HARRY MACK- LOW
Real-estate titan Harry Macklowe insists he’s broke — so broke, in fact, that he says his personal net worth is negative $400 million.
On Wednesday his soon-tobe-ex wife, Linda, called his bluff. Her lawyer John Teitler said during the opening day of their Manhattan divorce trial that his debts are based on the fact that he hasn’t paid taxes since 1983.
“Harry never paid any taxes,” Linda Macklowe, 79, added from the witness stand.
Macklowe, 80, uses a loophole that’s popular with realestate developers — deferring capital-gains penalties by declaring a net operating loss on his taxes each year.
For example, he bought the General Motors Building in Midtown for $1.3 billion in 2003 and sold it for $2.9 billion in 2008. He’s been able to delay paying $300 million in taxes on the deal for nearly two decades but is now claiming that he considers the sum — and other deferments — a “real liability.”
When Justice Laura Drager pointed out that the former couple “both benefitted” from the clever accounting, Linda Macklowe defended herself by pointing to the president.
“That’s why Donald Trump never paid any taxes,” she said.
“There you go!” the judge joked, throwing her hands up.
Teitler said the taxes are not a real debit because, “Mr. Macklowe himself knows these types of gains are never actually realized by real-estate developers.”
“This is a case study in divorce accounting 101,” Teitler said.
The supposedly illiquid developer’s been “paying [a French girlfriend’s] expenses, providing her with hundreds of thousands of dollars in cash as well as lavish gifts — and that’s just what we know about,” Teitler said.
Meanwhile Macklowe has listed his marital assets at $1.3 billion — largely a museumquality art collection including works by Andy Warhol and Jeff Koons and multiple homes. Linda Macklowe is asking the judge to award her all the art and their $100 million Plaza hotel apartment.
“Mrs. Macklowe believed they would stay married for the rest of their lives. She did not expect this divorce, let alone at age 80,” Teitler said.
They have been married for 58 years. The developer’s attorney, Peter Bronstein, insisted that his client shouldn’t have to shoulder all the debt.
“There’s no reason why half the marital assets should be taken by the wife and the husband should be left with all the liabilities,” Bronstein said.
Linda Macklowe is expected to continue her testimony tomorrow in a trial that could stretch through 2018.