Donald Trump Under Scrutiny for Tax Returns, Comments on Veterans

A recent New York Times report says that Trump could have avoided paying any federal income taxes for nearly two decades.
6:42 | 10/04/16

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Transcript for Donald Trump Under Scrutiny for Tax Returns, Comments on Veterans
Tonight, Donald Trump is speaking out about the story that has dominated the presidential campaign for two straight days. The "New York times" report that trump may have declared a loss of nearly $1 billion, and may not have paid federal income taxes for 18 years. Far from cowering tonight, trump is crowing, calling himself brilliant. Here's ABC's David Wright. I understand the tax laws better than almost anyone. Which is why I am the one who can fix them. Reporter: Trump's taxes were already officially a thing. Even before an anonymous whistleblower mailed the "New York times" a copy of part of his 1995 state returns. Now this is no longer just an abstract debate. I will release my tax returns, against my lawyers' wishes, when she releases her 33,000 e-mails that have been deleted. Reporter: Every presidential candidate since 1972 has presumably felt the voters are entitled to know -- except one. It must be something really important, even terrible, that he's trying to hide. It's republican nominee Donald Trump. Reporter: Donald Trump's dodge has made him an easy target for "Saturday night Liv live." He hasn't released his tax returns which means it's not that rich -- Wrong. Not that charitable. Wrong. Or has never paid taxes in his life. Warmer. Reporter: Now the devil is in the details. Specifically line 18 here on the 1040 form. Declaring a net operating loss of nearly $1 billion. What kind of genius loses $1 billion in a single year? Trump lost that much through what in hindsight appeared to have been a series of bad deal in the 1990s at his casinos in Atlantic City, his airline business, and his purchase of the plaza hotel in New York. Huge losses he was able to turn into a massive tax break for himself. Today, far from being ashamed, he dragged about it. As a businessman and real estate developer, I have legally used the tax laws to my benefit. Honestly, I have brilliantly -- I have brilliantly used those laws. I have trouble figuring out my own tax return which is simpler than Donald Trump's. We'll take this to my friendly neighborhood accountant. We tried trump's old tax guy but he wanted $600 an hour. Tax accountant Vincent ceronne is willing to do it for free. This is publication 536. It explains next operating losses. This is the rule the irs set. It tells you how to figure the loss -- Reporter: The $916 million loss became a way to offset an equivalent amount of personal income tax trump otherwise would have owed. A total amount allowed to be carried over for nearly 20 years. This is perfectly legal, perfectly Normal. So he's completely in the right to be -- Completely in the right to be taking this loss. Extremely large amount of money to lose, but in the course of business, nothing was done wrong here. Reporter: Legally trump appears on solid ground. Politically? Most of us pay our taxes. The idea that you can make billions of dollars and not have it taxed is surprising to most people. Reporter: Today in Ohio, Hillary Clinton not only mocked trump's business acumen, she also accused him of not paying his fair share. Toledo is the kind of place where people work hard, look after one another, and yes, pay their taxes. Right? Reporter: It's worth noting that just last year, Clinton herself wrote off nearly $700,000 of her own income, using the exact same method. Today trump pushed back, insisting it was the clinton-era recession, not his own poor business decisions that led to the loss and he was smart enough to dig himself out. I'm a fighter. And I'm now going to fight for you. I'm not fighting for me anymore, I'm fighting for you. My response is, he's a genius. Reporter: Top tour gats like Rudy Giuliani and Chris Christie are backing him up. There's no one who's shown more genius in their way to maneuver around the tax code -- Paying no taxes sounds brilliant to many people. To a lot of other people, it sounds like you're cheating. Reporter: Before any of the fine print came to light, trump often complained about the irs. Tweeting out a picture of himself last year signing his voluminous tax return. Lambasting other billionaires for dodging their tax bills. Mocking president Obama for paying just 20% of his income in tax. Even taking ordinary citizens to task for not pay their fair share. Half of Americans don't pay income taxes despite crippling government debt, he recently tweeted. He's running for president. That's the big difference. And as somebody running for president, he's talking about making government work. And without anything funding the government, it's hard for it to work. Reporter: Consider that the $916 million trump was able to shelter in 1995 would be worth about $1.4 billion in today's dollars, that's a lot money, enough to fund three years' worth of capital investments in America's transportation infrastructure. Our infrastructure is a disaster. Reporter: Enough to pay the total budget for customs and border protection nearly twice over. We will build a wall. Reporter: Nearly enough to pay for a whole year's worth of health care premiums for every enlisted soldier in the U.S. Army. We're going to take care of our vets. Reporter: Tonight, some veterans are outraged. Taxes pay for my body armor, they pay for my weapons, ammunition. They pay for the emergency life flight that flew my buddies out of Afghanistan when Te lost their legs. Reporter: It may well be a crime for the anonymous whistleblower to have shared trump's tax return without his consent. Today the "Times" said a trump lawyer threatened to sue them if they published the returns. Trump's 20-year-old tax details have all the hallmarks of an October surprise. Who was behind it? We may never know. Although it's safe to assume they're either with her, or just not with him. How badly, if at all, will it hurt trump? That's up to the voters. I'm David Wright for "Nightline" in New York. Thank you, David. Tomorrow night, you can see the vice presidential debate right here on ABC at 9:00 eastern. On Sunday, the second presidential debate just six days away, comoderated by Martha Raddatz. Full team coverage here on ABC.

This transcript has been automatically generated and may not be 100% accurate.

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