Trump Had A Huge But Legal Write-Off

President Donald Trump has always presented himself as a "winner" — the ultimate opposite of a "loser." But could he himself have been loser in the past? Even lost millions? We first got a look at his business failures when a 1995 tax return leaked during the campaign, and now we see that he's writing off major losses as recently as 2005. But what exactly are we talking about here? What is negative income? Trump's 2005 tax return shows that he had "other income" of negative $103 million. How does that work?

Well, according to the Houston Chronicle, negative taxable income is known as a "net operating loss." That's what Trump has here. Writing for the Houston Chronicle, Michael Dreiser explained that "a net operating loss for an individual taxpayer usually results from losses incurred in a business entity and then allocated to the taxpayer."

But how do you get a net operating loss (NOL) in a business? Forbes writer Kelly Phillips Erb explained how that would work back in October, before the election: "Under the Tax Code, an NOL results when certain of your tax deductions exceed your taxable income before you deduct your personal exemptions." In other words, if your business spends more than it makes, then you lose money. You can deduct that from taxes you owe, to simplify things.

In Trump's case, things can get a bit more complicated given his real estate holdings and a thing called depreciation, too. If his holdings lose value, he could write that off — which seems to be what happened in 1995. He could still be using that 1995 $916 billion loss as late as 2005 because you can carry it over for future use. That loss reported in 1995 could be part of his net operating loss in 2005.

Dreiser in the Houston Chronicle explained that having a net operating loss is most common with "pass-through losses from a partnership or S-Corporation" or "loss generated from rental real estate activities."

Past looks into Trump's finances have shown that he has organized his corporate holdings as "pass-throughs," Vox reported. And as for real estate losses, it's clear that, with his name on so many buildings around the world, real estate has been his focus. So, that fits, too.

All of this is a legal way to reduce one's taxes. Whether the tax code should allow for such a thing is another question completely. But Trump's "negative taxable income" or net operating loss is a common way to reduce one's taxes. And it's arguably not that big of a deal. More troubling is Trump's hope to repeal the Alternative Minimum Tax — which accounted for more than $30 million of what he paid to the government, according to these recently released forms.

While it's good we know a bit more about Trump's finances, many critics will still likely argue that two pages from a 2005 tax return are far from sufficient.