The New York Times said Donald Trump avoided paying potentially hundreds of millions of dollars in taxes in a way even his own lawyers considered questionable.
The newspaper said the "legally dubious" manoeuver may explain how Trump posted a one-year loss of more than $US900 million ($A1.2 billion) in 1995, enabling him to avoid paying federal income taxes on as much as $US50 million a year for 18 years.
The explained the process, saying: "The strategy, known among tax practitioners as a 'stock-for-debt swap,' relies on mathematical sleight of hand.
"Say a company can repay only $60 million of a $100 million bank loan. If the bank forgives the remaining $40 million, the company faces a large tax bill because it will have to report that canceled $40 million debt as taxable income."
The Times report added: "Clever tax lawyers found a way around this inconvenience. The company would simply swap stock for the $40 million in debt it could not repay. This way, it would look as if the entire $100 million loan had been repaid, and presto: There would be no tax bill due for $40 million in canceled debt."
At issue is how Trump canceled hundreds of millions of dollars of debt as his Atlantic City casinos went broke.
The Times said it obtained documents showing that Trump claimed his creditors' losses as his own, a strategy that his lawyers said the IRS would likely not allow.
Congress later explicitly banned the manoeuver in 2004.
Trump spokeswoman Hope Hicks said Trump's approach was appropriate.
