Goldman is Here to Help

Treasury Secretary Paulson, whose track record since the Webvan IPO is decidedly mixed, is bypassing front runner Jeff Spiccoli to temporarily bring aboard a Goldman banker to the Treasury Department, where he will presumably get a look at Fannie and Freddie books, rifle though Bernanke’s trash and return to Goldman to brief the mortgage desk, who will then place a few winning trades based on the keen insight he gains in Washington.

Goldman Sachs Group Inc.’s most senior financial-institutions banker, Ken Wilson, is temporarily leaving the firm to advise Treasury Secretary Henry Paulson on how to resolve the country’s banking crisis, according to people familiar with the matter. WSJ

Of course, Paulson’s love of public service was not the only reason he took the job. Thanks to a little known provision, Section 1043 of the Internal Revenue Code, Paulson (and Goldman alum Bob Rubin before him-who succeeds Paulson?) could save big bucks on his income taxes.

Section 1043 of the Internal Revenue Code provides for the deferral of capital gains taxes on assets that must be sold to comply with ethics program requirements. Proceeds from divested assets must be reinvested in certain specified categories of investments. This change allows for a more flexible remedy to conflicts that avoid subjecting an executive branch employee to costly tax consequences that would otherwise result from the sale.

AN OFFER THEY CAN’T REFUSE
Change Wave
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Alas, Jeff never worked at Goldman

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Banker Leaves Goldman Sachs To Aid Paulson
WSJ

July 2006
Paulson’s special tax deal
Town Hall
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