PUEBLO, Colorado (WASHINGTON POST) - Mr Donald Trump launched an aggressive defence of a massive business loss in the 1990s that would have enabled him to skip paying federal income taxes for 18 years, while also wading into a new controversy by suggesting that soldiers and veterans with mental health problems are not "strong" and "can't handle it".

"When people come back from war and combat, and they see things that maybe a lot of folks in this room have seen many times over - and you're strong and you can handle it - but a lot of people can't handle it," Mr Trump said at a townhall event with veterans in Northern Virginia on Monday (Tuesday Oct 4, Singapore time) .

At an afternoon rally later in Colorado, the Republican presidential nominee responded to a New York Times report last weekend on his 1995 tax return showing a US$916 million (S$1.13 billion) loss that would have allowed him to pay zero federal incomes taxes for 18 years.

Mr Trump said he "brilliantly used" tax laws to his advantage and bounced back from the loss, while others in his field fell flat in the 1990s. He said he has a "fiduciary responsibility" to "pay as little tax as legally possible" - although these were his personal taxes - and that the political class should be blamed for creating a "complex" and "unfair" tax system.

Mr Trump also pitched himself as an underdog who has overcome obstacles time and again in his career and now, on the campaign trail.

"While I made my money as a very successful private businessperson, following the law all the way, Hillary Clinton made her money as a corrupt public official," he said.

He riffed on other issues at the rally as well, saying the country is growing more divided with "race riots on our streets on a monthly basis", complaining about the quality of his microphone at the first debate and calling the Commission on Presidential Debates "a joke".

Mrs Clinton, the Democratic nominee, focused on Mr Trump's 1995 tax return during a campaign stop in downtown Toledo, Ohio, sharply criticising him for losing money and pocketing tax savings while ordinary Americans pay their fair share.

"What kind of genius loses a billion dollars in a single year?" she asked a crowd, with a hint of amusement in her voice, referring to arguments from Trump surrogates that the tax records proved Mr Trump was a "genius".

Mrs Clinton argued at last week's first presidential debate that Mr Trump has hidden his returns from the public to avoid revealing that he is not as wealthy as he has claimed or that he has not paid federal income taxes.

"After he made all those bad bets and lost all that money, he didn't lift a finger to protect his employees, or the small businesses and contractors he'd hired, or the people of Atlantic City," Mrs Clinton said. "They all got hammered, while he was busy with his accountants figuring out how he could keep living like a billionaire."

She said Mr Trump's tax proposals benefit him and his companies the most - and that he would continue to look out for himself and big businesses if elected president.

"Trump represents the same rigged system he claims he will change," she charged. "Trump's plan would cut his own taxes even more. He'd open the loopholes even wider."

Mrs Clinton's campaign released a new television ad on Monday using footage from the first presidential debate at Hofstra University last week, in which Mr Trump responded to accusations that he avoided paying taxes by saying it made him "smart".

Pro-Clinton allies also ran with the same message, highlighting the tax revelations and Mr Trump's boasting that the tax strategy showed his smarts.

"You work hard, you pay your taxes, but why didn't Donald Trump pay his?" the narrator says. "If he thinks that makes him smart, what does he think of you?"

Later in the day, Mrs Clinton's campaign also reacted to Mr Trump's comments about mental health, writing on her Twitter feed: "Veterans who experience PTS are stronger than we'll ever understand. We owe them nothing short of world-class care."

Mr Trump said at the veterans event - hosted by Retired American Warriors, a political action group - that mental health and suicide prevention are the issues that veterans want to discuss with him most often and that, as president, he would provide more funding for mental health initiatives and work to reduce wait times for veterans seeking medical help.

But his comment about strength comes as military leaders are attempting to fight the stigma attached to post-traumatic stress disorder and other mental-health issues, especially as the suicide rate among veterans has increased sharply since 2001.

Mr Trump's campaign defended his comments on Monday afternoon and accused reporters of taking his words out of context.

"The media continues to operate as the propaganda arm of Hillary Clinton as they took Mr Trump's words out of context in order to deceive voters and veterans - an appalling act that shows they are willing to go to any length to carry water for their candidate of choice," Lt-Gen Michael Flynn, one of Trump's top advisers, said in a statement. "Mr. Trump was highlighting the challenges veterans face when returning home after serving their country."

Marine Staff Sgt Chad Robichaux, whose question Mr Trump was responding to in his remarks, also issued a statement saying that it was "sickening that anyone would twist Mr. Trump's comments".

He added: "I took his comments to be thoughtful and understanding of the struggles many veterans have."

Mr Trump was warmly received by the friendly audience as he gave prepared remarks that included his plans for bolstering cybersecurity - an issue that came up during last week's debate and was one of his weakest answers of the night - and continued attacks on Mrs Clinton and her use of a private e-mail server while serving as secretary of state.

After his speech, Mr Trump took several questions from the audience, something he rarely does on the campaign trail.