Capitol Report: Tillerson Has Lost His Job But Retains His Tax Deferral

Rex Tillerson may have lost his job as secretary of state, but there’s no imminent tax worry, despite a popular misconception.

Before he was sworn in as secretary of state on Feb. 1, 2017, Rex Tillerson cashed out of all of the individual shares of stock he owned, including his restricted stock in Exxon Mobil XOM, -0.94%  , where he retired as chairman at the end of 2016.

Tillerson asked ahead of time for the special waiver that allows presidential appointees required to sell assets that might create a conflict of interest when performing their official duties to defer the tax liabilities until the substitute, nonconflicted assets purchased with the proceeds are sold.

An approved waiver, called a certificate of divestiture, for Tillerson is on file at the Government Ethics office and cites share sales for stakes in more than 150 companies including 597,545 shares of Exxon Mobil that Tillerson owned outright.

In his ethics agreement, dated Jan. 3, 2017, Tillerson agreed to cash out of all of his holdings in 156 companies, and in a fund called HF Renaissance EQ LLC, and to resign as the managing member of two private ranching and real-estate companies he owned, Bar RR Ranches LLC and R2 Real Estate LLC. He continued to receive and pay tax on the passive investment income from those two companies while in office.

Presidential appointees who divest conflicted assets are required to purchase government securities or diversified mutual funds in an amount equal to the sales’ proceeds, in order to receive the tax deferral.

Read: Tax break for Trump nominees from Goldman Sachs is a deferral, not a permanent windfall

Gary Cohn, who left the administration just days ago, reportedly over Trump’s overruling him on the matter of steel and aluminum tariffs, is in the same boat as Tillerson.

The former CEO of Goldman Sachs GS, -1.77% took office as Trump’s director of the National Economic Council on Inauguration Day, Jan. 20, 2017. Cohn has a certificate of divestiture on file with the Government Ethics Office dated March 8, 2017, giving him the benefit of the tax deferral on gains from the sales of 23 million shares of Industrial and Commercial Bank of China 601398, -0.92% and 872,712 shares of Goldman Sachs, among many other holdings.


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