The New York Times’ ignorant, biased reporting on Trump taxes continues

On May 8, the New York Times (NYT) reported that after seeing President Trump’s tax returns from 1984 to 1995, Trump had losses of over a billion dollars. The NYT concluded that Trump “appears to have lost more money than nearly any other individual American Taxpayer.”

The New York Times is showing an ignorance of the tax code.

The reason Trump had tax losses but was still able to build a real estate empire was due to how the tax code allows a business to recover its capital.

The explanation is very simple. In fact, anyone who has taken at least one course in accounting can easily explain this to the completely uninformed and obviously biased New York Times.

Understanding depreciation expense.

Suppose a businessperson buys or builds a factory for $100,000. She uses capital from income earned after paying income taxes. The IRS says they will allow that person to recover her capital investment over say a 25-year period at $4,000 year.

Because of this $4,000 annual depreciation expense, no income taxes would be paid annually on $4,000 of future income for the 25 year period.

Now suppose the factory generates $3,000 in profit the first year. With no depreciation expense…