Donald J. Trump paid $750 in federal income taxes the year he won the presidency. In his first year in the White House, he paid another $750.
He had paid no income taxes at all in 10 of the previous 15 years — largely because he reported losing much more money than he made.
As the president wages a re-election campaign that polls say he is in danger of losing, his finances are under stress, beset by losses and hundreds of millions of dollars in debt coming due that he has personally guaranteed. Also hanging over him is a decade-long audit battle with the Internal Revenue Service over the legitimacy of a $72.9 million tax refund that he claimed, and received, after declaring huge losses. An adverse ruling could cost him more than $100 million.
The tax returns that Mr. Trump has long fought to keep private tell a story fundamentally different from the one he has sold to the American public. His reports to the I.R.S. portray a businessman who takes in hundreds of millions of dollars a year yet racks up chronic losses that he aggressively employs to avoid paying taxes. Now, with his financial challenges mounting, the records show that he depends more and more on making money from businesses that put him in potential and often direct conflict of interest with his job as president.
The New York Times has obtained tax-return data extending over more than two decades for Mr. Trump and the hundreds of companies that make up his business organization, including detailed information from his first two years in office. It does not include his personal returns for 2018 or 2019. This article offers an overview of The Times’s findings; additional articles will be published in the coming weeks.
The returns are some of the most sought-after, and speculated-about, records in recent memory. In Mr. Trump’s nearly four years in office — and across his endlessly hyped decades in the public eye — journalists, prosecutors, opposition politicians and conspiracists have, with limited success, sought to excavate the enigmas of his finances. By their very nature, the filings will leave many questions unanswered, many questioners unfulfilled. They comprise information that Mr. Trump has disclosed to the I.R.S., not the findings of an independent financial examination. They report that Mr. Trump owns hundreds of millions of dollars in valuable assets, but they do not reveal his true wealth.
The tax data examined by The Times provides a road map of revelations, from write-offs for the cost of a criminal defense lawyer and a mansion used as a family retreat to a full accounting of the millions of dollars the president received from the 2013 Miss Universe pageant in Moscow.
Together with related financial documents and legal filings, the records offer the most detailed look yet inside the president’s business empire. They reveal the hollowness, but also the wizardry, behind the self-made-billionaire image — honed through his star turn on “The Apprentice” — that helped propel him to the White House and that still undergirds the loyalty of many in his base.
Ultimately, Mr. Trump has been more successful playing a business mogul than being one in real life.
“The Apprentice,” along with the licensing and endorsement deals that flowed from his expanding celebrity, brought Mr. Trump a total of $427.4 million, The Times’s analysis of the records found. He invested much of that in a collection of businesses, mostly golf courses, that in the years since have steadily devoured cash — much as the money he secretly received from his father financed a spree of quixotic overspending that led to his collapse in the early 1990s.
Indeed, his financial condition when he announced his run for president in 2015 lends some credence to the notion that his long-shot campaign was at least in part a gambit to reanimate the marketability of his name.
As the legal and political battles over access to his tax returns have intensified, Mr. Trump has often wondered aloud why anyone would even want to see them. “There’s nothing to learn from them,” he told The Associated Press in 2016. There is far more useful information, he has said, in the annual financial disclosures required of him as president — which he has pointed to as evidence of his mastery of a flourishing, and immensely profitable, business universe.
In fact, those public filings offer a distorted picture of his financial state, since they simply report revenue, not profit. In 2018, for example, Mr. Trump announced in his disclosure that he had made at least $434.9 million. The tax records deliver a very different portrait of his bottom line: $47.4 million in losses.
Tax records do not have the specificity to evaluate the legitimacy of every business expense Mr. Trump claims to reduce his taxable income — for instance, without any explanation in his returns, the general and administrative expenses at his Bedminster golf club in New Jersey increased fivefold from 2016 to 2017. And he has previously bragged that his ability to get by without paying taxes “makes me smart,” as he said in 2016. But the returns, by his own account, undercut his claims of financial acumen, showing that he is simply pouring more money into many businesses than he is taking out.
The picture that perhaps emerges most starkly from the mountain of figures and tax schedules prepared by Mr. Trump’s accountants is of a businessman-president in a tightening financial vise.
Most of Mr. Trump’s core enterprises — from his constellation of golf courses to his conservative-magnet hotel in Washington — report losing millions, if not tens of millions, of dollars year after year.
His revenue from “The Apprentice” and from licensing deals is drying up, and several years ago he sold nearly all the stocks that now might have helped him plug holes in his struggling properties.
The tax audit looms.
And within the next four years, more than $300 million in loans — obligations for which he is personally responsible — will come due.
Against that backdrop, the records go much further toward revealing the actual and potential conflicts of interest created by Mr. Trump’s refusal to divest himself of his business interests while in the White House. His properties have become bazaars for collecting money directly from lobbyists, foreign officials and others seeking face time, access or favor; the records for the first time put precise dollar figures on those transactions.
At the Mar-a-Lago club in Palm Beach, Fla., a flood of new members starting in 2015 allowed him to pocket an additional $5 million a year from the business. In 2017, the Billy Graham Evangelistic Association paid at least $397,602 to the Washington hotel, where the group held at least one event during its four-day World Summit in Defense of Persecuted Christians.
The Times was also able to take the fullest measure to date of the president’s income from overseas, where he holds ultimate sway over American diplomacy. When he took office, Mr. Trump said he would pursue no new foreign deals as president. Even so, in his first two years in the White House, his revenue from abroad totaled $73 million. And while much of that money was from his golf properties in Scotland and Ireland, some came from licensing deals in countries with authoritarian-leaning leaders or thorny geopolitics — for example, $3 million from the Philippines, $2.3 million from India and $1 million from Turkey.
He reported paying taxes, in turn, on a number of his overseas ventures. In 2017, the president’s $750 contribution to the operations of the U.S. government was dwarfed by the $15,598 he or his companies paid in Panama, the $145,400 in India and the $156,824 in the Philippines.
Mr. Trump’s U.S. payment, after factoring in his losses, was roughly equivalent, in dollars not adjusted for inflation, to another presidential tax bill revealed nearly a half-century before. In 1973, The Providence Journal reported that, after a charitable deduction for donating his presidential papers, Richard M. Nixon had paid $792.81 in 1970 on income of about $200,000.
The leak of Mr. Nixon’s small tax payment caused a precedent-setting uproar: Henceforth, presidents, and presidential candidates, would make their tax returns available for the American people to see.
The Real Estate Scam
Twenty-five years before he was elected president, Donald J. Trump went to Capitol Hill to complain that Congress had closed too many tax loopholes. He warned that one industry, in particular, had been severely harmed: real estate.
The recent demise of real estate tax shelters, part of a landmark 1986 overhaul of the tax code, was “an absolute catastrophe for the country,” Mr. Trump testified to Congress that day in November 1991.
“Real estate really means so many jobs,” he said. “You create so many other things. They buy carpet. They buy furniture. They buy refrigerators. They buy other things that fuel the economy.”
Mr. Trump was sounding a theme that has made real estate perhaps the tax code’s most-favored industry.
Legislators lapped it up. Mr. Trump and his fellow real estate investors got much of what he wanted, including the ability to fully deduct losses — sometimes only on paper — against other income.
Mr. Trump’s low taxes over the years were largely a product of his businesses hemorrhaging money, according to federal tax records obtained by The New York Times. But the records also show that so-called depreciation losses and other benefits for the real estate industry have helped Mr. Trump reduce his federal income taxes. In 2016 and 2017, he paid $750.
From the beginning, the real estate industry, with its claim to be a bedrock of the American way of life and its formidable lobbying power and lavish campaign contributions, has held disproportionate sway over how tax laws are written.
Tax breaks for real estate have been embedded in the federal income tax law for a century. New benefits sprouted up every few years. Even when lawmakers cracked down on business-friendly tax treatment, they often made special exceptions for real estate.
“The real estate industry has enjoyed the most lucrative tax breaks for decades,” said Victor Fleischer, a tax law professor at the University of California, Irvine, and former chief tax counsel for the Senate Finance Committee. The industry “thinks of the tax code as a basket of goodies to feast on rather than a financial obligation of doing business.”
The perks come in many varieties. One allows real estate investors to avoid capital-gains taxes when they sell properties as long as they use the proceeds to quickly buy others. Another gives developers a big break on taxes when they spend money on historical preservation.
Foremost among them is a deduction for depreciation, a provision originally included in the federal tax code in response to lobbying by the railroad industry.
Taxpayers are allowed to deduct from their annual taxable income a portion of the cost of an asset such as a locomotive or a building, as well as money spent on improving that asset. If you buy a building for $270,000, you can deduct $10,000 a year from your taxable income for 27 years. A profitable business can actually report losses on its tax returns because of depreciation deductions.
The tax benefit was meant to reflect the deterioration in value over time of an asset. But for the real estate industry, it can be a boondoggle: Many buildings kept in reasonable repair increase in value over time, unlike, say, cars or computers.
Depreciation is the ultimate tax shelter, critics say, because it permits real estate investors to take deductions for spending other people’s money. If a bank lends an investor $70 million to buy a $100 million office building, and none of the principal is repaid for a decade — a common structure for such loans — the investor still gets to deduct that $100 million over several years, even though only $30 million of that is his or her own money.
In 1962, Congress passed rules that made the depreciation tax break less lucrative when someone sold the asset on which he or she had been taking deductions. But Congress exempted real estate.
“The real estate lobby always had a stronghold,” recalled Donald Lubick, at the time a top tax official in President John F. Kennedy’s Treasury Department.
Mr. Trump has taken hundreds of millions of dollars in depreciation deductions, his tax records show.
Most but not all of his depreciation expenses since 2010 stemmed from money he spent improving his golf courses and on transforming the Old Post Office building in Washington into a luxury hotel. Some of that spending was done with nearly $300 million that he borrowed from Deutsche Bank.
“That’s Trump’s story,” said Michael Graetz, a top tax official in the first Bush administration and now a professor at Columbia Law School. “His losses are somebody else’s money.”
Mr. Trump has publicly credited depreciation with lowering his tax bills. “I love depreciation,” he said during a presidential debate in 2016.
In reality, the fact that his businesses were losing money was a major factor in reducing his taxes.
For example, for Mr. Trump’s commercial real estate properties that reported losses between 2010 and 2018, about half of the losses — $54 million — came from depreciation, his tax records show.
Jared Kushner, Mr. Trump’s son-in-law and senior adviser, has also benefited from depreciation. The Times reported in 2018 that he most likely didn’t pay federal income taxes for years, largely because he took deductions from depreciation.
In 1986, Congress reined in depreciation benefits and capped the amount of losses that real estate investors could use to offset other income.
The changes were meant to combat a proliferation of tax shelters in which investors put money into real estate partnerships that, thanks to depreciation, generated enormous only-on-paper losses that then canceled out income from other sources.
“The tax shelters were out of control,” said Daniel Shaviro, a tax professor at the New York University School of Law who worked on the Joint Congressional Committee on Taxation and helped draft the 1986 law. “Every lawyer and dentist had one.”
Knowing the real estate industry would mobilize, the congressional tax committee kept the proposed changes under wraps as long as possible. The industry “was caught flat-footed,” Mr. Shaviro said. Even so, “I knew they’d get it back thanks to their raw political power.”
It didn’t take long.
Mr. Trump, who blamed the 1986 law for a subsequent fall in real estate prices and a deep recession, was one of several developers who urged lawmakers to restore the breaks in full.
In 1993 Congress restored those breaks. At the same time, it carved out another advantage for the real estate industry. For most businesses, canceled or forgiven debts had to be recognized as income. Real estate investors for the most part got a pass, though they had to relinquish some future deductions. Mr. Trump has benefited from those rules, such as when his lenders canceled about $270 million of debt on his Chicago skyscraper, his tax records show.
Then Mr. Trump ran for president. On the campaign trail, he acknowledged that he had been a big winner from the tax code’s favoritism toward the real estate industry. He said his expertise on the subject would help him close loopholes and make the tax code fairer.
“The unfairness of the tax laws is unbelievable,” Mr. Trump said in 2016. “It’s something I’ve been talking about for a long time, despite, frankly, being a big beneficiary of the laws. But I’m working for you now. I’m not working for Trump.”
But Republicans’ 2017 tax overhaul, which remains Mr. Trump’s signature legislative achievement, expanded and enhanced several lucrative tax breaks for real estate developers. For example, while the law barred people and companies from avoiding capital-gains taxes by selling one property and buying another, one industry was exempted: real estate.
The law was a boon to people, like Mr. Trump, who owned golf courses. It permitted real estate investors to immediately write off the full cost of various expenses, including improvements to golf courses.
In recent years Mr. Trump has also taken advantage of a tax credit that covered 20 percent of developers’ costs of rehabilitating historical structures, which is meant to encourage the preservation of old buildings.
Mr. Trump has said he spent $200 million transforming the Old Post Office Building in Washington, a designated landmark, into a luxury hotel. That could translate into a tax credit of as much as $40 million, which Mr. Trump could use to offset his taxes for up to 20 years. (The caveat is that such tax credits reduce a developer’s ability to take other tax deductions in the future.)
Mr. Trump’s tax records show that in 2017 he used at least $1.5 million in historical preservation tax credits. That was one of the reasons his federal income tax bill that year was only $750.
The 2017 law made that tax benefit less generous, reducing it to 4 percent from 20 percent of the rehabilitation costs. But properties opened before 2017 were exempted. Mr. Trump’s hotel opened in 2016.