Presidents-elect typically have to divest themselves of certain assets or investments prior to assuming the Presidency in order to avoid any conflicts of interest while President.
Federal employees are subject to various ethics rules and are prohibited from holding financial interests that conflict with the performance of duty, using public office for private gain and using non-public government information to engage in a financial transaction to further one’s private interests. However, the definition of a federal employee does not apply to the President or Vice-President.
President-Elect Trump has said that he will be leaving his businesses “in total” and that legal documents are being crafted that will remove him from the operations of his various businesses, thereby removing any potential conflict of interest. Although Trump stated that he will be leaving his businesses, he has not yet outlined the steps he intends to take to do so.
When anybody sells an investment or an asset, there are income tax consequences related to that sale. Because Trump has steadfastly refused to release his tax returns, it is uncertain as to the tax consequences that Trump will experience when he leaves his businesses.
Internal Revenue Code §1043 softens the tax consequences to an officer or employee of the Executive Branch by deferring the gain on the assets sold if that individual or family members are required to divest themselves of assets to avoid any conflicts of interest.
However, it is unclear whether the President-Elect qualifies as an officer or employee of the Executive branch prior to assuming office. On top of all of this, a bill was recently introduced by Senator Sheldon Whitehouse, D-R.I., would amend Internal Revenue Code §1043 to limit the amount of tax-deferred gains to $1,000,000.00 per year, effective January 1, 2017.
The legislation is entitled the “No Windfalls for Government Service Act” and is clearly aimed at President-Elect Trump. We hope that the No Windfalls for Government Service Act does not become law because we feel that it will dissuade qualified individuals from running for public office stemming from the potentially crippling tax consequences for that individual. What do you think?
Are you in trouble with the IRS? You need a tax attorney! Contact Chicago tax lawyer Patrick T. Sheehan & Associates today.