A Loophole For Poor Mr. Paulson - Forbes.com

A Loophole For Poor Mr. Paulson - Forbes.com: "By accepting the Treasury post, Paulson is poised to take advantage of a tax loophole that allows government officials to defer capital gains taxes on assets they have to sell to avoid a conflict of interest, as long as the proceeds are reinvested in government securities or a broad array of mutual funds approved by the government within 60 days.
Technically, the tax kicks in once these replacement assets are sold, using the purchase price of the original assets as the cost basis, says Tom Ochsenschlager of the American Institute of Certified Public Accountants. But why sell when you can avoid the tax altogether?
'The idea is never to sell,' says Robert Willens, the top tax and accounting analyst at Lehman Brothers. 'If you're able to hold onto the replacement assets until your demise, you never have to pay it.'
The tax break was designed to ensure that the wealthy are not deterred from taking posts in government because they fear a big tax hit. But it amounts to a significant perk of public office. "