"There are IRS rules which specifically state that when a foundation has an item, an individual can store those items — on behalf of the foundation — in order to help it with storage costs," Trump adviser Boris Epshteyn said on MSNBC. "And that's absolutely proper."
"Right, of course, he’s doing a good thing for his foundation," Epshteyn said.
That appeared to be the first time that anyone connected to Trump has explained the rationale behind the placement of the portrait, which was discovered by Univision's Enrique Acevedo last week.
Trump bought the painting at a charity auction in 2014, with a winning bid of $10,000. Later, he paid with a check from the Donald J. Trump Foundation — a small charity, whose tax records show no personal donations from Trump himself since 2008.
By law, tax experts said, the portrait then belonged to the Trump Foundation, and Trump was required to find a charitable use for it. If he did not, Trump risked violating laws against "self-dealing," which prohibit leaders of nonprofit groups from using their charities' money to buy things for themselves or their businesses.
Epshteyn's explanation was, in effect, that Trump hadn't used his foundation to buy his resort some art. Instead, Trump's resort was helping the foundation — which has no employees or office space of its own — find a place to store its possessions.
Tax experts were not impressed by this reasoning.
"It's hard to make an IRS auditor laugh," Brett Kappel, a lawyer who advises nonprofit groups at the Akerman firm, said in an email. "But this would do it."
Experts said that the Internal Revenue Service had actually ruled on a similar issue in 1974, in a case where a major donor to a private foundation took paintings belonging to that foundation and hung them in his home. (The rules against "self-dealing" apply to both major donors and to foundation officers, like Trump.) The IRS determined that this was, indeed, self-dealing — because the homeowner was using the foundation's assets to benefit himself.
In this case: "If [the portrait] were gathering dust in a closet, and neither Trump nor the businesses were charging for the storage, that would probably be fine," Lloyd Mayer, a professor of tax law at the University of Notre Dame, said in an email.
"The same reasoning [as in the 1974 case] would apply to displaying a private foundation's paintings in a business owned by a foundation insider," Mayer wrote. "So definitely still self-dealing."
The penalties for violating self-dealing rules can include penalty taxes on the foundation leader who did wrong, and even the revocation of their charity's tax-exempt status.
Epshteyn seemed to imply that Trump was also "storing" two other items that he bought with the Trump Foundation's money: a six-foot-tall portrait of Trump himself, bought for $20,000, and a football helmet autographed by former quarterback Tim Tebow. Trump bought the helmet for $12,000.
The Trump campaign had previously declined to answer questions about where those items are, or what Trump had done with them.
After Epshteyn's comments, The Washington Post sent him new questions. If Trump is only storing the $10,000 portrait now, what charitable use does he have in mind for it, eventually?
Epshteyn did not respond.