SELLING ASSETS TO AVOID A CONFLICT OF INTEREST SELLING…

 SELLING ASSETS TO AVOID A CONFLICT OF INTEREST

           SELLING ASSETS                        CERTIFICATES OF DIVESTITURE

When must an employee sell an asset?          What is a Certificate of Divestiture?
 P When holding the asset will interfere       P A Certificate of Divestiture is
with the employee's ability to perform        confirmation by the U.S. Office of
official duties. A Federal employee may       Government Ethics (OGE) that an asset
not work on any matter affecting a            was sold to avoid a conflict of interest. It
company in which the employee (or the         permits deferral of Federal taxes on
employee's spouse or dependant child)         capital gains from the sale, if certain
owns stock, unless it is publicly-traded      conditions are met. An employee may
and less than $15,000. If an employee is      seek a certificate through the Ethics Law
required to work on a matter affecting a      and Programs Division of the Office of the
company, the employee may be required         General Counsel.
to sell stock held in that company.
                                              Are Certificates of Divestiture available
Can economic costs from a sale be             for all sales that result from a conflict of
reduced?                                      interest?
 P yes, an employees may defer Federal         P No. A Certificate of Divestiture will not:
taxes on capital gains received.                R apply to a sale made before the
                                              certificate was issued and will not
How are taxes deferred?                         R be issued for an asset that created a
 P To defer taxes an employee:                conflict of interest when originally
first: gets a Certificate of Divestiture      obtained by the employee.
then: within 3 months, divests the
        conflicting interest                  Who can provide further tax advice?
then: within 60 days, reinvests the            P The Internal Revenue Service or a tax
        proceeds into:                        advisor can provide further guidance on
  R U.S. Government securities or             the applicable tax law (Section 1043 of
  R diversified investment funds; taxes are   the Internal Revenue Code).
due when these are sold.

  Ethics Law and Programs Division, Office of the Assistant General Counsel for
             Administration, United States Department of Commerce
             202-482-5384 ­ ethicsdivision@doc.gov ­ January 2, 2008

                       A WORD ABOUT ETHICS