continue to see Lennar perform well as long as they continue to focus on controlling those construction costs, which really does seem like a priority.

The stock hasn't really done much for investors over the last five years; it's been an underperformer. But you stretch that out longer, over a 10-year timeframe, for example, and the stock has really performed very well and it has outperformed the market. So, it does feel like, when you're able to get into a business like this at the right price and then just hang on -- I mean, housing is a very reliable, sort of, market there, and Lennar is definitely one of the key players in it.

Hill: Nvidia (NASDAQ:NVDA) wins the prize for the biggest deal of the week. Nvidia is buying fellow chipmaker Arm Holdings in a cash and stock deal worth $40 billion. Andy, Wall Street seemed to like this deal, what about you?

Cross: It may be the second biggest deal next to the Snowflake [laughs] IPO, I guess. But from an M&A perspective, yeah, this has been in the news for the past couple of weeks, so it wasn't a huge surprise, Nvidia acquiring Arm Holdings, which is another chip company, for about $40 billion. Nvidia's market cap is $300 billion, so it's about 13% of the value. It's certainly the largest one Nvidia's has made next to their Mellanox acquisition last year, which was $7 billion. It really combines these two powerhouses in the chip business. Combines Nvidia's GPU and AI strength with Arms CPU system and their ecosystem. Arm provides 70% of the world's population with these chips, including, like, Apple and Qualcomm chips. Their strengths are smartphone and laptops and routers, wearables, industrial applications, while Nvidia's are in graphics, gaming, AI, robotics, and auto. And pairing these together really opens up the market for Nvidia.

Now, it's a very large acquisition, they have to digest this company. It really helps SoftBank, I think SoftBank's had some struggles here, [laughs] and they bought Arm Holdings a few years ago for about $31 billion, so they're getting that off their balance sheet. They will now be one of the largest owners of Nvidia with the stock deal, even more than the Founder Jensen Huang. So, it does combine them. But these big acquisitions, Chris, always are a little bit tricky to, kind of, get into the works, even though Nvidia is talking about how it will be accretive. And I think it really does certainly expand the development platform, but we'll have to really watch closely how it plays out as they bring the two together, because powerful technology integration operations are always a little bit tricky with these big acquisitions.

Hill: Amwell (NYSE:AMWL), a Boston-based telehealth company, went public on Wednesday, and shares rose nearly 30%. Jason, I've never heard of this company, what do I need to know?

Moser: [laughs] Well, that's the difference between me and you, Chris, I have heard of this company ...

Hill: Why do you think you're on the show?

Moser: [laughs] A very good point. I think the opportunity for Amwell is really set up. I think they have a great opportunity in what is clearly becoming a very attractive market and a big market in healthcare and telemedicine, they just need to execute. And that's really the big question, right, will they be able to do it? And they're going up against much bigger, and honestly, better capitalized competitors. I mean, Teladoc Health clearly has had just a fascinating year, and the merger with Livongo is going to make that an even larger company.

So, when we look at a company like Amwell, when we talk about that path to profitability, that's the big question. And I think based on their size and the competitive jockeying in the space, you know, as I like to say, you better pack a lunch, because I think that's going to take a while. But Amwell is a provider of telehealth services. I think in simplest terms, it's Teladoc Health's biggest rival. But for the company itself, the numbers that they're turning in, in 2019 they brought in about $150 million in revenue, and that represented 31% growth, not bad. They have +2,000 hospitals and health systems in their network. They have 5,000 multidisciplinary providers covering all 50 states with 24/7 coverage every day of the year. So, it really is firing in on the merits of telemedicine and access to healthcare anywhere anytime.

And the nice part about the business model, 84% of revenue is recurring. Co-founders own 50% of the business, so they certainly are bought in. I think the big question for Amwell, what does this business look like, what does the growth look like post-COVID? They certainly are going to have to make some acquisitions like Teladoc Health has made, in order to build out that network and its capabilities. But clearly as we've seen with Teladoc Health, it's an attractive market with big opportunity, and I suspect Amwell is positioned pretty well to take advantage of it.

Hill: Shares of FedEx (NYSE:FDX) hitting an all-time high this week after first quarter revenue came in at a record $19.3 billion. And Andy, FedEx is talking pretty optimistically about what's coming this holiday season.

Cross: Chris, this is a stock, between January 2018 and January 2020, fell from a high of $274 to about $155, so more than a 40% drop. And since this year year-to-date it's up 60%. So, I don't know another business that's rebounded like this. Revenue was up 13.5%, as you mentioned, crossing over $19 billion. It was the best-performing growth quarter since 2017, highest first quarter since 2016, and their net operating margin expanded to 8.2% from 6.1%. EPS was up 60%, Chris. So, the two things that are really driving this business are the dramatic reduction in air traffic cargo capacity from a loss of the commercial airline business, so that's really dropped off, and that's been the benefit of FedEx. And then, of course, the acceleration in e-commerce pulling shipment volumes ahead by three years. So, as you really think about the drivers behind FedEx, they've been a beneficiary of this, they've taken advantage of it, they start to think about some pricing surcharges going ahead into the year in the holiday season, as you mentioned, very attractive. So, this is a company that Fred Smith and the team have really turned the tide over the past few months to the beneficiary of so many of us who rely on FedEx to get packages sent to our door every day.

Hill: They're hiring 70,000 seasonal workers; that's up from 55,000 last year. You go back a couple of weeks, UPS talking about how they're adding, I think, somewhere in the neighborhood of 100,000 seasonal workers. It is nice to see that level of optimism from two big shippers like UPS and FedEx.

Cross: Yeah. And then the real another interesting point I found in the call is the preparation that FedEx is going on for -- whenever we do get a vaccine, it is going to be a distribution real challenge, if not nightmare. So, they're preparing around this, including what they're calling FedEx SenseAware ID, which transmits the location every two seconds so you understand where it is. So, when I think about the FedEx business and what is going to drive the value of it, they have really turned and gotten this business moving in the direction that consumers are going to demand.

Hill: Rollercoaster week for Dave & Buster's (NASDAQ:PLAY), on Thursday shares fell 26% on reports of a potential bankruptcy; on Friday, the stock rose more than 15% as some analysts on Wall Street called the previous day's sell-off an overreaction. Jason, I'm not rooting against Dave & Buster's, but their business model depends on people getting together with their friends in-person at malls.

Moser: Yes, it does. And to clarify, their food and alcohol is 41% of sales and amusements represent the other 59%. So, it just counts on people being there, and that's been a big problem recently, of course. Now, this story, this bankruptcy story really stems from some language in the 10-Q that they just filed, their quarterly report, where they actually used the two words "going concern," and anybody in investing knows when you see a business talking about [laughs] going concern, that's never a good thing, it's ultimately they're wondering, are they going to be able to stay in business? And given their reliance on customers being there, it's certainly understandable.

You know, if this were, like, March or April, I think I'd be a little bit more concerned, but it feels like we're on the backend of the most traumatic impacts from this pandemic, on the economy at least. So, they are able to get stores open again. Over the course of the quarter they reopened 81 stores, and ended the quarter with 84 stores opened. They have $750 million in long-term debt but they have $224 million in cash on the balance sheet. And noted in the call that right now the average weekly cash burn is approximately $3.3 million. So, I think things are starting to improve, I don't think bankruptcy is something that's going to happen with Dave & Buster's here. You know, they may still have some work to do and they may have to pay up for a little bit of additional financing, but I think that they're going to still be in business when all of this stuff settles down.

Hill: She's a Personal Finance Expert and the award-winning host of the Money Girl podcast. Her latest book is Money‑Smart Solopreneurs: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers. I don't know about you, but I wasn't familiar with the word "Solopreneur" until I picked up Laura's book and read a statistic that really surprised me.


More than 30 million small businesses in America, 85% of them, have no employees. Why do you think there are so many people, and I say this as someone who would never think to start his own business, why do you think there are so many people going this route?

Laura Adams: It is a shocking statistic and I don't think many people realize we even have that many small businesses in America, much less, as you said 85% nonemployee, so that means it is a one owner person, ergo solopreneur. And why? I think that there are a lot of people that want to be in business for themselves and I don't think that having employees is necessarily their dream. Maybe they come out of a company where they were managing employees, maybe they're tired of a very dense structure and think, wow! I can do this on my own, I have talents, I have abilities, I also have other business owners to lean on, other freelancers, independent contractors. As the number grows, the ability to leverage each other is greater, and therefore you really don't need your own "employees" those W-2 people to make it work, you can really lean on other people who have said, yeah, I'm going to go into freelance work, I'm going to be an independent contractor, however you want to define these terms.

And as you mentioned, the term really doesn't matter, you're a business owner, whether you're in it by yourself or whether you have employees, that's one of my points of the book. But I think a lot of people are looking for simplicity.

Hill: You and I were talking over the Summer when you were telling me about your book, one of the things I said to you was, there are a lot of books that have come out over the last few years that fall under the umbrella of "Follow your passion!" And that's great, I'm not knocking those books, I think inspiration is important however you can get it, but what I love about your book is it's essentially saying, hey, if you want to follow your passion, you're going to run into a bunch of issues that have nothing to do with your passion, and here's a guide for how to navigate around them and through them so that you can be successful. You've written books about money and personal finance, what was the origin of this book?

Adams: This book really came out of questions that I have been getting over and over for years, really, and I've seen this trend of people wanting to be in business for themselves, whether it's a side business, whether they want to keep the day job or whether they want to ditch the day job completely and go 100% on their own, there's this trend. And so, I've been getting a lot of questions, hey, Laura, how do you incorporate? Do I need to incorporate? What is a business bank account, do I really need it? You know, all of these, kind of, nitty-gritty questions about getting started.

As you mentioned, there are people who jump into it and have no idea that, hey, I'm going to have self-employment taxes and I'm going to have all these obligations. They're kind of like the, you know, you've heard the expression, Ready! Aim! Fire! -- Aim! Fire! Ready! There are a lot of people who are doing it backwards. They're saying, well, I'm just going to jump in and we'll work it all out later. Then you have people who are very cautious and they are not going to do anything until they fully understand the process. And so, I've seen, kind of, two camps, people who don't go into business because they're afraid of, oh, my gosh! What are the regulations? What do I have to do? They're kind of letting the analysis keep them from moving forward. And there are other people that just jump in and it can kind of burn them, because all of a sudden they wake up and they go, whoa! I owe a lot of taxes from my income last year or I didn't realize I was supposed to be doing this or that. So, you got a range of experience levels and motivation too.

So, as you mentioned, yeah, your inspiration and your passion is wonderful, but if it's not backed up by some just basic fundamental knowledge and principles to stay out of trouble, you may end up regretting the decision.

Hill: Let's get to some of the stuff in the book, I'm sure a lot of people, when they're starting out, despite the best intentions, they're going to make mistakes, they're going to stumble. What are some of the common mistakes that people make? And for people who haven't taken the leap, either to start their own business or a side-hustle, how do they avoid them?

Adams: When you're just starting out, you really don't realize the tax liability, I find that's the No. 1 mistake. People say, I didn't put anything aside that first year for taxes, I maybe put a little bit aside, but I had no idea what the burden would be. So, that's mistake No. 1, not really having a grasp on what your tax liability will be. Not paying quarterly estimated taxes, many people don't even know what that is, they don't know that they're supposed to be paying tax as you go. You know, you think about our paychecks, when we're a W-2 employee, taxes are taken out every week, you know, you're keeping up with it literally on a weekly basis. As a solopreneur or small business owner, it's up to you to make sure that you are paying that as you go. Typically, that happens quarterly. So, that's a huge mistake, because all of a sudden, you've made a little money from last year, Tax Day rolls around and boom! you realize I've got a big burden, you may not have that much in savings. And so, you end up going into a hole right away and that can cause people to accumulate debt in year No. 2 of business. So, that's a big one. And it's pretty easy to get around if you got a little help maybe from a software program that you're using or an accountant, they can help you estimate what you're going to owe, so you know what to put aside.

Hill: I'm glad you mentioned that, because that leads to my next question, which is, maybe it is just because it seems this way, but it really does seem like if you are starting out, you have more tools at your disposal to help you along the way, whether it's software, whether it's apps. In terms of people staying financially organized, what are some of the better tools and apps that are out there?

Adams: I'm a big fan of the Intuit product, so QuickBooks is a great one. If you're self-employed, they have a version called Self-Employed. And it is amazing for keeping you on track. It actually has a tax component, so as you're making money and those deposits are going in, it will show you what you owe per quarter. So, it's a great way to make sure that you're not falling behind. It's going to show you profitability, it's going to also keep up with any of the independent contractors that you're using. So, any 1099s that you need to send out as a solopreneur. So, that's a great one. There are so many great programs, as you mentioned.

You know, I would say also, if you are thinking about anything to do with writing, Grammarly is a program that I love, it's just a great way to, kind of, up-level your communication, making sure that everything that you're putting out with your website and all of your literature is correct, having an editor is great, but there are a lot of great online programs too. And I think that anything that's a time-management type of program that you can use, Slack is a great program that you can work with other freelancers and maybe independent contractors, if you're working with them frequently. That is a great way to have project management within your business. So, it really depends on the type of work you're doing, but there are so many great tools out there to keep you organized.

Hill: It really seems like if you're going to go out, start your own business, start your own side-hustle, that knowing who you are and what makes you tick, knowing yourself is more important than if you just have a "regular job." It seems like you would have to know, for example, when you're at your most productive and then schedule accordingly.

Adams: So true. It is important. If you're not really, kind of, tapped in to how you work, your energy, your skill level, whether you're good at networking or not, it can be more challenging when you're on your own. And I do think that managing your time as a small business person is really one of the biggest challenges. I mean, it's important for all of us, but when you're on your own, you've got a lot more opportunity to get sidetracked if you're not really disciplined. And one of the things I recommend in the book or some ways to make yourself more productive, especially if you are dealing with a day job and a side-hustle, now you're juggling more and you're going to have to be incredibly efficient to do both things well. So, you have to master your time. And matching that with your energy level, that's a great hack.

So, for instance, I'm a morning person. I get up and I have lots of energy in the morning. I focus that time on the really hard stuff, because I know my brain is working and I'm kind of firing on all cylinders. Mid-afternoon, you know, I'm feeling a little less sharp, and so I might leave that for doing billing, for administrative type of work that needs to be done. And understanding, OK, I'm at my best in the morning, so hey, if I got something important to do, let's just put it off until tomorrow morning, we'll tackle that first thing. So, that's an example. You might be a night owl and really get a lot done in the wee hours. But as you mentioned, knowing how you work and your capabilities is key to success.

Hill: You and I met in-person last year, but I've been aware of you for more than 10 years, for as long as I've known you because of the Money Girl podcast, you've been living the solopreneur life. Did you ever have a regular job or is this just one of those things where you just, sort of, knew coming out of college that this is the path that you were destined for?

Adams: Chris, I have had regular jobs, sort of, here and there during my career. But I'll tell you, for most of the time I've been doing both, I've had W-2 and that 1099 work. Why? I really enjoy the diversity of it. I love being able to do different types of work. I get bored really easily. So, having different types of projects, kind of, feeds my energy and my interests. But there have been times where I've been 100% W-2, you know now I'm a 100% solopreneur, I've been that way for years. But for a lot of people, I think having more than one occupation not only does it give you more to do mentally, but you're providing multiple streams of income. And more than ever right now, that can be something that will help people feel more secure in an uncertain time. So, if you're not sure what's going on with your job, your industry right now, there's never been a better time to start a venture on your own. And it's a great way to test ideas too. So, testing ideas, testing that income that might be out there, diversifying interests and money is always a good thing and it's also a great way to prepare for full-time entrepreneurship. So, you need to make sure you've got a financial cushion, at least some fair amount of savings if you're going to go full-time. I never recommend just jumping completely from a W-2 job into a business if you're not really prepared for it.

So, it's a great time. If you've got multiple streams of income, get your savings straightened out, you know, beef that up, then when you do have the inclination and maybe the customer base to go full-time with your business, you're going to be ready for it.

Hill: The book is Money‑Smart Solopreneurs: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers. Whether you have your own business, you're starting a side-hustle or you know someone doing either of those things, get this book.

You can listen to Motley Fool Money every week on radio stations across America and on platforms like Apple Podcast, Stitcher, Spotify, and now Amazon Music. You can find all of The Motley Fool's podcasts on Amazon Music. We added the podcast to that platform this week, so check us out there.

Guys, Halloween is just six weeks away, but we already have some scary news. Peeps, the iconic marshmallow candy company announced they will not be producing customized Marshmallow Ghosts and Jack-O-Lanterns for Halloween this year due to reduced capacity. And the same goes for Christmas and Valentine's Day 2021. Andy, I don't even like Peeps and I'm disturbed by this news.

Cross: [laughs] Peeps are the cornerstone at my family around Easter and Halloween. Luckily, we ordered a whole bunch, so we still have some supplies. I think their shelf lives are pretty long. So, yeah, [laughs] I'm sure a lot of people will be a little bit disturbed by that. I actually found the news from that James Cromwell, the actor from Babe, L.A. Confidential, I think on Netflix, The Crown, he was in that, but very respected, and a vegan, has written a letter and joined the drive to try to make Peeps vegan to get rid of the ingredients that make them a little bit not as appropriate or tasty for vegan. So, I found that news, kind of, inspiring as someone as a family who does not like to eat too much meat.

But yeah, I think this is another [laughs] distribution challenge that so many businesses are facing over the COVID quarantine and it'll be a little sad for some kids at Halloween, I think.

Hill: Now, let's go to our man behind the glass, Dan Boyd. Dan, before we get to the stocks on our radar, thoughts on the story about Peeps?

Dan Boyd: Chris, can I enter the hot take zone for a moment?

Hill: Absolutely.

Boyd: If you're an adult who likes Peeps, you're a psychopath.

Jason Moser: That's a bold statement.

Cross: It sure is.

Moser: That's a bold statement. I mean, I will say, like, you know, I'm not going to go out and buy Peeps to eat them. Really, the other purpose that Peeps serve in, you know, just good old-fashioned microwave fun. I mean, you stick one of those in the microwave, you let that thing go on for a couple of seconds. I mean, you know, listen, that's entertainment.

Hill: [laughs] Our email address is, for any thoughts you want to share about any hot takes we have on the show. Let's get to the stocks on our radar. Jason Moser, you're up first, what are you looking at this week?

Moser: Sure. Earnings-palooza! has wrapped up, of course, but next week we will see earnings from Nike, ticker NKE. Tuesday, the 22nd, earnings come out. And they've been holding their cards close to the vest in regard to guidance. But they have noted that they do expect for the full fiscal year, they expect revenue to be flat, perhaps up a little bit versus the prior year. And it does sound like they are planning for a more robust back half of this year. So, really, for me, it's going to be getting a better idea of how they're dealing with the pandemic economy and how their margin picture really looks, because they are conceding a little bit on pricing these days. And then finally keeping up with inventory and that supply chain, because that's a concern for all retailers these days.

Hill: Dan, question about Nike?

Boyd: Yeah. If people aren't playing as much team sports as they have been because of the pandemic, how's that going to be affecting Nike sales moving forward?

Moser: Well, it definitely could play out. It sounds like it is playing out. But, hey, listen, for all of the team sports that we're not playing, Dan, you know, it's been a wonderful Summer weather-wise. I mean, people should be out there playing disc golf, for example. I mean, that's a wonderful outdoor sport where you don't need to be a part of a team. And, hey, listen, team sports aren't everything, right? There's still plenty of ways to get out there and get some exercise; regular golf, for example, Dan. Maybe you and I could go play regular golf one day.

Boyd: Maybe, Jason, maybe.

Moser: Or disc golf. I'm not picky.

Hill: Andy Cross, what are you looking at this week?

Cross: I'm looking at Freshpet, Dan; FRPT. Specialized in providing refrigerated foods and treats for dogs that humanizes pet food, Dan. Uses fresh meat, veggies, fruits, building out its kitchen networks. A $4.3 billion business, growing 29%. Pets are part of the family now, Dan. Pet food is a $30 billion market. And Freshpet is really trying to provide so many households that own dogs and cats better food for their pets. And they're looking to expand their market, grow beyond the 22,000 retail locations they have and they're building out their e-commerce platform. So, I'm just really watching the growth picture and the profitability picture as they start to really become more and more profitable. So, it's Freshpet, FRPT, as a watchlist stock.

Hill: Dan, question about Freshpet?

Boyd: Andy, OK, so I don't have dogs, I have cats. Cats, the thing is, they don't like cold food, so refrigerating cat food, there's like a step of putting it in the microwave to warm it up before they'll actually eat it. Like, what has Freshpet got for me that doesn't need that extra step?

Cross: Well, Dan, they really specialize in dogs, so I can't really help you there. But I know I have a dog and we spend a lot of money on Freshpet every week.

Hill: What do you want to add to your watchlist, Dan?

Boyd: Well, I'm not adding Freshpet with that kind of specialization in dog nonsense, that's for sure, I'm going Nike.

Moser: Just do it!

Hill: All right. Jason Moser, Andy Cross, guys, thanks for being here.

Cross: Thanks, fellas.

Moser: Thank you.

Hill: That's going to do it for this week's show. Our Producer is Mac Greer, our Engineer is Dan Boyd, I'm Chris Hill, thanks for listening, we'll see you next week.


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