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Sam Lessin: Ultra-wealthy use government cabinet positions to defer capital gains taxes

Sam Lessin · #73: Elon to Lead DOGE, Bitcoin Surges & the Trump Alliance · More or Less Podcast · Nov 15, 2024 · at 18:04

Slow Ventures partner Sam Lessin explains how US federal ethics divestiture rules (Section 1043) permit deferred tax rollover when entering government.

0:00 / 0:18exact quote · 18.5s

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“There's this hack where some Goldman Sachs guys got cabinet positions and they're like, well, the reason they did that or like at some level of seniority of the government is because you are forced to sell, but you don't have to pay taxes on the sale. And so it's actually an incredible diversification strategy. If you are in the point, oh, oh, oh, oh, one percent that can pull that off.”

quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →

The claim, plainly

Senior executive-branch appointees forced to divest assets can defer capital gains taxes on those sales, making government appointments a valuable tax diversification strategy for the ultra-wealthy.

a quote alone can be ambiguous, so this restates it with the references and context of the conversation around it resolved. AI-written; the tape below the player is the source.

Assessment

Under 26 U.S.C. § 1043 (enacted under the Ethics Reform Act of 1989) and implementing regulations at 5 C.F.R. Part 2634, Subpart J, eligible executive-branch officers and employees who obtain a Certificate of Divestiture from the Office of Government Ethics (OGE) can defer capital gains tax on mandated asset sales. To qualify for nonrecognition of gain, the proceeds must be reinvested within 60 days into 'permitted property'—specifically U.S. government obligations or diversified investment funds approved by OGE. The deferred gain is preserved via a downward basis adjustment in the replacement property under § 1043(c). This confirms the claim that executive-branch divestment rules permit tax-deferred diversification of concentrated asset holdings.

26 U.S.C. § 1043(a) provides for nonrecognition of capital gain upon the sale of property pursuant to a Certificate of Divestiture to the extent reinvested in permitted property within 60 days.
26 U.S.C. § 1043(b) defines eligible persons to include executive-branch officers and permitted property to include U.S. government obligations and OGE-approved diversified investment funds.
5 C.F.R. §§ 2634.1001–2634.1008 establish OGE rules governing the issuance of Certificates of Divestiture for conflict-of-interest compliance.
IRS Form 8824, Part IV formalizes the tax reporting and basis rollover under Section 1043.

Checked against

[1] federalregister.gov [2] cornell.edu [3] civicresearchinstitute.com [4] opencasebook.org [5] govregs.com [6] ecfr.gov [7] federalregister.gov [8] ecfr.gov

IRS Form 8824 "section 1043" "26 U.S.C. § 1043" basis "permitted property" Internal Revenue Code section 1043 Certificate of Divestiture capital gains deferral Office of Government Ethics Certificate of Divestiture permitted property 1043

assessed as of 2026-09-08

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Mentioned

Cabinet Goldman Sachs U.S. Government

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