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Tag: Government taxation and revenue

  • Hunter Biden pleads guilty in tax case, hours after jury selection for trial was to begin

    Hunter Biden pleads guilty in tax case, hours after jury selection for trial was to begin

    Hunter Biden, son of U.S. President Joe Biden, arrives at court for his trial on tax evasion in Los Angeles on Sept. 5, 2024.

    Ringo Chiu | AFP | Getty Images

    Hunter Biden pleaded guilty to all nine counts in his criminal tax case in Los Angeles federal court on Thursday afternoon, hours after jury selection was due to begin for a trial of the son of President Joe Biden.

    Biden’s sentencing was scheduled for Dec. 16.

    The plea came after prosecutors strongly opposed Biden’s surprise offer earlier in the day to enter a special plea — known as an Alford plea — that would allow him to maintain that he believed he was innocent but concede that prosecutors had enough evidence to convict him at trial.

    If the Alford plea had been accepted by U.S. District Judge Mark Scarsi, Biden would have been convicted of the charges.

    The plea that Biden ended up making to Scarsi is an “open plea,” or one done without a plea deal with prosecutors, which might have included a reduction in the number of criminal counts he faced and an agreement on the likely terms of his sentencing.

    Biden, 54, was charged in the case with three felony counts and six misdemeanors related to failing to pay at least $1.4 million in federal taxes between 2016 and 2019.

    He was accused of deducting money that he paid to sex workers on his taxes as a business expense and of spending “millions of dollars on an extravagant lifestyle rather than paying his tax bills,” according to an indictment.

    “Mr. Biden will agree that the elements of each offense have been satisfied,” Biden’s lawyer Abbe Lowell told Scarsi after returning from a recess following arguments over the proposed Alford plea.

    When Scarsi asked special counsel Leo Wise, the prosecutor, if that was sufficient, Wise said he would prefer that Biden admit his actions as alleged in an indictment.

    “Will Mr. Biden agree that that is the truth? Because the truth matters,” Wise said. “He should have to say that the facts are true!”

    Lowell then argued that was not required under the law.

    “He just has to agree to the elements,” Lowell said. “I know Mr. Wise would like Mr. Biden to say, ‘and in addition, I was a really bad person when I did this,’ but that’s not what the law requires.”

    Scarsi said, “So we’re going to take an open plea from Mr. Biden. And I will ask if you committed conduct that satisfies element in the indictment.”

    Wise then began reading the 56-page indictment out loud in court. That reading took almost 90 minutes to complete.

     In June, Biden was found guilty after trial in another case where he was accused of crimes related to his purchase of a handgun in 2018 while being a user and addict of crack cocaine.

    He is awaiting sentencing in that case, which was tried in U.S. District Court in Delaware.

    Read more CNBC politics coverage

    On Thursday morning in Los Angeles federal court, more than 100 potential jurors assembled for jury selection in Biden’s tax case.

    But Biden’s lawyer Lowell surprised prosecutors and others in the court when he told Scarsi, “There is no reason to proceed with jury selection as Mr. Biden intends to change his plea.”

    Lowell told Scarsi there was “no agreement” with prosecutors about Biden’s planned Alford plea. But the lawyer said there is no requirement for such an agreement.

    “The law is very clear. If the defendant satisfies rule 11b, the court is required to accept the plea,” Lowell said.”

    Lowell also said, “I don’t think we would agree under conventional plea circumstances.”

    Wise, the special counsel, told Scarsi, “This is the first we’ve heard of this.” Wise asked for time to discuss the proposed change of plea privately.

    “I think this can be resolved today,” Lowell said. “It doesn’t need days.”

    After a recess, Wise told the judge, “I want to make it crystal clear: The U.S. opposes an Alford plea.”

    “We will not under any circumstances accept an Alford plea,” said Wise. “It’s not in the public interest, it’s contrary to the rule of law and we think it’s an injustice.”

    “Hunter Biden is not innocent. Hunter Biden is guilty,” said Wise.

    “We were as shocked as anyone else,” the prosecutor said about the proposed Alford plea.

    He said the prosecution is not in a position to evaluate that plea offer Thursday.

    “There’s no way to rush this at this point. And it shouldn’t be rushed,” Wise said. 

    Under Department of Justice guidelines, federal prosecutors “may not consent” to an Alford plea “except in the most unusual circumstances and only after the Assistant Attorney General, Tax Division, or a higher Departmental official, has approved a written request.”

    Lowell told Scarsi that Biden is not asking for special treatment, noting that “people all over the U.S.” take Alford pleas.

    “He is asking for the same rights as others,” Lowell said. “He is willing to say that the government has put forth sufficient evidence to prove the case beyond a reasonable doubt. … I don’t know why the government wants to punt.”

    Scarsi called another recess after hearing the arguments and telling attorneys, “I haven’t seen a case that tells me I have to accept an Alford plea.”

    But the judge also said, “Assuming I have the opportunity to reject an Alford plea, why shouldn’t I?”

    “I need a reason why I accept or reject a plea,” Scarsi said. 

    After that recess, Biden returned to the courtroom, where Lowell said he would enter his open guilty plea, dropping the suggestion of an Alford plea.

    President Biden, as he left the White House earlier Thursday to travel to Wisconsin, ignored shouted questions from reporters about his son’s plan to change his original not-guilty plea in the case.

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  • Harris calls for expanded child tax credit of up to $6,000 for families with newborns

    Harris calls for expanded child tax credit of up to $6,000 for families with newborns

    U.S. Vice President Kamala Harris speaks at an event with U.S. President Joe Biden (not pictured) in Prince George’s County, Maryland, U.S., August 15, 2024. 

    Elizabeth Frantz | Reuters

    Vice President Kamala Harris on Friday unveiled an economic plan, including an expanded child tax credit worth up to $6,000 in total tax relief for families with newborn children.

    The Democratic presidential nominee’s plan aims to restore the higher child tax credit enacted via the American Rescue Plan in 2021, which provided a maximum credit of up to $3,600 per child, according to a fact sheet from the campaign.

    The 2021 credit was up to $3,000 or $3,600, depending on the child’s age and family’s income. Harris’ proposed tax break would increase for middle- to lower-income families for one year after a child is born.

    “We will provide $6,000 in tax relief to families during the first year of a child’s life,” said Harris during a policy speech in Raleigh, North Carolina.

    More from Personal Finance:
    Vance wants to raise the child tax credit to $5,000. Here’s why that could be difficult
    The expanded child tax credit failed in the Senate. Here’s what it means for families
    Trump and Harris both want no taxes on tips. Why policy experts don’t like the idea

    The plan comes less than one week after Sen. JD Vance of Ohio, former President Donald Trump‘s GOP running mate, floated a $5,000 child tax credit. 

    A Trump campaign official told CNBC: “Trump will consider a significant expansion of the child tax credit that applies to American families.”

    While Harris has followed President Joe Biden’s footsteps with her proposed child tax credit expansion, the $2,400 bonus for newborns is “different and somewhat surprising,” said Kyle Pomerleau, senior fellow and federal tax expert with the American Enterprise Institute. “That, to me, sounds very much like a response to JD Vance.”

    The Harris campaign did not immediately respond to CNBC’s request for comment.

    ‘Bipartisan momentum’ for the child tax credit

    Senate Republicans earlier in August blocked an expanded child tax credit that passed in the House with broad support. However, Republican lawmakers are expected to revisit the measure after the election.

    “There is bipartisan momentum behind expanding the [child tax credit],” said Andrew Lautz, associate director for the Bipartisan Policy Center’s economic policy program.

    There is bipartisan momentum behind expanding the [child tax credit].

    Andrew Lautz

    Associate director for the Bipartisan Policy Center’s economic policy program

    The size of the expansion and future credit design will hinge on which party controls the White House and Congress. But the House-passed bill and Senate negotiations could be a starting point, Lautz said.

    Future child tax credit expiration

    Without action from Congress, the maximum child tax credit will drop from $2,000 to $1,000 once Trump’s 2017 tax cuts expire after 2025.

    The American Rescue Plan temporarily increased the maximum child tax credit from $2,000 to either $3,000 or $3,600, depending on the child’s age. Families received up to half via monthly payments for 2021.

    The child poverty rate fell to a historic low of 5.2% in 2021, largely due to the credit’s expansion, according to a Columbia University analysis.

    If there’s a future child tax credit expansion, Pomerleau doesn’t expect it to be as large as the tax break that Harris or Vance have proposed.

    Amid the federal budget deficit, lawmakers are already wrestling with trillions in expiring tax cuts that are “prohibitively expensive,” he said.

    Expanding the child tax credit to $3,000 or $3,600 could cost an estimated $1.1 trillion over a decade, according to the Committee for a Responsible Federal Budget. Meanwhile, the expansion to $6,000 for newborns could cost $100 billion.

    The Harris campaign’s economic plan fact sheet said she would fulfill her “commitment to fiscal responsibility,” including calls for higher taxes on wealthy Americans and large corporations.

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  • Tim Walz vs. JD Vance: What the 2024 presidential running mates could mean for your wallet

    Tim Walz vs. JD Vance: What the 2024 presidential running mates could mean for your wallet

    Democratic vice presidential candidate and Minnesota Governor Tim Walz (L), and Republican Vice Presidential candidate Sen. JD Vance (R-OH).

    Getty Images

    Housing

    Affordable housing is an important topic for many Americans and both Walz and Vance have addressed the issue.

    In May 2023, Walz signed housing legislation that included $200 million in down payment assistance. The bill also had $200 million for housing infrastructure and $40 million for workforce housing.

    “We expect Walz to be an advocate for demand-side approaches to housing,” Jaret Seiberg, analyst at TD Cowen wrote in a July statement. “These are the type of housing ideas we would expect in a Harris administration,” she wrote.

    Demand-side approaches to housing aim to help individual households by improving housing quality or reducing monthly housing costs.

    Meanwhile, Vance, who is also a proponent of affordable housing, highlighted the issue in his Republican National Convention acceptance speech and along the campaign trail.

    “Prior to running for Senate, Vance argued that one key to tackling poverty is to address affordable housing,” and he has opposed institutional ownership of rental homes and Chinese buyers for U.S. real estate, Seiberg wrote.

    Child tax credit

    Without action from Congress, trillions of tax breaks enacted by Trump are scheduled to expire after 2025, including the child tax credit, which will drop from $2,000 to $1,000 per child. 

    Congress in 2021 approved a temporary expansion of the child tax credit, including upfront monthly payments, which reduced the child poverty rate to a historic low of 5.2% for 2021, according to a Columbia University analysis.

    Following the federal policy, Minnesota enacted a refundable state-level child tax credit in 2023, which Walz described as “signature accomplishment.”    

    Minnesota’s new child tax credit is unusual in its narrowness, but it is the most generous in the nation for low-income households.

    Jared Walczak

    Vice president of state projects at the Tax Foundation

    “Minnesota’s new child tax credit is unusual in its narrowness,” said Jared Walczak, vice president of state projects at the Tax Foundation. “But it is the most generous in the nation for low-income households.” 

    However, a permanent federal child tax credit expansion could be difficult, particularly amid a divided Congress and increasing concerns over the federal budget deficit.

    Walz’s campaign did not respond to CNBC’s request for comment.

    Senate Republicans blocked a federal child tax credit expansion last week, and Sen. Mike Crapo, R-Idaho, the ranking member of the Senate Finance Committee, described the vote as a “blatant attempt to score political points.”

    Despite the failed procedural vote, Crapo voiced openness to negotiating a “child tax credit solution that a majority of Republicans can support.”

    Democrats scheduled the vote partially in response to Vance, who has positioned himself as a pro-family candidate. Vance was not present for the Senate vote, but has expressed support for the child tax credit.

    Vance’s campaign did not respond to CNBC’s request for comment. 

    Student loans

    Vance has spoken out against student loan forgiveness policies.

    “Forgiving student debt is a massive windfall to the rich, to the college educated, and most of all to the corrupt university administrators of America,” Vance, a Yale Law School graduate wrote on X in April 2022. “Republicans must fight this with every ounce of our energy and power.”

    Outstanding education debt in the U.S. stands at around $1.6 trillion. Nearly 43 million people — or 1 in 6 adult Americans — carry student loans. Women and people of color are most burdened by the debt.

    Vance does seem to approve of loan forgiveness in extreme cases. In May, he helped introduce legislation that would excuse parents from student loans they took on for a child who became permanently disabled.

    Jane Fox, chapter chair of the Legal Aid Society Attorneys union, UAW local 2325, said it was hypocritical and incorrect of Vance to frame debt relief as a benefit to those who are well off.

    “Student debt forgiveness is a working-class issue,” Fox said. “Those in the 1% who went to elite institutions and then worked in private equity as Senator Vance did rarely need debt relief.”

    Vance’s campaign did not respond to CNBC’s request for comment.   

    Meanwhile, Walz, a former school teacher, has supported programs to alleviate the burden of student debt on people, said higher education expert Mark Kantrowitz.

    He signed a student loan forgiveness program for nurses into law in Minnesota, Kantrowitz said, as well as a free tuition initiative for low-income students.

    “As my daughter prepares to head off to college next year, affordability and student loan debt are at the front of our minds,” Walz wrote on Facebook in 2018. “Every Minnesotan deserves a shot at a great education without being held back by soaring costs and student loan debt.”

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  • ‘Building up the middle class will be a defining goal,’ Harris says — here’s how she may make that happen

    ‘Building up the middle class will be a defining goal,’ Harris says — here’s how she may make that happen

    Vice President and 2024 Democratic presidential candidate Kamala Harris speaks at a campaign event in Atlanta, Georgia, on July 30, 2024.

    Elijah Nouvelage | Afp | Getty Images

    “Building up the middle class will be a defining goal of my presidency,” Vice President Kamala Harris said at a political event in Atlanta on Tuesday evening.

    “When our middle class is strong, America is strong,” the de facto Democratic presidential nominee said to the crowd of more than 10,000 supporters.

    “And to keep our middle class strong, families need relief from the high cost of living so that they have a chance, not to just to get by, but to get ahead,” she added.

    Here’s a look at how Harris may make that happen, based on the policies she advocated for during her first presidential bid in 2020 and as a senator.

    More from Personal Finance:
    What Kamala Harris’ latest financial disclosure reveals
    What a Kamala Harris administration could mean for you
    Where Kamala Harris could stand on tax policy, experts say

    One of Harris’ signature proposals as senator — the LIFT the Middle Class Act, or Livable Incomes for Families Today — would have provided an annual tax credit of up to $3,000 per person (or $6,000 per couple) for lower- and middle-income workers, on top of the benefits they already receive.

    The size of the credit would have amounted to “significant tax relief,” according to the Committee for a Responsible Federal Budget.

    The Harris campaign did not immediately respond to CNBC’s request for comment. 

    How the LIFT Act could look today

    Since the LIFT Act was first proposed in 2018, the cost of living has only skyrocketed, hitting working-class Americans especially hard.

    For these households, “real incomes have declined or remained flat due to inflation,” Tomas Philipson, former chair of the White House Council of Economic Advisers, told CNBC. That makes many workers feel less confident about their financial standing — and less satisfied with President Joe Biden’s handling of the economy.

    At the same time, the rise of artificial intelligence has stoked fears about long-term job security.

    In that context, “there’s a good rationale” for refloating a tax credit for those making under a certain income threshold, according to Laura Veldkamp, a professor of finance and economics at Columbia University Business School.

    “A lot of people are asking the question, ‘Will AI take my job?’ There are people whose hard-earned skills could be obsolete,” she said. “One way to deal with that is to have more social insurance.”

    But a tax credit like LIFT would also be extremely costly, according to Tax Policy Center estimates from 2018 and 2019.

    To help cover the tab for the additional financial support, Harris at the time proposed repealing provisions of the Tax Cuts and Jobs Act for taxpayers earning more than $100,000.

    However, funding such a tax credit now could be tough amid growing concerns over the federal budget deficit. Harris will also need to address trillions of expiring tax cuts enacted by former President Donald Trump before 2025.

    How the LIFT Act could support renters

    A present-day version of the LIFT Act may benefit renters the most, as many are part of the income category the tax credit is targeting, according to Francesco D’Acunto, an associate professor of finance at Georgetown University.

    D’Acunto and other experts suggest the LIFT Act might even be a better aid than the 5% rent cap proposal Biden unveiled on July 16. That proposal calls on Congress to cap rent increases from landlords with 50 existing units or more at 5% or risk losing federal tax breaks.

    Harris also supported the idea of rent caps at the campaign rally in Atlanta: “We will take on corporate landlords and cap unfair rent increases.”

    However economists have found that such policies inadvertently bring down the available supply of rental units. And rent-control policies could further affect an already, relatively short supply, according to a report by the Federal Reserve published in February.

    Rental vacancy rates, or the percentage of all units available for rent, measure the tightness of rental markets; the higher the vacancy rate, the easier it is to find housing, per the Fed.

    In 2021, the overall vacancy rate slid to 5.6%, the lowest level since 1984, the central bank found. Supply has since rebounded and plateaued at 6.6% in April, per census data via the Fed.

    While the rent cap may lead consumers to believe prices will not increase significantly, it could have negative side effects, such as landlords taking their properties off the rental market, said Karl Widerquist, an economist and professor of philosophy at Georgetown University.

    Plus, landlords who lose those federal tax breaks will still be able to raise rents, said Jacob Channel, a senior economist at LendingTree.

    The advantage of the LIFT tax credit, said D’Acunto, is that it doesn’t create the same market distortions the rent cap would ignite. “But instead now on the side of the renter, we are actually very directly helping them to defray the effects of rent inflation,” he said.

    Adds Widerquist: “We very often give tax benefits to all homeowners in the name of making it more affordable for people to become homeowners, and we don’t give a similar tax break to people who are paying rent. Those are the people who are struggling to become owners.”

    Child tax credit is a ‘huge priority’ for Democrats

    LIFT was first proposed years before Congress temporarily expanded the child tax credit during the Covid-19 pandemic, which could now be a bigger priority, experts say.

    The American Rescue Plan boosted the child tax credit to $3,000 from $2,000, with an extra $600 for children under age 6 for 2021, and families received up to half upfront via monthly payments. Harris described the child tax credit changes as one of the “most important” and “most impactful” parts of the legislation in a 2021 speech.

    The child poverty rate plunged to a historic low of 5.2% in 2021, largely due to the expansion, a Columbia University analysis found. Then in 2022, the rate more than doubled to 12.4% after pandemic relief expired, according to the U.S. Census Bureau.

    “Whereas the last administration gave tax cuts to billionaires, we gave tax cuts to families through the child tax credit, which cut child poverty in America by half,” Harris said at a political event in North Carolina in late July, before Biden left the race.

    Biden’s fiscal year 2025 budget aimed to restore the 2021 child tax credit increase and House lawmakers in January passed a bipartisan tax package, which included a child tax credit expansion. The Senate has scheduled a procedural vote for the bill on Thursday, which will force lawmakers to take a stand on the issue ahead of November.

    The enhanced tax break is “a huge priority for Democrats,” said Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation. 

    Still, it’s unclear whether Harris, now the clear front-runner for the nomination, will renew calls for LIFT or focus on the child tax credit, which has a different design but a similar goal, he said.

    “It’s very hard to say whether they would revisit specific policy options from so long ago,” said Columbia Business School economics professor Brett House.

    For now, “there are other cultural and political issues that are going to dominate.”

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  • Building the middle class may be a ‘defining goal’ under a Harris presidency — how that may shape a key tax credit

    Building the middle class may be a ‘defining goal’ under a Harris presidency — how that may shape a key tax credit

    U.S. Vice President Kamala Harris delivers remarks during a campaign event at West Allis Central High School in West Allis, Wisconsin, on July 23, 2024.

    Kevin Mohatt | Reuters

    “Building up the middle class will be a defining goal of my presidency,” Vice President Kamala Harris said at a political event in West Allis, Wisconsin, on Tuesday — one of her first speeches since becoming the front-runner to replace President Joe Biden as the Democratic candidate for president.

    As the Harris campaign takes shape, tackling the wealth gap is already front and center.

    “When our middle class is strong, American is strong,” she said Tuesday.

    That sentiment revisits an idea she has advocated for previously.

    More from Personal Finance:
    What a Kamala Harris administration could mean for you
    Where Kamala Harris could stand on tax policy, experts say
    JD Vance once called on GOP to fight student loan forgiveness

    One of Harris’ signature proposals as senator — known as the LIFT the Middle Class Act, or Livable Incomes for Families Today — would have provided an annual tax credit of up to $3,000 per person (or $6,000 per couple) for lower- and middle-income workers, on top of the benefits they already receive.

    The size of the credit would have amounted to “significant tax relief,” according to the Committee for a Responsible Federal Budget.

    The Harris campaign did not immediately respond to CNBC’s request for comment. 

    How LIFT can help renters

    In today’s climate, the LIFT Act could financially benefit renters, as many are part of the income category the tax credit is targeting, according to Francesco D’Acunto, an associate professor of finance at Georgetown University.

    D’Acunto and other experts suggest the LIFT Act might even be a better aid for renters than the 5% rent cap proposal Biden unveiled on July 16. That proposal calls on Congress to cap rent increases from landlords with 50 existing units or more at 5% or risk losing federal tax breaks.

    While the rent cap may lead consumers to believe prices will not increase significantly, it could have negative side effects, such as landlords taking their properties off the rental market, said Karl Widerquist, an economist and professor of philosophy at Georgetown University.

    Plus, landlords who lose those federal tax breaks will still be able to raise rents, said Jacob Channel, a senior economist at LendingTree.

    The advantage of the LIFT tax credit, said D’Acunto, is that it doesn’t create the same market distortions the rent cap would ignite. “But instead now on the side of the renter, we are actually very directly helping them to defray the effects of rent inflation,” he said.

    Adds Widerquist: “We very often give tax benefits to all homeowners in the name of making it more affordable for people to become homeowners, and we don’t give a similar tax break to people who are paying rent. Those are the people who are struggling to become owners.”

    What the LIFT Act would mean today

    Since the LIFT Act was first proposed in 2018, the cost of living has only skyrocketed, hitting working-class Americans especially hard.

    For these households, “real incomes have declined or remained flat due to inflation,” said Tomas Philipson, former chair of the White House Council of Economic Advisers. That makes many workers feel less confident about their financial standing — and less satisfied with Biden’s handling of the economy.

    At the same time, the rise of artificial intelligence has stoked fears about long-term job security.

    In that context, “there’s a good rationale” for refloating a tax credit for those making under a certain income threshold, according to Laura Veldkamp, a professor of finance and economics at Columbia University Business School.

    “A lot of people are asking the question, ‘Will AI take my job?’ There are people whose hard-earned skills could be obsolete,” she said. “One way to deal with that is to have more social insurance.”

    But a tax credit like LIFT would also be extremely costly, according to Tax Policy Center estimates from 2018 and 2019.

    To help cover the tab for the additional financial support, Harris at the time proposed repealing provisions of the Tax Cuts and Jobs Act for taxpayers earning more than $100,000.

    However, funding such a tax credit now could be tough amid growing concerns over the federal budget deficit. Harris will also need to address trillions of expiring tax cuts enacted by former President Donald Trump before 2025.

    Focus on the child tax credit

    LIFT was first proposed years before Congress temporarily expanded the child tax credit during the Covid-19 pandemic, which could now be a bigger priority, experts say.

    The American Rescue Plan boosted the child tax credit to $3,000 from $2,000, with an extra $600 for children under age 6 for 2021, and families received up to half upfront via monthly payments. 

    The child poverty rate plunged to a historic low of 5.2% in 2021, largely due to the expansion, a Columbia University analysis found. Then in 2022, the rate more than doubled to 12.4% after pandemic relief expired, according to the U.S. Census Bureau.

    The Biden economy: How Vice President Kamala Harris can reset the economic debate

    “Whereas the last administration gave tax cuts to billionaires, we gave tax cuts to families through the child tax credit, which cut child poverty in America by half,” Harris said at a political event in North Carolina last week before the president left the race.

    Biden’s fiscal year 2025 budget aimed to restore the 2021 child tax credit increase and House lawmakers in January passed a bipartisan tax package, which included a child tax credit expansion. However, the bill has been stuck in the Senate.  

    The enhanced tax break is “a huge priority for Democrats,” said Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation. 

    Still, it’s unclear whether Harris will renew calls for LIFT or focus on the child tax credit, which has a different design but a similar goal, he said.

    “It’s very hard to say whether they would revisit specific policy options from so long ago,” said Columbia Business School economics professor Brett House.

    For now, “there are other cultural and political issues that are going to dominate.”

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  • Your home sale could trigger capital gains taxes. Here’s how to calculate your bill

    Your home sale could trigger capital gains taxes. Here’s how to calculate your bill

    Westend61 | Westend61 | Getty Images

    As home values climb, more Americans owe capital gains taxes when selling property. But knowing how to calculate your home’s profit could reduce your bill, experts say.

    Most Americans do not owe taxes for selling a primary residence because of a special tax break — known as the Section 121 exclusion — that shields up to $250,000 of profits for single filers and $500,000 for married couples filing together.

    However, more U.S. home sales profits now exceed these thresholds, according to an April report from real estate data firm CoreLogic. Nearly 8% of sales exceeded the $500,000 limit in 2023, up from roughly 3% in 2019, the report found.

    More from Personal Finance:
    More home sellers are paying capital gains taxes. Here’s how to reduce your bill
    Inflation is slowing. Here’s why prices still aren’t going down
    Fewer homeowners are remodeling, but demand is still ‘solid’

    There are strict IRS rules to qualify for the $250,000 or $500,000 exemptions. Any profit above those limits is subject to capital gains taxes, levied at 0%, 15% or 20%, based on your earnings.

    Capital gains brackets use “taxable income,” which is calculated by subtracting the greater of the standard or itemized deductions from your adjusted gross income.

    Reduce capital gains by increasing ‘basis’

    “It is important to track your cost basis of the home,” which is your original purchase price plus closing costs from the purchase, according to Thomas Scanlon, a certified financial planner at Raymond James in Manchester, Connecticut.

    You can reduce your home sale profit by adding often-forgotten costs and fees to your basis, which minimizes your capital gains tax liability.

    For example, you can start by tacking on fees and closing costs from the purchase and sale of the home, according to the IRS. These may include:

    • Title fees
    • Charges for utility installation
    • Legal and recording fees
    • Surveys
    • Transfer taxes
    • Title insurance
    • Balances owed by the seller

    These could be small amounts individually but have a significant effect on the basis when tallied.

    The average closing cost nationwide is $4,243, according to a report from Assurance, but fees vary widely. In the priciest state, New York, the average is $8,039, while California is a close second at $8,028.

    “You also get credit for the expenses for the sale of the property,” added Scanlon, who is also a certified public accountant. That includes your real estate commissions and closing costs.

    However, there are some fees and closing costs you cannot add to your basis, such as home insurance premiums or rent or utilities paid before your closing date, according to the IRS.

    Similarly, loan charges such as points, mortgage insurance premiums, the cost to pull your credit report or appraisals required by your lender will not count.

    The ‘best way’ to reduce capital gains taxes

    You can further increase your home’s basis by tacking on the cost of eligible upgrades, experts say.

    “The best way to minimize the tax owed from selling a house is to maintain an accurate record of home improvements,” said CFP and enrolled agent Paul Fenner, founder and president of Tamma Capital in Commerce Township, Michigan.

    An improvement must “add to the value of your home, prolong its useful life or adopt it to new uses,” according to the IRS.

    For example, you can increase your basis with additions, outdoor or exterior upgrades, adding new systems, plumbing or built-in appliances.

    However, you cannot tack on repairs or maintenance needed to “keep your home in good condition,” such as fixing leaks, holes or cracks or replacing broken hardware, according to the IRS.

    Of course, you will need documentation for any improvements used to increase your home’s basis in case of a future IRS audit.

    If you do not have receipts, “at the very least, take pictures,” and gather any permits pulled for home projects, Scanlon from Raymond James said.

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  • Chubb ended Trump fraud bond talks after backing E. Jean Carroll appeal bond, court filing says

    Chubb ended Trump fraud bond talks after backing E. Jean Carroll appeal bond, court filing says

    Donald Trump and his co-defendants were in talks with insurance giant Chubb for a $464 million appeal bond in the former president’s civil fraud case, but the company backed out — days after it raised eyebrows for giving Trump a bond in a separate case, according to a Trump lawyer.

    Chubb was one of more than 30 companies that refused to craft a bond that would put the massive business fraud judgment on pause, attorneys for Trump said in a New York appeals court filing Monday.

    The attorneys in that filing asked the appeals court to “put the brakes” on the judgment before New York Attorney General Letitia James can start to collect on it — a process that could begin as soon as next week. James has said she will seize Trump’s assets if he cannot pay the judgment.

    A panel of judges on that court has yet to rule on Trump’s request to pause the judgment without him having to post a fully secured bond.

    Alan Garten, a lawyer for the Trump Organization, said in that filing that Chubb was the only company willing to consider underwriting an appeal bond secured by a blend of liquid assets and real property.

    The other companies — which included Warren Buffett’s Berkshire Hathaway, Liberty Mutual, Allianz, and Travelers — wanted only cash or other liquid assets.

    Appeal bonds aim to prevent the loser of a court judgment from using the appeals process to delay or avoid paying their penalties. The bonds also ensure that, if the appeal is unsuccessful, the plaintiff can quickly receive their award.

    Chubb was “actively negotiating” with Trump and his co-defendants, Garten said. But “within the past week,” he said, Chubb reversed course and “notified Defendants that it could not accept real property as collateral.”

    “Though disappointing, this decision was not surprising given that Chubb was the only surety willing to even consider accepting real estate as collateral,” Garten said.

    Garten’s statement came more than a week after it was revealed that a Chubb subsidiary gave Trump a $91.6 million appeal bond in a separate civil case where he was found liable for defaming writer E. Jean Carroll after she accused him of rape.

    Chubb faced swift scrutiny for underwriting that bond. News outlets noted that Chubb’s CEO, Evan Greenberg, previously had been appointed by Trump to a trade policy advisory committee and to a business group aimed at combating the economic toll of Covid-19.

    On Wednesday, Greenberg sent a letter to investors, customers and brokers who had expressed concerns about that bond.

    “As the surety, we don’t take sides, it would be wrong for us to do so and we are in no way supporting the defendant,” Greenberg wrote. “When Chubb issues an appeal bond, it isn’t making judgments about the claims, even when the claims involve alleged reprehensible conduct.”

    He added that Trump’s bond in the defamation case was “fully collateralized.”

    Records show that Trump used a Schwab brokerage account as collateral for the Carroll-related bond.

    CNBC asked Chubb on Wednesday if the company was talking to Trump’s team about obtaining a bond in the business fraud case.

    In response, Chubb said, “As a matter of policy, we do not confirm or deny whether we are engaged in business discussions with businesses or individuals.”

    A Chubb spokesman did not respond to CNBC’s request for comment on Monday’s court filing.

    The lawyers argued in that filing that Trump will face major harm if he is forced to quickly sell parts of his real estate portfolio to get enough cash to obtain a bond.

    They said it would be “impossible” for them to post a complete appeal bond, despite their “diligent efforts.”

    That’s largely because the few surety companies willing to write a bond this large will not accept “hard” assets, like real estate, as collateral, they said.

    Since the person appealing often loses again, surety companies consider the bonds “hazardous” and usually demand that they are fully backed by liquid assets, said JD Weisbrot, president and chief underwriting officer at JW Surety Bonds.

    Unlike banks, which are better equipped to attach liens and sell properties, insurance companies are “not in the business of holding real estate,” Weisbrot said in an interview with CNBC.

    Still, Weisbrot agreed with Trump’s lawyers that the size of the bond is “unprecedented.”

    “I have never heard of a bond being required of this size of a private organization,” he said.

    With a deadline fast approaching for James to collect on the fraud judgment, the Republican presidential nominee has taken to social media to vent his rage against the case.

    The trial judge “actually wants me to put up Hundreds of Millions of Dollars for the Right to Appeal his ridiculous decision,” Trump posted Tuesday morning on his social media site Truth Social.

    “I shouldn’t have to put up any money, being forced by the Corrupt Judge and AG, until the end of the appeal,” he claimed in a later post.

    In fact, New York court rules require Trump to post an appeal bond in order to keep James from moving to collect on the fraud judgment.

    “Nobody has ever heard of anything like this before. I would be forced to mortgage or sell Great Assets, perhaps at Fire Sale prices, and if and when I win the Appeal, they would be gone,” Trump wrote on the site.

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  • Trump can’t secure $454 million appeal bond in New York fraud case, his lawyers say

    Trump can’t secure $454 million appeal bond in New York fraud case, his lawyers say

    Former U.S. President Donald Trump holds up a news story about New York Attorney General Letitia James as he speaks to the media at one of his properties at 40 Wall Street following closing arguments at his civil fraud trial on January 11, 2024 in New York City.

    Spencer Platt | Getty Images

    Donald Trump does not have enough cash to obtain an appeal bond that would prevent New York’s attorney general from seizing his real estate assets to satisfy a $454 million civil fraud judgment, his lawyers indicated in a court filing Monday.

    Trump’s lawyers in the filing said it has proved “impossible” for the former president to get a bond that would secure the full judgment he faces while he appeals the verdict ordering him to pay it.

    The filing asks a panel of five Manhattan appeals court judges to let Trump avoid having to post a bond while he challenges a judge’s verdict that he, the Trump Organization and other defendants committed business fraud.

    If the panel does not approve that request, Attorney General Letitia James could begin a process to seize Trump’s properties on March 25.

    James, who had successfully sued Trump in the case, previously said she would take that step if he did not post an appeal bond or pay off the judgment.

    The filing in Manhattan Supreme Court’s appellate division says Trump’s team contacted about 30 surety companies but did not find one willing to underwrite the bond.

    Trump’s lawyer wrote that obtaining a bond of that size would require “cash reserves approaching $1 billion,” which neither the former president nor the Trump Organization company has.

    Under New York court rules, Trump must post an appeal bond to avoid James moving to collect on the fraud judgment.

    More news on Donald Trump

    Trump campaign spokesman Steven Cheung in a statement said, “A bond of this size would be an abuse of the law, contradict bedrock principals of our Republic, and fundamentally undermine the rule of law in New York.”

    Manhattan Supreme Court Judge Arthur Engoron in February ordered Trump and his co-defendants to pay a total of $464 million in damages and interest for violating a New York anti-fraud statute.

    Engoron ruled that Trump, his two adult sons, the Trump Organization, and the company’s top executives had fraudulently inflated the value of real estate assets for years to boost his net worth and get better loan terms and other financial benefits.

    Trump was ordered to pay the lion’s share of the judgment: $454 million. Post-judgment interest on Trump’s share of the damages continues to accrue at a rate of nearly $112,000 a day.

    Trump, who has secured the Republican presidential nomination, in a deposition last year claimed to have “substantially in excess of $400 million in cash.”

    Despite that, Monday’s nearly 5,000-page court filing by his lawyers detailed his inability to get a bond to secure the full judgment.

    The filing includes an affirmation from Gary Giulietti, president of the Northeast division of the Lockton Companies, which he describes as the largest privately held insurance brokerage firm in the world.

    Giulietti, who was hired by Trump to help him get a bond, wrote, “Despite scouring the market, we have been unsuccessful in our effort … for the simple reason that obtaining an appeal bond for $464 million is a practical impossibility under the circumstances presented.”

    Only a handful of bond surety companies are approved by the Treasury Department to underwrite a bond that large, and many of those firms will only issue a single bond to a maximum of $100 million, Giulietti wrote.

    He also said that none of those companies will accept non-liquid assets — such as real estate — as collateral.

    “Simply put, a bond of this size is rarely, if ever, seen,” Giulietti wrote. “In the unusual circumstance that a bond of this size is issued, it is provided to the largest public companies in the world, not to individuals or privately held businesses.”

    The Trump Organization is privately held.

    Giulietti wrote that it would be unattainable for a private company to obtain a bond to secure the $464 million total judgment unless it had around $1 billion in cash or cash equivalents to offer as collateral, while still being able to satisfy its other business obligations.

    “While it is my understanding that the Trump Organization is in a strong liquidity position, it does not have $1 billion in cash or cash equivalents,” he wrote.

    Trump’s attorneys also noted in the filing that bond issuers often will demand collateral totaling 120% of the judgment, which equates to over $557 million.

    Those issuers are also likely to demand a two-year advance on a 2% annual bond premium, which would require the defendants to pay more than $18 million upfront, the lawyers wrote.

    The defendants had previously offered to post a $100 million bond to prevent James from collecting on the judgment while Trump appealed Engoron’s verdict.

    An appellate division judge rejected that proposal but allowed the defendants to continue doing business in New York and lifted Engoron’s three-year ban on Trump seeking loans in New York. That order is temporarily in effect before a full appeals court panel hears the motion for a stay.

    Trump earlier this month obtained a $91.6 million bond from insurance company Chubb to secure a civil defamation judgment against him in favor of writer E. Jean Carroll as he appeals that verdict. According to Monday’s filing, Chubb was one of the companies that Trump contacted in trying to obtain the bond for the business fraud case.

    Carroll had successfully sued Trump in federal court for defaming her after she accused him in 2019 of raping her in the mid-1990s in a Manhattan department store.

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  • New York AG questions Trump cash reserves as $464 million judgment looms

    New York AG questions Trump cash reserves as $464 million judgment looms

    Former U.S. President Donald Trump speaks as he arrives at a Manhattan courthouse, for the trial of himself, his adult sons, the Trump Organization and others in a civil fraud case brought by state Attorney General Letitia James, in New York City, U.S., October 2, 2023. 

    Brendan Mcdermid | Reuters

    Former President Donald Trump has not shown that he has enough cash to cover the full amount of a $464 million civil fraud judgment if he loses his appeal, New York’s chief law officer warned in a court filing Monday evening.

    New York Attorney General Letitia James raised that concern as she argued that Trump and his co-defendants should be required to post cash or bonds covering the entire fraud judgment, if they want to pause it from coming due while they challenge the ruling.

    “Defendants have never demonstrated that Mr. Trump’s liquid assets—which may fluctuate over time—will be enough to satisfy the full amount of this judgment following appeal,” James told a New York appeals court.

    Trump’s real estate holdings may also decrease in value as the appeal drags on, while post-judgment interest continues to rack up, she wrote.

    His finances could be further strained by his other civil and criminal legal battles, James added, including a January jury verdict ordering him to pay $83.3 million in damages for defaming writer E. Jean Carroll.

    Trump “has substantial liabilities that may reduce his liquid assets further, including other outstanding money judgments against him, and he faces multiple criminal indictments,” she wrote, pointing to that verdict.

    Without a full bond, the civil fraud defendants — Trump, his two adult sons, his company and its top executives — might also try to “evade” or exacerbate enforcement of the judgment if they lose the appeal, James warned.

    She urged the appeals court to reject Trump’s bid to stay the judgment with a $100 million bond, less than a quarter of the total amount awarded by Manhattan Supreme Court Judge Arthur Engoron.

    Attorneys for Trump did not immediately respond to CNBC’s request for comment on James’ filing.

    The defense lawyers had argued that the smaller bond amount was enough to secure the judgment, when coupled with the continuing oversight of the Trump Organization’s assets by a court-appointed financial monitor.

    New York Attorney General Letitia James sits in the courtroom during the civil fraud trial of former President Donald Trump and his children at New York State Supreme Court on November 03, 2023 in New York City.

    David Sanders | Getty Images

    They claimed that it would be “impossible” for them to secure a full appeal bond, which could be set at 120% of the judgment — more than $550 million — since that judgment also barred Trump from applying for loans in New York.

    James challenged that claim, writing that the defendants “fail to provide information about what steps (if any) they have taken to secure an undertaking prior to filing their motion.”

    They have not yet shown that Trump — a professed multi-billionaire who said in a deposition last year that he holds more than $400 million in cash — has tried and failed to obtain a bond, she noted. The ban on borrowing is also no obstacle, because appeal bonds are not loans, she wrote.

    Appeal bonds are intended to ensure that the person awarded damages at trial will be able to collect that money if the verdict is upheld on appeal. The person posting the bond will get their deposit back if they win their appeal.

    Read more CNBC politics coverage

    New York appeals court Judge Anil Singh on Feb. 28 rejected the $100 million bond proposal, but allowed the defendants to continue doing business in New York and lifted the ban on seeking loans.

    That temporary ruling is in effect before a full panel of appeals court judges is set to consider the matter next week.

    Meanwhile, Trump on Friday posted a $91.6 million bond as he appeals a federal civil jury verdict finding him liable for defaming Carroll after she came forward to accuse him of raping her in the mid-1990s.

    That was the second jury to order Trump to pay Carroll damages for defamation. The presumptive Republican presidential nominee has continued to attack Carroll, prompting her lawyers to suggest that they might file another defamation lawsuit.

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  • Biden proposes $10,000 tax breaks for first-time homebuyers, ‘starter home’ sellers

    Biden proposes $10,000 tax breaks for first-time homebuyers, ‘starter home’ sellers

    Cavan Images | Cavan | Getty Images

    President Joe Biden has floated plans to address the country’s affordable housing issues, including new tax breaks for first-time homebuyers and “starter home” sellers. However, experts have mixed opinions on the proposals.

    “I know the cost of housing is so important to you,” Biden said during his State of the Union speech Thursday night.

    “If inflation keeps coming down, mortgage rates will come down as well. But I’m not waiting,” he said.

    More from Smart Tax Planning:

    Here’s a look at more tax-planning news.

    How the homebuyer, ‘starter home’ sale credit works

    Biden has proposed a “mortgage relief credit” of $5,000 per year for two years for middle-class, first-time homebuyers, which would be equivalent to lowering the mortgage interest rate for a median-price home by 1.5 percentage points for two years, according to an outline released by the White House on Thursday.

    The administration is also calling for a one-year credit of up to $10,000 for middle-class families who sell their “starter homes” to another owner-occupant. They define starter homes as properties below the median price for the seller’s county.

    U.S. President Joe Biden delivers the State of the Union address in the House Chamber of the U.S. Capitol in Washington, D.C., on March 7, 2024.

    Pool | Getty Images News | Getty Images

    “Many homeowners have lower rates on their mortgages than current rates,” the White House said. “This ‘lock-in’ effect makes homeowners more reluctant to sell and give up that low rate, even in circumstances where their current homes no longer fit their household needs.”

    However, it’s difficult to predict whether Biden’s proposal will progress during a presidential election year, especially with a split Congress, experts say.

    Interest rates still near ‘multidecade highs’

    With soaring home prices and mortgage interest rates, 2023 was the least affordable year for homebuyers in more than a decade, according to a report from Redfin.

    In 2023, those making the median U.S. income of $78,642 would have spent 41.4% of earnings by purchasing a median-price home at $408,806, up from 38.7% in 2022, the report found.

    While rates have fallen from 2023 peaks, the average interest rate for 30-year fixed-rate mortgages was still hovering around 7%, as of March 7.

    “We’re close to multidecade highs for mortgage rates,” said Keith Gumbinger, vice president of mortgage website HSH.

    “Unless [Biden’s proposed credit] counts as qualifiable income, it’s not going to actually make it easier for homebuyers to qualify for mortgages,” he said.

    There’s a ‘housing supply crisis’

    Of course, higher mortgage interest rates are only one piece of the country’s affordable housing puzzle.

    “The housing supply crisis has been building, really, since the Great Recession,” said Janneke Ratcliffe, vice president for housing finance policy and leader of the Housing Finance Policy Center at the Urban Institute.

    The housing supply crisis has been building, really, since the Great Recession.

    Janneke Ratcliffe

    Vice president for housing finance policy at the Urban Institute

    Since the economic crisis, there has been a “perfect storm” of issues for the country’s housing supply, including declines in new home construction, she said.

    “What we don’t need today in the market is more demand,” said Gumbinger. “We have plenty of demand, but we don’t have adequate supply.”

    Still, Ratcliffe said she was pleased to see housing affordability highlighted during the State of the Union speech. “I think this is a great starting point,” she said.

    Don’t miss these stories from CNBC PRO:

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  • ‘Clean’ property, private lenders could be Trump’s best option to get $540 million for legal judgments

    ‘Clean’ property, private lenders could be Trump’s best option to get $540 million for legal judgments

    Republican presidential candidate, former U.S. President Donald Trump speaks during a Fox News town hall at the Greenville Convention Center on February 20, 2024 in Greenville, South Carolina. 

    Justin Sullivan | Getty Images

    Donald Trump is racing to stave off a pair of civil penalties totaling nearly $540 million — without having to first put up the full amounts in cash or bonds.

    The former president’s lawyers claim that he would face “irreparable” harm if required to fully secure his judgments in order to keep them from coming due, and might even have to quickly sell off properties that can’t be re-bought.

    They also say Trump can’t simply post a cash deposit — at least not in his New York civil business fraud case, where he is facing $454 million in fines and interest alone.

    “No one, including Jeff Bezos, Elon Musk and Donald Trump, has five hundred million laying around,” Trump’s attorney Chris Kise told an appeals court judge last week.

    But legal experts say there’s another option that Trump’s lawyers haven’t mentioned in the court filings: Trump could offer up some of his properties as collateral to borrow what he needs — potentially from private equity sources.

    There are “lots of private lenders out there in the debt markets and private equity markets that could lend” to Trump, said Columbia University law professor Eric Talley.

    “In all cases, the loans would probably have to be secured with Trump properties, but if there is enough equity in some of them, he should be able to obtain secured credit, even on a compressed timeline,” Talley said.

    In this courtroom sketch, former U.S. President Donald Trump looks on as his attorney Alina Habba delivers closing arguments during E. Jean Carroll’s second civil trial in which Carroll accused Trump of raping her decades ago, at Manhattan Federal Court in New York City on Jan. 26, 2024.

    Jane Rosenberg | Reuters

    The professor underscored the irony of Trump using his real estate to fight a lawsuit in which he was found liable for fraudulently inflating his property values for financial gain.

    Any loans “would themselves involve making declarations of the value of the property — and that of course is what got him into this mess to begin with,” said Talley.

    But accurately appraising the value of Trump’s assets is not a serious obstacle. As Trump’s lawyers noted during the fraud trial, the institutions that have lent him money already have conducted their own analyses of Trump’s finances, and did not rely solely on the claims at issue in his financial statements.

    A more important factor could be whether Trump’s real estate assets are already mortgaged, said law professor John Coffee.

    “He would have to come up with clean real estate property that is not already securing something that some other bank has a lien on,” Coffee said.

    “Does he have that property? I can’t tell you.”

    What Trump owns

    As of late January, the Trump Organization comprised 415 entities, according to a retired federal judge tasked with monitoring the company’s finances.

    Of those, Jones identified 70 operating entities that generate revenue. That includes long term leases of buildings like 40 Wall Street, commercial office space on 13 floors of the 58 story Trump Tower, and the Trump National Doral Miami resort.

    View leading into Trump National Doral in Miami, Florida on April 3, 2018.

    Michele Eve Sandberg | AFP | Getty Images

    In New York City, the value of Trump’s real estate holdings totals $690 million, according to a September 2023 estimate by Forbes. And some of the most prominent buildings that bear Trump’s name in the city are largely owned by other entities.

    New York Attorney General Letitia James, who brought the fraud case, said she would seize Trump’s real estate assets if he cannot pay his civil penalty.

    “There’s absolutely no reason for the New York attorney general to be kind and gentle to him if he doesn’t post the bond,” Coffee said.

    Trump said in a deposition last year that he had “substantially in excess of $400 million in cash.” But his lawyers claimed last week that, if Trump is forced to secure the full $454 million penalty, “properties would likely need to be sold to raise capital under exigent circumstances.”

    They instead offered to post a $100 million bond, but New York appeals court Judge Anil Singh rejected the proposal.

    Unless a full appeals court reverses Singh’s decision, Trump has until March 25 to post an “undertaking” — cash or bonds — covering the entire penalty in order to stop it from taking effect during his appeal.

    Trump has also asked a federal judge to delay another fast-approaching deadline to pay an $83.3 million penalty in E. Jean Carroll’s civil defamation case.

    Carroll’s attorneys argued that Trump’s request “boils down to nothing more than ‘trust me.’”

    Trump’s next move

    If Trump does attempt to sell assets to meet his undertaking, he won’t have much time to get it done.

    He would have to hire a broker to market his properties, and any deal would have to close in order to free up the cash to use toward a bond, said Neil Pedersen, owner of New York-based bond agency Pedersen & Sons.

    “There could be opportunistic buyers approaching him as well,” Pedersen noted.

    So far, Trump has given no indication that he is moving in that direction.

    “There are no sales planned or contemplated,” Kise told CNBC in an email before Singh’s ruling. “So no appraisers hired, no steps taken, etc.”

    Trump Tower on 5th Avenue is pictured in the Manhattan borough of New York City, New York, U.S., April 18, 2019.

    Caitlin Ochs | Reuters

    After Singh ordered Trump to pay the full penalty, Kise and Trump’s other attorneys did not reply to questions about whether they were now preparing to sell off properties.

    Coffee said that Trump “can very likely” get a loan to help him meet his undertaking. That’s in part because Singh temporarily halted another penalty that would bar Trump from applying for loans from New York registered lenders.

    Moreover, said Coffee, Trump is well known within New York financial circles, so he “not going into a market with strangers.”

    “The real problem is, can he gives the banks enough collateral that they’re satisfied?”

    Talley agreed. “There is a lot of ‘dry powder’ out there, not just with banks but also in non-banks,” he said.

    Read more CNBC politics coverage

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  • Your home sale may leave you in a tax shock. Here’s how to reduce your capital gains tax bill

    Your home sale may leave you in a tax shock. Here’s how to reduce your capital gains tax bill

    Witthaya Prasongsin | Moment | Getty Images

    Despite a slump in U.S. home sales, many homeowners made a profit selling property in 2023. Those gains could trigger a tax bill this season, depending on the size of the windfall, experts say.

    In 2023, home sellers made a $121,000 profit on the typical median-priced single-family home, according to ATTOM, a nationwide property database. That’s down from $122,600 in 2022.  

    But sometimes profits exceed the IRS limits for tax-free gains and “it’s a shock” for sellers, said certified public accountant Miklos Ringbauer, founder of MiklosCPA in Los Angeles. 

    More from Smart Tax Planning:

    Here’s a look at more tax-planning news.

    Still, “the tax laws were written to encourage homeownership,” and many sellers qualify for a tax break, Ringbauer said.  

    Single homeowners can shield up to $250,000 of home sales profit from capital gains taxes and married couples filing jointly can exclude up to $500,000, provided they meet IRS eligibility.

    If you’ve owned the property for more than one year, profits above $250,000 and $500,000 are subject to long-term capital gains taxes, levied at 0%, 15% or 20%, depending on your 2023 taxable income. (You calculate “taxable income” by subtracting the greater of the standard or itemized deductions from your adjusted gross income.)

    Who qualifies for the capital gains exemptions

    There are strict rules to qualify for the $250,000 or $500,000 capital gains exclusions, Ringbauer warned. 

    The “ownership test” says you must own the home for at least two of the past five years before your home sale — but that’s only required for one spouse if you’re married and filing jointly.

    There’s also a “residence test,” which requires the home to be your primary residence for any 24 months of the five years before sale, with some exceptions. (The 24 months of residence can fall anywhere within the five year period, and it doesn’t have to be a single block of time.)

    Both spouses must meet the residence requirement for the full exclusion.

    A partial exclusion may also be possible if you sold your home because of a workplace location change, for health reasons or for “unforeseeable events,” according to the IRS.

    Generally, you can’t get the tax break if you received the exclusion for the sale of another home within two years of your closing date.

    How to reduce your home sale profits

    If your capital gain exceeds the IRS exclusions, it’s possible to reduce your profits by increasing your home’s original purchase price or “basis,” according to certified financial planner Assunta McLane, managing director of Summit Place Financial Advisors in Summit, New Jersey.

    You can increase your home’s basis by adding certain improvements you’ve made to the property to “prolong its useful life,” according to the IRS.

    For example, you could tack on the cost of home additions, updated systems, landscaping or new appliances. But the cost of repairs and maintenance generally don’t count.

    Of course, you’ll need detailed records to show proof of capital improvements, because “estimates don’t work when it comes to an audit,” Ringbauer said.

    After a home sale, the IRS receives a copy of Form 1099-S, which shows your closing date and gross proceeds. But you need paperwork to prove any changes to your home’s basis.

    Failing to keep home improvement records throughout ownership is a “common mistake,” McLane said.

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  • Trump ordered to pay $454 million in fines and interest in NY business fraud case

    Trump ordered to pay $454 million in fines and interest in NY business fraud case

    Former U.S. President Donald Trump walks outside the courtroom on the day of a court hearing on charges of falsifying business records to cover up a hush money payment to a porn star before the 2016 election, in New York State Supreme Court in the Manhattan borough of New York City, U.S., February 15, 2024.

    Andrew Kelly | Reuters

    A New York judge on Friday ordered Donald Trump to pay about $454 million in total penalties as part of his ruling in the former president’s civil business fraud trial.

    The staggering figure includes about $355 million in disgorgement, a term for returning ill-gotten gains, plus more than $98 million in prejudgment interest that will accrue every day until it is paid, according to a spokesperson for the attorney general’s office.

    Manhattan Supreme Court Judge Arthur Engoron also barred Trump from running a business in New York for three years.

    The former president also faces a three-year ban on applying for loans from financial institutions registered with the state.

    “New York means business in combating business fraud,” Engoron wrote in the 92-page ruling.

    The judge delivered the final decision from the trial, which was held without a jury.

    “We’ve employed tens of thousands of people in New York, and we pay taxes like few other people have ever paid in New York,” Trump said in remarks at his Mar-a-Lago resort after the ruling. “They don’t care about that. It’s a state that’s going bust because everybody’s leaving.”

    His attorney Chris Kise said in a statement earlier Friday that Trump “will of course appeal.”

    The former president “remains confident the Appellate Division will ultimately correct the innumerable and catastrophic errors made by a trial court untethered to the law or to reality,” Kise said.

    The appeals process could take several years to resolve.

    The explosive trial stemmed from New York Attorney General Letitia James’ lawsuit accusing Trump, his two adult sons, his company and top executives of fraudulently inflating Trump’s assets to boost his stated net worth and obtain various financial perks.

    New York Attorney General Letitia James speaks during a press conference following a ruling against former U.S. President Donald Trump ordering him to pay $354.9 million and barring him from doing business in New York State for three years, in the Manhattan borough of New York City, U.S., February 16, 2024. 

    David Dee Delgado | Reuters

    “There simply cannot be different rules for different people,” James said in a statement celebrating the ruling Friday afternoon.

    “Everyday Americans cannot lie to a bank to get a mortgage to buy a home, and if they did, our government would throw the book at them,” James said.

    James had asked Engoron to ban Trump for life from New York’s real estate industry, and for $370 million in disgorgement.

    Instead, Engoron fined Trump $354,868,768 in disgorgement. He also ordered Trump to pay a total of $98.6 million in prejudgment interest, which will accrue at an annual rate of 9%.

    The grand total, including disgorgement and interest, for all defendants in the case: just under $464 million.

    Of that sum, Eric Trump and Donald Trump Jr., who took over the Trump Organization after their father became president in 2017, have been ordered to pay more than $4 million each.

    Eric and Donald Jr. also face two-year bans from serving as officers or directors of any New York corporation or legal entity.

    Donald Trump Jr. and his brother Eric Trump arrive at New York Supreme Court for former President Donald Trump’s civil fraud trial on November 02, 2023 in New York City. 

    David Dee Delgado | Getty Images

    Co-defendants Allen Weisselberg, the Trump Organization’s former chief financial officer, and the company’s comptroller, Jeffrey McConney, are permanently banned from controlling the finances of a New York business, Engoron ruled.

    But the judge vacated his own prior directive to cancel the defendants’ business certificates, meaning he is no longer pursuing what some legal experts described as a “corporate death penalty” for the Trump Organization.

    The decision is only the latest court-ordered punishment imposed on Trump, who is running for president while dealing with numerous criminal and civil lawsuits. Last month, a jury in a separate civil case in New York federal court ordered Trump to pay $83.3 million for defaming writer E. Jean Carroll when he responded to her claim that he had raped her in the mid-1990s.

    Trump is the clear front-runner for the Republican presidential nomination, setting up a likely rematch with President Joe Biden, who beat him in 2020.

    Lawyers for Trump and the other defendants quickly blasted Friday’s ruling, accusing the judge and the prosecutor of political bias and warning that the outcome will drive business away from New York.

    “Countless hours of testimony proved that there was no wrongdoing, no crime, and no victim,” Trump attorney Alina Habba said in a statement.

    But Engoron wrote in his ruling that the statute used in the case does not require that a victim lose money.

    “It is undisputed that defendants have made all required payments on time; the next group of lenders to receive bogus statements might not be so lucky,” he wrote.

    “Defendants submitted blatantly false financial data” as they sought to borrow more money at better loan rates, “resulting in fraudulent financial statements,” Engoron wrote.

    He also pointed to the Trump team’s legal defenses, saying they proved the company and its officers would keep operating the same way they always had unless he forced them to change.

    “When confronted at trial with the statements, defendants’ fact and expert witnesses simply denied reality,” the judge wrote.

    Their “refusal to admit error” led the judge to conclude “that they will engage in it going forward unless judicially restrained.”

    “Indeed, Donald Trump testified that, even today, he does not believe the Trump Organization needed to make any changes based on the facts that came out during this trial,” Engoron wrote.

    “Their complete lack of contrition and remorse borders on pathological.”

    Read more on this Trump fraud trial

    Trump has frequently raged against his many legal battles as “witch hunts,” claiming they are part of a Biden administration-backed conspiracy to tank his political ambitions.

    He vociferously denied all wrongdoing in the New York fraud case, blaring his claims of total innocence on social media, at the courthouse and even on the witness stand.

    Trump claimed to be worth far more than what was reported on his financial statements, while asserting that a disclaimer on the records protected him from liability for any inaccuracies.

    But Trump and the other defendants were found liable for fraud by Engoron before the trial even began.

    In a bombshell pretrial ruling, Engoron granted summary judgment on James’ main cause of action — that the defendants committed fraud in violation of New York law.

    Justice Arthur Engoron speaks during the trial of former U.S. President Donald Trump, his adult sons, the Trump Organization and others in a civil fraud case brought by state Attorney General Letitia James, at a Manhattan courthouse, in New York City, U.S., October 3, 2023. 

    Shannon Stapleton | Reuters

    Engoron found that Trump’s statements of financial condition between 2014 and 2021 overvalued his assets between $812 million and $2.2 billion.

    The ruling razed Trump’s defense claims, accusing him and his co-defendants of trying to convince the court to “not believe its own eyes.”

    The trial was conducted to determine the amount to be paid in penalties and resolve other claims of wrongdoing from James’ lawsuit.

    The trial also doubled as a soapbox for Trump to air his grievances about his perceived political foes, including those sitting feet away from him in court.

    On the witness stand, Trump railed against Engoron and James while defending the values that were reported on his statements of financial condition. Trump also tore into another key witness, his former fixer and personal lawyer Michael Cohen, who testified that Trump had directed him to falsely manipulate his net worth.

    Trump’s venting brought consequences. On the second day of the trial, Engoron imposed a narrow gag order after Trump repeatedly targeted the judge’s principal law clerk, Allison Greenfield, who sat in court.

    Trump violated the gag order twice within four weeks, catching fines totaling $15,000.

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  • Former Swiss finance executive pleads guilty to tax evasion scheme that hid $60 million

    Former Swiss finance executive pleads guilty to tax evasion scheme that hid $60 million

    The Internal Revenue Service headquarters building in Washington, D.C.

    Chip Somodevilla | Getty Images News | Getty Images

    WASHINGTON — A former Swiss finance executive pled guilty in New York federal court on Thursday to conspiring to defraud the U.S. in a tax evasion scheme known as the “Singapore Solution” that hid $60 million in income and assets held by wealthy Americans, prosecutors said.

    Rolf Schnellmann, 61, former head of Zurich-based Allied Finance Trust AG, helped defraud the Internal Revenue Service by stashing money of U.S. taxpayer clients in undeclared accounts at a private Swiss bank, Privatbank IHAG Zurich AG, between 2008 and 2014, according to the Manhattan U.S. Attorney’s Office.

    In the “Singapore Solution,” Schnellmann and colleagues conspired to transfer more than $60 million from the undeclared accounts across several countries and Hong Kong, and back to the private bank in newly opened accounts under a Singapore-based asset management firm established by a co-conspirator.

    Schnellmann and the co-conspirators were paid large fees to assist the tax evasion scheme, prosecutors said.

    He was arrested in August in Italy, and extradited to the U.S.

    Schnellmann faces a maximum possible sentence of five years in prison when he is sentenced on July 19.

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  • Many mutual funds are converting to exchange-traded funds. Here's what investors need to know

    Many mutual funds are converting to exchange-traded funds. Here's what investors need to know

    A growing number of mutual funds are converting to exchange-traded funds, which is a positive trend for investors, experts say.

    Since early 2021, there have been more than 70 mutual fund to ETF conversions, including nearly three dozen in 2023, according to Morningstar Direct, and experts say more conversions are coming.

    “It’s steadily increasing year-over-year,” said Daniel Sotiroff, senior manager research analyst for Morningstar Research Services.

    More from ETF Strategist

    Here’s a look at other stories offering insight on ETFs for investors.

    A 2019 change from the Securities and Exchange Commission provided fund managers with more flexibility, which has helped pave the way for mutual fund to ETF conversions, according to Sotiroff.

    The conversion itself is tax-free to the investor and switches from actively managed mutual funds, which aim to outperform the market. The primary benefit of the new ETF is more tax efficiency.

    “That’s a big selling point,” Sotiroff said.

    Year-end mutual fund capital gains distributions can be a pain point for investors with actively managed mutual funds in brokerage accounts. Those payouts can trigger a sizable tax bill, even when the investor hasn’t sold shares.

    In 2023, many fund managers realized gains to meet investor redemptions, resulting in double-digit projected payouts for some funds.

    The most attractive feature of an ETF is that most don’t distribute capital gains at the end of the year.

    Barry Glassman

    Founder and president of Glassman Wealth Services

    Conversions are still ‘kind of rare’

    Despite the uptick in mutual fund to ETF conversions over the past couple of years, it’s still “kind of rare to see,” according to CFP Matt Knoll, senior financial planner at The Planning Center in Moline, Illinois.

    Sotiroff said conversions have been “relatively smaller” actively managed mutual funds worth around $100 million or less that are more likely to be converted to ETFs.

    “You’re not seeing a lot of big-name mutual funds turning into ETFs,” he said. The exceptions, of course, were Dimensional Funds and JPMorgan conversions.

    Future conversions are likely to be smaller, actively managed mutual funds outside of 401(k) accounts, Sotiroff said.

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  • Trump gag order in fraud case reinstated by New York appeals court

    Trump gag order in fraud case reinstated by New York appeals court

    Former U.S. President Donald Trump attends trial in a civil fraud case that state Attorney General Letitia James brought against him, his adult sons, the Trump Organization and others, in New York City, Oct. 3, 2023.

    Eduardo Munoz | Reuters

    A New York appeals court Thursday reinstated a gag order on Donald Trump in the former president’s $250 million civil business fraud trial.

    The order bars Trump from making public statements about the staff of Manhattan Supreme Court Judge Arthur Engoron, who is presiding over the ongoing trial.

    Engoron had imposed the gag order on Trump after Trump repeatedly targeted the judge’s principal law clerk, Allison Greenfield.

    Engoron later imposed a similar gag order on Trump’s attorneys, barring them from making any public statements about confidential communications between the judge and his staff. The gag orders on Trump’s attorneys were also reinstated Thursday.

    Engoron has said his chambers have been “inundated” with threats and harassment against him and his staff during the trial. An official who monitors threats for the New York Court System’s Department of Public Safety told the appeals court in a sworn statement that Trump’s comments about Greenfield have prompted “hundreds” of threatening messages, many of which were antisemitic.

    In its ruling Thursday, a four-judge appellate panel lifted a temporary suspension of the gag orders on Trump and his attorneys that was put in place while Trump appealed the speech restrictions.

    The gag orders are now likely to stay in place for the remainder of the trial, which is expected to last until mid-January.

    Engoron acknowledged the ruling in court and informed the parties in the case that he intends to “enforce the gag orders rigorously and vigorously.”

    Trump attorney Christopher Kise said the appeals court’s ruling marked a “tragic day for the rule of law” in a statement to NBC News.

    “Hard to imagine a more unfair process and hard to believe this is happening in America,” Kise said, claiming the ruling prevents Trump from publicly explaining why he believes his trial is unfair.

    The appellate ruling came three days after Trump’s attorneys urged the appeals court not to reimpose the gag orders, arguing that they unconstitutionally blocked Trump from accusing Engoron and Greenfield of political bias.

    Engoron has found Trump in violation of his gag order twice, imposing a total of $15,000 in fines on the former president since the fraud trial began in early October.

    The narrow order does not block Trump from attacking Engoron or New York Attorney General Letitia James, who brought the case accusing him and his co-defendants of falsely inflating Trump’s assets for financial gain.

    Trump has repeatedly attacked both of them, casting the judge as a Trump “hater” and decrying the case as a “witch hunt.”

    On Wednesday, Trump sent at least six separate Truth Social posts targeting Engoron’s wife, accusing her of criticizing Trump and commenting on the trial on X, formerly Twitter.

    Engoron’s wife told Newsweek earlier this month that she does not have an account on X and has not posted any anti-Trump messages. After the gag orders were reinstated, Office of Court Administration spokesman Al Baker said that the judge’s wife “has sent no social media posts regarding the former president.”

    “They are not hers,” Baker said in a statement, NBC reported.

    Trump sent at least three additional posts Thursday claiming that Engoron’s wife sent anti-Trump social media messages.

    Read more CNBC politics coverage

    Engoron has already found Trump, his two adult sons, the Trump Organization and its top executives liable for fraudulently misstating the values of real estate properties and other assets. The trial will determine penalties and resolve other claims of wrongdoing in James’ suit.

    In addition to seeking around $250 million in damages, James wants to permanently bar Trump Sr., Donald Trump Jr. and Eric Trump from running a New York business.

    Engoron on Thursday morning extended the scheduled end of the trial from mid-December. He set closing arguments for Jan. 11 after Trump’s lawyers asked for more time to prepare.

    The defense is expected to call Trump back to the stand as its final witness on Dec. 11. Engoron plans to issue a verdict in the case a few weeks after the trial ends.

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  • Trump mistrial request denied in $250 million New York fraud case

    Trump mistrial request denied in $250 million New York fraud case

    A New York judge on Friday denied a request by former President Donald Trump and his co-defendants for a mistrial in the $250 million civil business fraud case against them.

    Manhattan Supreme Court Judge Arthur Engoron said the arguments for a mistrial were “utterly without merit” as he declined to sign the defendants’ bid for a motion to throw out the case.

    The ruling came two days after attorneys for Trump Sr., Donald Trump Jr., Eric Trump, the Trump Organization and its top executives argued that the case had been undermined by political bias.

    The defense lawyers claimed that Engoron and his principal law clerk have “tainted these proceedings” and that “only the grant of a mistrial can salvage what is left of the rule of law.”

    But Engoron in Friday’s ruling disputed each allegation of bias, and made clear that he intends to preside over the case until its conclusion.

    “As expected, today the Court refused to take responsibility for its failure to preside over this case in an impartial and unbiased manner,” Trump’s attorney Alina Habba said in a statement. “We, however, remain undeterred and will continue to fight for our clients’ right to a fair trial.”

    The lawsuit, brought by New York Attorney General Letitia James, accuses the defendants of fraudulently inflating the values of Trump’s real estate properties and other assets for years in order to obtain tax benefits, better loan terms and other financial perks.

    In addition to seeking $250 million in damages, James wants to permanently bar Trump and his two adult sons from running a New York business.

    Engoron has already found the defendants liable for fraud and ordered the cancellation of their New York business certificates. The trial, which is being conducted without a jury, will determine penalties and resolve James’ other claims of wrongdoing by Trump and his co-defendants.

    An appeals court has temporarily paused the process of dissolving Trump’s business entities.

    In Friday’s ruling, Engoron went through all of the defendants’ arguments for a mistrial and explained why each was “without merit.”

    The defense lawyers had pointed to articles that Engoron had linked to in his alumni newsletter, claiming they created an appearance of impropriety because they were related to the fraud case.

    Engoron responded that he “neither wrote nor contributed to any of the articles on which defendants focus, and no reasonable reader could possibly think otherwise.”

    He also shrugged off claims that he and his clerk are “co-judging,” writing, “my rulings are mine, and mine alone.”

    The clerk has become such a target of criticism that Engoron has imposed gag orders barring both Trump and his lawyers from making comments about her. Trump has already violated the narrow gag order twice, receiving a total of $15,000 in fines.

    A New York appeals judge on Thursday temporarily suspended those gag orders, citing the “constitutional and statutory rights at issue.”

    In their bid for a mistrial, the defense lawyers had also that the clerk’s presence in the case damages its integrity because of contributions she made to Democratic groups, including some that are supporting the attorney general.

    They had also accused the clerk of making contributions over the $500 limit that applies to members of a New York judge’s staff.

    But Engoron said Trump’s lawyers were ignoring that the clerk is a candidate for judicial office, and therefore is not bound by the $500 limit when contributing to her own campaign or buying tickets to political functions.

    Engoron said it was “nonsensical” to assume that the clerk’s attendance at events sponsored by political organizations suggests that she, and by proxy the judge himself, must therefore agree with the views of those groups.

    “And in any event, they are a red herring, as my Principal Law Clerk does not make rulings or issue orders — I do,” Engoron wrote.

    He noted that the attorney general’s office has called for a full briefing schedule on the mistrial motion. But “in good conscience, I cannot sign a proposed order to show cause that is utterly without merit, and upon which subsequent briefing would therefore be futile.”

    The trial, which began last month, is expected to last until late December. Trump, a leading Republican presidential candidate, faces four pending criminal cases in addition to the fraud case and other civil matters.

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  • Trump requests mistrial in $250 million New York business fraud case

    Trump requests mistrial in $250 million New York business fraud case

    Former US President Donald Trump appeared in court on Tuesday for the third week of a civil fraud trial in New York, on October 17, 2023.

    Fatih Akta | Anadolu Agency | Getty Images

    Donald Trump and his co-defendants asked a judge Wednesday to grant a mistrial in the $250 million civil business fraud case that threatens the former president’s business empire.

    In a court filing, attorneys for Trump, his two adult sons Donald Trump Jr. and Eric Trump, the Trump Organization and its top executives argued that “the evidence of apparent and actual bias” in the case is “tangible and overwhelming.”

    The 30-page filing in Manhattan Supreme Court targeted the presiding judge, Arthur Engoron, as well as his principal law clerk, claiming their conduct has “tainted these proceedings” and that “only the grant of a mistrial can salvage what is left of the rule of law.”

    The focus on the clerk comes after Engoron barred defense attorneys from commenting on his staff, citing a wave of threats and harassment that have “inundated” his office since the trial began last month.

    Trump himself was already bound by that same gag order, which Engoron imposed after the former president repeatedly attacked the law clerk online and at the courthouse.

    The office of New York Attorney General Letitia James, who brought the sweeping fraud case, accused Trump of “trying to dismiss the truth and the facts” by throwing out the trial.

    “The numbers and evidence don’t lie,” a spokesperson for James’ office said in a statement. “Donald Trump is now being held accountable for the years of fraud he committed and the incredible ways he lied to enrich himself and his family. He can keep trying to distract from his fraud, but the truth always comes out.”

    James accuses Trump and the other defendants of fraudulently inflating his net worth by billions of dollars in order to obtain financial perks including tax benefits and better loan and insurance terms.

    She seeks about $250 million in damages and wants to permanently bar Trump and his sons, who took over the Trump Organization after their father became president in 2017, from running a New York business.

    Before the trial even began, Engoron had found the defendants liable for fraudulently misstating the values of Trump’s real estate properties and other assets. The judge in that pretrial ruling ordered the cancellation of the defendants’ business certificates, but an appeals court has temporarily paused that order from taking effect.

    Engoron will deliver additional verdicts in the trial, which is being held without a jury to determine penalties and resolve six other claims in James’ lawsuit.

    The defense lawyers in Wednesday’s court filing accused Engoron and his clerk of creating an “appearance of impropriety” that feeds a “public perception of bias in this case.”

    They pointed to articles shared by Engoron in his alumni newsletter, which they say are “disparaging” to the defendants and their counsel. Those articles, most of which are news stories from major publications including NPR and The New York Times, were shared before the trial began.

    The lawyers also decried the alleged “co-judging” by Engoron and his clerk. Their filing, which includes pictures of the two seated next to each other in the courtroom, argued that the clerk has “unprecedented and inappropriate latitude” over the case.

    They also accused the clerk of engaging in “partisan activities,” citing her contributions to Democratic groups that they say are supporting James, the attorney general.

    The clerk has “engaged in prohibited partisan political activity with respect to the parties before the Court, while their case is pending before the Court,” they argued.

    Trump’s lawyers had previously told the court that they would seek a mistrial, the latest in a series of efforts to either halt or scrap the fraud case. Trump lost a bid to stay the trial days after it began in early October, and an appeals court rejected a request from Ivanka Trump’s defense lawyer to pause the entire trial while she fought a subpoena for her testimony.

    Defense attorneys have also repeatedly asked Engoron to grant a directed verdict that would throw out James’ claims in the case. Engoron has rejected each of those requests.

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  • GOP Rep. Elise Stefanik files ethics complaint against Trump NY fraud trial judge

    GOP Rep. Elise Stefanik files ethics complaint against Trump NY fraud trial judge

    Chair of the House Republican Conference Rep. Elise Stefanik (R-NY) speaks during a news conference after a caucus meeting with House Republicans on Capitol Hill May 10, 2023 in Washington, DC.

    Drew Angerer | Getty Images

    House Republican Conference Chair Rep. Elise Stefanik on Friday filed an ethics complaint calling for the removal of a judge presiding over the $250 million business fraud trial of former President Donald Trump.

    The No. 3 House Republican and one of Trump’s most loyal allies in the chamber, Stefanik claimed in her complaint that Manhattan Supreme Court Judge Arthur Engoron had shown “clear judicial bias” against the former president and displayed “bizarre behavior” during his high-profile civil trial.

    Stefanik, whose congressional district covers northeast New York, urged the state’s Commission on Judicial Conduct to “take corrective action to restore a just process and protect our constitutional rights.”

    Stefanik also wrote that Engoron “must recuse from this case,” although the commission does not have the authority to remove specific judges.

    The complaint is a remarkable step by Trump’s political allies in Washington to join his aggressive efforts to undermine Engoron, whose rulings in the case could strike a major blow to the ex-president and his business empire.

    The letter from Stefanik, who is not a lawyer and has no relation to the case, could also be meant to support Trump’s argument if he appeals any of Engoron’s eventual rulings.

    It comes after a week of testimony in the trial by members of the Trump family that some legal experts say did little to help their case.

    The case will settle claims brought by New York Attorney General Letitia James, who accuses Trump, his two adult sons, his company and some of its top executives of fraudulently inflating the values of Trump’s assets to boost his net worth and rake in financial benefits.

    Engoron will deliver verdicts in the no-jury trial, because neither side requested one.

    Read more CNBC politics coverage

    Engoron has already found the defendants liable for fraud. The trial itself will determine how much the defendants will be ordered to pay in damages or other penalties. The judge will also evaluate six other claims in James’ lawsuit that have yet to be resolved.

    In addition to seeking around $250 million in damages, James wants to permanently bar Trump Sr., Donald Trump Jr. and Eric Trump from running a New York business.

    Stefanik’s letter Friday echoed many of Trump’s own criticisms of Engoron and James’ case as she urged the commission to sanction the judge.

    She railed against the judge for striking a pose at cameras in the courtroom on the first day of the trial, for granting James’ request for partial summary judgement in a pretrial ruling, and for imposing a gag order on Trump and his attorneys. She also repeated Trump’s claim that the value of his Palm Beach, Florida, resort home Mar-a-Lago is much higher than the estimates provided during the trial.

    Engoron had barred Trump from making public statements after Trump repeatedly targeted the judge’s principal law clerk on the second day of the trial. The judge later extended that gag order to Trump’s lawyers after their “repeated, inappropriate remarks” about the clerk.

    Trump has been found to have violated that narrow gag order twice since it was imposed, leading to $15,000 in fines. Stefanik called the gag order “un-American.”

    Her letter also targets the clerk, claiming that she has given more in political donations to Democratic candidates than she is allowed to as a court official.

    “Judge Engoron’s bizarre and biased behavior is making New York’s judicial system a laughingstock,” Stefanik wrote. “The Commission’s sanctions against Judge Engoron are necessary to bring back credibility to our great state’s legal system.”

    Asked for comment on Stefanik’s letter, Commission Administrator Robert Tembeckjian said in a statement to CNBC, “All matters before the Commission on Judicial Conduct are confidential according to law, unless and until a judge is found to have committed ethical misconduct, and a decision to that effect is issued.”

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  • Ivanka Trump testifies in $250 million civil fraud trial after ex-president’s angry appearance

    Ivanka Trump testifies in $250 million civil fraud trial after ex-president’s angry appearance

    Ivanka Trump arrives for the civil fraud trial of her father former President Donald Trump at New York State Supreme Court on November 08, 2023 in New York City.

    Michael M. Santiago | Getty Images

    Ivanka Trump, the eldest daughter of former President Donald Trump, testified Wednesday in the $250 million civil fraud trial that threatens her family’s business empire.

    Ivanka, who had tried in vain to avoid the witness stand, was asked about her involvement with loans for Trump Organization properties that feature in New York Attorney General Letitia James’ case. James accuses Trump Sr., Donald Trump Jr., Eric Trump and others of falsely inflating asset values to get tax benefits and other financial perks.

    Ivanka testified that she knew little about the financial statements at the heart of the AG’s case, and that she had no role in preparing them.

    “I had no involvement” in Donald Trump’s statements of financial condition and “don’t know about the valuations that were taken into account,” she said.

    In addition to seeking a remarkable quarter of a billion dollars in damages, James wants the court to permanently bar the ex-president and his sons from running a business in New York.

    “Ivanka Trump was cordial. She was disciplined. She was controlled. And she was very courteous, but her testimony raises some questions with regards to its credibility,” James said after leaving Manhattan Supreme Court later Wednesday.

    “The reality is that based on the evidence, the documentary evidence, she clearly was involved in negotiating and securing loans favorable loans for the benefit of the Trump Organization, for Mr. Trump, and her brothers, and for herself,” James said.

    “At the end of the day, this case is about fraudulent statements of financial condition that she benefited from.”

    New York State Attorney General Letitia James speaks to the press as she arrives for the Trump Organization civil fraud trial and testimony by Ivanka Trump, daughter of former US President Donald Trump, at the New York State Supreme Court in New York City on November 8, 2023.

    Timothy A. Clary | Afp | Getty Images

    Ivanka Trump was originally listed as a co-defendant, but she was dismissed from the case in June after a New York appeals court found that the claims against her fell outside a statute of limitations.

    Judge Arthur Engoron, who will deliver verdicts in the no-jury trial, has already found the defendants liable for fraudulently misstating the values of real estate properties and other assets on key financial forms. His pretrial ruling ordered the cancellation of their New York business certificates, though that order is on hold while the trial proceeds.

    The trial itself will determine how much the defendants will be ordered to pay in damages or other penalties. The judge will also evaluate six other claims in James’ lawsuit that have yet to be resolved.

    Ivanka Trump was an executive vice president for development and acquisitions at the Trump Organization until 2017, when she joined her father’s presidential administration as a senior advisor. She “negotiated and secured financing” for company properties and “directed all areas of the company’s real estate and hotel management platform,” according to James’ lawsuit.

    During her testimony, Ivanka was asked about loans for the Old Post Office building — the former site of Trump’s Washington, D.C., hotel — and the Trump Doral property, both of which she is credited with having negotiated.

    The former Trump International Hotel at the Old Post Office Building is seen on May 12, 2022 in Washington, DC. The Trump family completed the hotel’s sale Wednesday and the hotel will reopen as a Waldorf Astoria.

    Kevin Dietsch | Getty Images

    She also fielded questions about her penthouse apartment and her father’s introduction to the personal wealth management team at Deutsche Bank.

    She frequently testified that she could not recall details about the documents that were presented to her in court.

    Ivanka’s testimony follows that of her father on Monday, who angrily lashed out at James, Engoron and his other self-perceived “haters” from the witness stand.

    Trump also repeatedly argued that a disclaimer notice on his annual statements of financial condition provided him with total protection against legal liability if the figures were inaccurate.

    “That’s why we have a disclaimer clause in case there is a mistake,” Trump said. “There is a disclaimer clause, where you don’t have to get sued by the attorney general of New York.”

    But the judge, Engoron, has already rejected Trump’s interpretation of liability.

    Read more CNBC politics coverage

    The clause “does not say what defendants say it says, does not rise to the level of an enforceable disclaimer, and cannot be used to insulate fraud as to facts peculiarly within defendants’ knowledge,” Engoron wrote in his pretrial ruling on Sept. 26.

    Trump Jr. and Eric Trump, who took over the Trump Organization as executive vice presidents after their father became president in 2017, were called to the stand last week. Both testified that they relied largely on the company accountants to prepare the annual financial statements and approve valuations.

    Engoron on Oct. 27 ordered Ivanka Trump to comply with subpoenas for her testimony without any limitations.

    Former U.S. President Donald Trump’s son and co-defendant, Eric Trump, testifies during the Trump Organization civil fraud trial in New York State Supreme Court in the Manhattan borough of New York City, U.S., November 2, 2023 in this courtroom sketch.

    Jane Rosenberg | Reuters

    Ivanka Trump appealed, and asked a New York appeals court to temporarily pause Engoron’s order. Her attorney argued that Ivanka, who lives in Florida, is “beyond the jurisdiction” of the New York court and would suffer “irreparable harm” if forced to testify.

    The attorney also asserted that Ivanka Trump, who has three children, would face “undue hardship” if she has to appear “in the middle of a school week.”

    Some legal experts swiftly chimed in to deride that argument as a poor excuse to avoid a court summons — especially for Ivanka Trump and her husband, Jared Kushner, whose combined net worth has been estimated to exceed $1 billion and can likely afford adequate child care.

    Clarification: This story has been updated to clarify that Ivanka Trump and Jared Kushner’s combined net worth has been estimated to exceed $1 billion.

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