Do you think when Trump or anyone in that circumstance gets a $100,000,000 loan it is without independent (or the banks) appraisers determining the value of properties?
I am wondering how deflating value of assets give tax losses aside from walking away from an investment and declaring it worthless. Or selling at a loss.
I do think I read somewhere there was an IRS dispute about an asset he had declared worthless.
As I understand it, there are at least two ways someone can benefit from deflating the value of an asset.
In some circumstances, the amount of tax payable on a (property) asset is dependent on the value of that asset. It is alleged that President Trump claimed that one of his Florida courses which was worth $50m was worth "no more than $5m" in order to pay lower local taxes. Permanently undervaluing the asset reduces the tax payable.
By deflating the value of an asset, you can create a "paper loss" which you can then offset against profits made elsewhere in the company reducing your tax liability towards, or even beyond, zero. When you come to dispose of the asset, you may make a capital gain for which taxes may be payable. Then again in some tax jurisdictions, the longer you hold onto an asset, the lower your capital gains liability so no capital gains tax may be due. In this case, the devaluing of an asset now reduces the current tax liability.
I am not an accountant (IANAA) but I did have to take some accountancy courses more than 30 years ago and am a director/part owner of a business. Our assets are largely things like IT equipment, furniture and so on and so we depreciate them at "standard" rates (over three or five years typically). For businesses with more volatile assets (like property companies, or companies with a lot of intangible assets) then there may be a lot more flexibility about how those assets are valued and hence how much can be written off against taxes. Done "correctly" this is legal tax avoidance.
However, if a business is deemed to be too aggressive about asset re-evaluation (for example writing off too much of an asset's value) then the tax authorities may deem it illegal tax evasion.