NEW YORK (NYTIMES) - By the time his master-of-the-universe memoir "Trump: The Art of the Deal" hit bookstores in 1987, Donald Trump was already in deep financial distress, losing tens of millions of dollars on troubled business deals, according to previously unrevealed figures from his federal income tax returns.
Trump was propelled to the presidency, in part, by a self-spun narrative of business success and of setbacks triumphantly overcome. He has attributed his first run of reversals and bankruptcies to the recession that took hold in 1990.
But 10 years of tax information obtained by the New York Times paints a different, and far bleaker, picture of his deal-making abilities and financial condition.
The data - printouts from Trump's official Internal Revenue Service (IRS) tax transcripts, with the figures from his federal tax form, the 1040, for the years 1985 to 1994 - represents the fullest and most detailed look to date at the president's taxes, information he has kept from public view.
Though the information does not cover the tax years at the centre of an escalating battle between the Trump administration and Congress, it traces the most tumultuous chapter in a long business career - an era of fevered acquisition and spectacular collapse.
The numbers show that in 1985, Trump reported losses of US$46.1 million (S$62.8 million) from his core businesses - largely casinos, hotels and retail space in apartment buildings. They continued to lose money every year, totalling US$1.17 billion in losses for the decade.
In fact, year after year, Trump appears to have lost more money than nearly any other individual American taxpayer, The Times found when it compared his results with detailed information the IRS compiles on an annual sampling of high-income earners.
His core business losses in 1990 and 1991 - more than US$250 million each year - were more than double those of the nearest taxpayers in the IRS information for those years.
Overall, Trump lost so much money that he was able to avoid paying income taxes for eight of the 10 years. It is not known whether the IRS later required changes after audits.
Since the 2016 presidential campaign, journalists at The Times and elsewhere have been trying to piece together Trump's complex and concealed finances.
While The Times did not obtain the president's actual tax returns, it received the information contained in the returns from someone who had legal access to it. The Times was then able to find matching results in the IRS information on top earners - a publicly available database that each year comprises a one-third sampling of those taxpayers, with identifying details removed.
It also confirmed significant findings using other public documents, along with confidential Trump family tax and financial records from the newspaper's 2018 investigation into the origin of the president's wealth.
The White House's response to the new findings has shifted over time.
Several weeks ago, a senior official issued a statement saying: "The president got massive depreciation and tax shelter because of large-scale construction and subsidized developments. That is why the president has always scoffed at the tax system and said you need to change the tax laws. You can make a large income and not have to pay large amount of taxes."
On Saturday, after further inquiries from The Times, a lawyer for the president, Charles J. Harder, wrote that the tax information was "demonstrably false," and that the paper's statements "about the president's tax returns and business from 30 years ago are highly inaccurate."
He cited no specific errors, but on Tuesday added that "IRS transcripts, particularly before the days of electronic filing, are notoriously inaccurate" and "would not be able to provide a reasonable picture of any taxpayer's return."
Mark J. Mazur, a former director of research, analysis and statistics at the IRS, said that, far from being considered unreliable, data used to create such transcripts had undergone quality control for decades and had been used to analyse economic trends and set national policy.
In addition, IRS auditors often refer to the transcripts as "handy" summaries of tax returns, said Mazur, now director of the nonpartisan Urban-Brookings Tax Policy Centre in Washington.
In fact, the source of The Times' newly obtained information was able to provide several years of unpublished tax figures from the president's father, the builder Fred C. Trump. They matched up precisely with Fred Trump's actual returns, which had been obtained by The Times in the earlier investigation.
Donald Trump built a business licensing his name, became a television celebrity and ran for the White House by branding himself a self-made billionaire. "There is no one my age who has accomplished more," he told Newsweek in 1987, adding that the ultimate scoreboard was "the unfortunate, obvious one: money."
Yet over the years, the actual extent of his wealth has been the subject of much doubt and debate. He broke with four decades of precedent in refusing to release any of his tax returns as a presidential candidate, and until now only a few pages of his returns have become public. Last year's Times investigation found that he had received at least US$413 million in 2018 dollars from his father.
The new tax information does not answer questions raised by House Democrats in their pursuit of the last six years of Trump's tax returns - about his recent business dealings and possible foreign sources of financing and influence. Nor does it offer a fundamentally new narrative of his picaresque career.
But in the granular detail of tax results, it gives a precise accounting of the president's financial failures and of the constantly shifting focus that would characterize his decades in business.
In contrast to his father's stable and profitable empire of rental apartments in Brooklyn and Queens, New York, Donald Trump's primary sources of income changed year after year, from big stock earnings, to a single year of more than US$67.1 million in salary, to a mysterious US$52.9 million windfall in interest income. But always, those gains were overwhelmed by losses on his casinos and other projects.
The new information also suggests that Trump's 1990 collapse might have struck several years earlier if not for his brief side career posing as a corporate raider.
From 1986 through 1988, while his core businesses languished under increasingly unsupportable debt, Trump made millions of dollars in the stock market by suggesting that he was about to take over companies. But the figures show that he lost most, if not all, of those gains after investors stopped taking his takeover talk seriously.
In Washington, the struggle over access to Trump's tax returns and other financial information has sharpened in recent days, amid partisan warfare over the findings in the Mueller report.
On Monday, Treasury Secretary Steven Mnuchin said he would not deliver the tax returns to the Ways and Means Committee. And after vowing that "we're fighting all the subpoenas" from House Democrats, the president has filed lawsuits against his banks and accounting firm to prevent them from turning over tax returns and other financial records.
In New York, the attorney general's office is investigating the financing of several major Trump Organisation projects; Deutsche Bank has already begun turning over documents.
The state attorney general is also examining issues raised last year by The Times' investigation, which revealed that much of the money Trump had received from his father came from his participation in dubious tax schemes, including instances of outright fraud.
The first of the two previous glimpses of the president's tax returns came from his 1995 filings, pages of which were anonymously mailed to The Times in 2016.
They showed that Trump had declared losses of US$915.7 million, giving him a tax deduction so substantial that it could have allowed him to legally avoid paying federal income taxes on hundreds of millions of dollars of income for almost two decades.
Several months later, journalist David Cay Johnston was mailed pages of Trump's 2005 returns, which showed that by then he had significant sources of income and was paying taxes.
THE ART OF LOSING MONEY
The year was 1985, and Trump appeared to be on top of the world.
He was still riding high from the completion of his first few projects - the Grand Hyatt Hotel, Trump Tower and another Manhattan apartment building, and one Atlantic City casino. He also owned the New Jersey Generals of the United States Football League.
As the year played out, he borrowed hundreds of millions of dollars to fuel a wave of purchases, acquiring a second casino (US$351.8 million), a Manhattan hotel (US$80 million), the Mar-a-Lago property in Florida (US$10 million), a New York hospital he intended to replace with an apartment building (US$60 million) and an undeveloped expanse of railroad yards on the West Side of Manhattan (US$85 million), where he planned to construct an entire neighborhood, including a 150-story tower envisioned as the world's tallest.
For the first time, Forbes' ranking of the wealthiest Americans listed Trump individually, independent of his father - with an estimated net worth of US$600 million that included the real estate empire Fred Trump still owned.
"What I have done is build the most beautiful buildings in the best locations," Donald Trump told the magazine.
But what the newly revealed tax information makes clear is that, with his vast debt and other expenses on those properties, Trump's fortunes were already on the way down.
His yearly carrying costs on the rail yards would rise to US$18.7 million. He would not be able to convert Mar-a-Lago into a moneymaking club for another decade. The apartments on the hospital site would not be ready for sale, as Trump Palace, until 1990, and another residential project would be stalled for years. The football league would soon fold.
Because his businesses were generally created as partnerships, the companies themselves did not pay federal income taxes. Instead their results wound up on Trump's personal ledger.
Beyond the US$46.1 million loss that his core businesses logged in 1985, Trump's tax information shows that he carried more than US$5.6 million in losses from prior years. The IRS data on one-third of high-income tax returns that year lists only three taxpayers with greater losses.
In his letter, Harder, the president's lawyer, took issue with comparing the tax returns of "a real estate developer to the returns of all taxpayers."
But most of the high-income taxpayers appeared, like Trump, to be business owners who received what is known as pass-through income. (That data does not include businesses, like most large corporations, that pay their taxes directly.)
The next years were a time of continued empire building. The information also documents, year by year, a time of gathering loss.
Here is how it added up.
In 1986, he bought out his partners in Trump Tower and the Trump Plaza Hotel and Casino. He bought an apartment building in West Palm Beach for US$43 million. His business losses for the year: US$68.7 million.
About two weeks before the stock market crash of Oct 19, 1987, he spent US$29 million on a 282-foot yacht. Months later he bought the Plaza Hotel for US$407 million. He recorded US$42.2 million in core business losses for 1987, and US$30.4 million for 1988.
In 1989, he bought a shuttle operation from Eastern Airlines for US$365 million. It never made a profit, and Trump would soon pump in more than US$7 million a month of his dwindling cash to keep it airborne, New Jersey casino regulators, who closely monitored his finances in those years, found.
Trump's business losses that year soared to US$181.7 million.
Then came the Trump Taj Mahal Hotel and Casino, which opened in April 1990 saddled with more than US$800 million in debt, most at very high interest rates. It did not generate enough revenue to cover that debt, and sucked revenue from his other casinos, Trump's Castle and Trump Plaza, pulling them deep into the red.
As a result, 1990 and 1991 represented the worst years of the period reviewed by The Times, with combined losses of US$517.6 million. And over the next three years, as Trump turned over properties to his lenders to stave off bankruptcy, his core businesses lost an additional US$286.9 million.
The 10-year total: US$1.17 billion in losses.
Trump was able to lose all that money without facing the usual consequences - such as a steep drop in his standard of living - in part because most of it belonged to others, to the banks and bond investors who had supplied the cash to fuel his acquisitions. And as The Times' earlier investigation showed, Trump secretly leaned on his father's wealth to continue living like a winner and to stage a comeback.
This is not to say that Trump never made money on a deal. One that turned out quite well came in 1985, when he bought the Hotel St. Moritz in Manhattan for US$73.7 million.
Trump has said he sold it for US$180 million in 1989. His tax information showed long-term capital gains of US$99.8 million, accounting for the vast majority of such gains in the 10 years reviewed by The Times.
But that rich payday was overwhelmed by his business losses, and Trump still paid no federal income taxes that year.
Some fraction of that ocean of red ink represented depreciation on Trump's real estate. One of the most valuable special benefits in the tax code, depreciation lets owners of commercial real estate write down the cost of their buildings.
"I love depreciation," Trump said during a presidential debate in 2016.
In "The Art of the Deal," Trump points to one of his Atlantic City casinos to illustrate the magic of depreciation. If the casino's cost was US$400 million, he says, he would be able to depreciate it at a rate of 4 per cent a year, allowing him to shelter US$16 million in taxable income annually.
But while this example is intended to show the benefits of depreciation, it also demonstrates that depreciation cannot account for the hundreds of millions of dollars in losses Trump declared on his taxes.
The tax code also lets business owners like Trump use losses to avoid paying tax on future income - a lucrative deduction intended to help troubled businesses get back on their feet. Trump's losses over the years rolled into the US$915.7 million free pass from income taxes - known as net operating loss - that appeared on his 1995 returns.
The newly revealed tax information sheds light on how those net operating losses snowballed. By 1991, they had grown to nearly US$418 million, accounting for fully 1 per cent of all the losses that the IRS reported had been declared by individual taxpayers that year. And the red ink continued to accumulate apace.
Because Trump reported a negative adjusted gross income in each of the 10 years, he was not allowed to deduct any charitable contributions. So while he has boasted of making large donations at the time, the information obtained by The Times shows no such itemized deductions. Potential deductions could have been carried over to a future year, should Trump have reported a positive income.
A VULTURE'S APPETITE
As losses from his core enterprises mounted, Trump took on a new public role, trading on his business-titan brand to present himself as a corporate raider. He would acquire shares in a company with borrowed money, suggest publicly that he was contemplating buying enough to become a majority owner, then quietly sell on the resulting rise in the stock price.
The tactic worked for a brief period - earning Trump millions of dollars in gains - until investors realized that he would not follow through. That much has been known for years. But the tax information obtained by The Times shows that he ultimately lost the bulk of the gains from his four-year trading spree.
The figures do not include an itemisation of individual trades. But The Times was able to align the reported total gains with details on trades publicly documented by casino regulators at the time.
As with many things Trump, his adventures in the stock market were more image than substance, helped greatly by news reports quoting anonymous sources said to have knowledge of Trump's actions. An occasional quote from an associate - including his stockbroker, Alan C. Greenberg - helped burnish the myth.
"He has an appetite like a Rocky Mountain vulture," Greenberg, the legendary chairman of Bear Stearns, told The Wall Street Journal in 1987. "He'd like to own the world." In his actions, Trump was more like a peacock.
An early and profitable gambit came in February 1987, when Trump started buying stock in the company that owned United Airlines. That April, The Times reported that Trump was "believed to own 4.9 per cent" of United and was "believed to have paid" about US$50 a share.
Trump takeover speculation set off a rally in the stock. At the end of the month, Trump quietly sold nearly all his shares. The next day, The Journal reported that Trump's gamble appeared to have netted him US$55 million.
It was a gross exaggeration. New Jersey gaming regulators later determined that he had purchased only 2.3 per cent of the company and gained US$11 million, before interest and commissions.
The same tactic continued to work through 1988. Trump made a total of US$57 million by briefly presenting himself as a takeover threat to, among others, Hilton Hotels, the Gillette razor company and Federated Department Stores, casino regulators found.
In all, from 1986 through 1989, Trump declared US$67.3 million in gains from stocks and other assets bought and sold within one year.
By 1989, investors were less fooled by his moves. That September, he bought a large stake in American Airlines and announced a takeover bid.
"I'm very skeptical of everything this man does," Andrew Geller, then an airline analyst at Provident National Bank in Philadelphia, told The Associated Press.
Trump was rebuffed, and the stock price fell sharply. Though at the time his losses were reported to be modest, the new tax return figures show that in 1990, the year he sold his American Airlines stake, Trump lost US$34.9 million on short-term trades, wiping out half his gains from the previous four years.
He appears to have held only one other significant chunk of stock by decade's close: a 27 per cent stake in the Alexander's department store company.
Trump had bought those shares for US$67.9 million and held on, hoping to gain control of the company's real estate with a partner. After climbing on the possibility of a takeover, the stock price slid.
Trump ultimately agreed to turn over that stock and most of his other assets - including the yacht, the Trump Shuttle and his stake in the Grand Hyatt - to his lenders.
On the day in 1992 when he gave up the stock, it was trading at about US$9 a share - which would represent a loss of US$55.5 million.
And with that, Trump's days as a market mover were over.
ONE HUGE PAYDAY
As would be expected for a business owner, the line on Trump's tax returns showing regular wages and salary does not represent the bulk of his income. But one year stands out: 1988, when he recorded US$67.1 million in salary - 90 per cent of his total regular wages for the 10 years.
The figure appears to include a payment he received as part of a deal to buy the unfinished Taj Mahal casino from Merv Griffin, the talk show host turned businessman. Griffin's company had agreed to pay Trump to manage construction of the casino, among other services, and the resolution of a bitter dispute between the two included Griffin's company paying Trump US$63 million to buy out that contract.
That windfall contributed to Trump's making his biggest income tax payment of the 10 years reviewed by The Times. Even so, his overwhelming business losses meant that he paid only US$1.4 million in alternative minimum tax that year.
The only other income tax he was required to pay in those years was US$124,344 in 1987, also under the alternative minimum tax, which was created to make sure wealthy people could not avoid all income tax through loopholes and deductions.
AN INTEREST MYSTERY
One number from Trump's tax returns is particularly striking - and particularly hard to explain: the US$52.9 million in interest income he reported in 1989.
Trump reported US$460,566 in interest income in 1986. That number grew to US$5.5 million the next year, and US$11.8 million the next. Then came the outlier 1989.
Taxpayers can receive interest income from a variety of sources, including bonds, bank accounts and mortgages.
High-yield bonds, though less common today, were popular with institutional investors in the 1980s. And to make US$52.9 million in interest, for example, Trump would have had to own roughly US$378 million in bonds generating 14 per cent a year.
Hard data on most of Trump's business life is hard to come by, but public findings from New Jersey casino regulators show no evidence that he owned anything capable of generating close to US$52.9 million annually in interest income.
Similarly, there is no such evidence in a 1990 report on Trump's financial condition, prepared by an accounting firm he hired at his bankers' request and based on his most current tax returns and audited financial statements.
Trump's interest income fell almost as quickly as it rose: He reported US$18.7 million in 1990, and only US$3.6 million in 1992.
At his nadir, in the post-recession autumn of 1991, Trump testified before a congressional task force, calling for changes in the tax code to benefit his industry.
"The real estate business - we're in an absolute depression," Trump told the lawmakers, adding: "I see no sign of any kind of upturn at all. There is no incentive to invest. Everyone is doing badly, everyone." Everyone, perhaps, except his father, Fred Trump.
While Donald Trump reported hundreds of millions of dollars in losses for 1990 and 1991, Fred Trump's returns showed a positive income of US$53.9 million, with only one major loss: US$15 million invested in his son's latest apartment project.