Penelope
Diamond Member
- Jul 15, 2014
- 60,265
- 15,791
paying 71 million in taxes.
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How Exxon and Trump Are Helping Rex Tillerson Put Off a $71 Million Tax Bill
What neither side cared to mention: A quirk in the way the deal was structured will allow Tillerson, at least for now, to avoid over $71 million in taxes. With the deal, Tillerson can move his money, now locked up in the value of Exxon’s stock, which right now accounts for about half of Tillerson’s total wealth, according to a financial disclosure form Tillerson filed on Wednesday, into diversified mutual funds—potentially an even bigger benefit, since his financial well being won’t be so closely tied to just one company. And again, he gets to do that without incurring taxes, at least for now.
(snip)
Here’s how the almost unprecedented deal will work: In the early 1990s, George H.W. Bush’s administration added a loophole to the tax code that allows political appointees to defer any capital gains taxes they would ordinarily have to pay on investments they’re required to divest to take a post in government. The main requirement is that the appointee reinvest the money immediately into a diversified mutual fund or U.S. Treasury Bonds. The $54 million worth of Exxon stock that Tillerson owns directly will squeeze through the Bush-era loophole. So the money Tillerson gets is tax-free for now as long as it stays invested. And could be forever. If Tillerson never touches the money before he dies, and given that the $54 million is about a tenth of his total net worth he might not have to, it will transfer to his heirs with no taxhttp://fortune.com/2017/01/06/rex-tillerson-exxon-taxes-trump/ liability.
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How Exxon and Trump Are Helping Rex Tillerson Put Off a $71 Million Tax Bill
What neither side cared to mention: A quirk in the way the deal was structured will allow Tillerson, at least for now, to avoid over $71 million in taxes. With the deal, Tillerson can move his money, now locked up in the value of Exxon’s stock, which right now accounts for about half of Tillerson’s total wealth, according to a financial disclosure form Tillerson filed on Wednesday, into diversified mutual funds—potentially an even bigger benefit, since his financial well being won’t be so closely tied to just one company. And again, he gets to do that without incurring taxes, at least for now.
(snip)
Here’s how the almost unprecedented deal will work: In the early 1990s, George H.W. Bush’s administration added a loophole to the tax code that allows political appointees to defer any capital gains taxes they would ordinarily have to pay on investments they’re required to divest to take a post in government. The main requirement is that the appointee reinvest the money immediately into a diversified mutual fund or U.S. Treasury Bonds. The $54 million worth of Exxon stock that Tillerson owns directly will squeeze through the Bush-era loophole. So the money Tillerson gets is tax-free for now as long as it stays invested. And could be forever. If Tillerson never touches the money before he dies, and given that the $54 million is about a tenth of his total net worth he might not have to, it will transfer to his heirs with no taxhttp://fortune.com/2017/01/06/rex-tillerson-exxon-taxes-trump/ liability.
