Did Clinton close Trump's loophole?

At a rally Tuesday in Arizona, Donald Trump sought to blame Hillary Clinton for his own low tax bills. He asked:

"After years of failure, she complains about how I've used tax laws of this country to my benefit. Then I ask a simple question: Why didn't she ever try to change those laws so I couldn't use them?"

Well, maybe Clinton didn't just try to change laws Trump used, but actually got them changed, when she was in the Senate in 2002.

According to a Tuesday column by Lee Sheppard in the tax industry publication Tax Notes, Trump may have benefited greatly in the 1990s from a tax loophole related to forgiven debts — a loophole that would have allowed him to deduct business losses on his personal income tax return, even if those losses were actually borne by banks that loaned Trump money and never got it back.

People often use the term "loophole" to refer to tax deductions they don't like, but this one was a loophole in the true sense of the word: a tax break created by legislative accident.

This loophole was the subject of a 2001 Supreme Court case, Gitlitz v. Commissioner, in which the IRS argued the relevant tax law could not have possibly meant what it appeared to say, which was that business owners could in some cases deduct losses they had not actually borne.

After the IRS lost that case, the loophole was closed by the Job Creation and Worker Assistance Act of 2002, a bill that then-Sen. Hillary Clinton voted for and President George W. Bush signed. But that law only stopped taxpayers from using the loophole going forward; they were still allowed to benefit from tax losses they had booked through it in prior years, such as 1995.