Trump, Cabinet could avoid millions in taxes thanks to this little-known law
By Drew Harwell December 2 at 9:11 PM
President-elect Donald Trump’s ultra-wealthy Cabinet nominees will be able to avoid paying millions of dollars in taxes in the coming weeks when they sell some of their holdings to avoid conflicts of interest in their new positions.
The tax advantage will allow Trump officials, forced by ethics laws to sell certain assets, to defer the weighty tax bills they would otherwise owe on the profits from selling stock and other holdings.
The benefit is one of the more subtle ways that the millionaires and billionaires of Trump’s White House, which already will be the wealthiest administration in modern American history, could benefit financially from their transition into the nation’s halls of power.
The legal tax maneuver, offered for years to executive-branch appointees and employees, was designed to help ease the sting of being forced to suddenly sell investments.
But the federal program, encoded in Section 2634 of federal ethics laws and known as a “certificate of divestiture,” has never been tested quite like this. Trump’s Cabinet picks have amassed assets worth billions of dollars from lifetimes in banking and investing, much of which they will be able to sell tax-free.
Trump has not committed to divesting his fortune. But if he does, federal ethics advisers said, the self-described billionaire could potentially reap the same tax advantage. The Office of Government Ethics, which leads the program, said this week that it was researching whether the president-elect could qualify.
The benefit was used to great effect when Henry Paulson, then chief executive of Goldman Sachs, was nominated by President George W. Bush to serve as treasury secretary. Paulson sold roughly half a billion dollars’ worth of Goldman stock and used the benefit to avoid what the Economist estimated was $200 million in taxes.
Some ethics advisers defend the tax benefits as a smart way to ensure new government officials can avoid heavy tax burdens on holdings they are required by law to sell.
more:
https://www.washingtonpost.com/business/economy/trump-cabinet-could-avoid-millions-in-taxes-thanks-to-this-little-known-law/2016/12/02/509d009a-b7f5-11e6-959c-172c82123976_story.html?hpid=hp_hp-top-table-main_taxgiveaway-710pm%3Ahomepage%2Fstory&utm_term=.91182bb3c499
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