A bad week for The Mooch.
On Monday, Scaramucci lost his new job as White House Communications director, forced out by new White House Chief of Staff John Kelly. He also may have lost a multi-million dollar tax break.
Federal law allows new executive branch employees to defer capital gains taxes on assets they were forced to sell in order to avoid conflicts of interest, so Scaramucci was likely anticipating a large tax break when he struck up a deal in January to sell off his hedge-fund, SkyBridge Captial, to a Chinese investment conglomerate. After losing out on a White House job, he moved on to Export-Import Bank. A spokeswoman for the Ex-Im Bank told Bloomberg that Scaramucci had requested a certificate of disclosure, the paperwork required to receive the tax break, and included the sale of SkyBridge on it.
Unfortunately for Scaramucci, however, the sale might have been all for nothing. Because he entered the deal in January and wasn’t officially offered a White House job until late June, there is no way for Scaramucci to prove the government forced him to divest. Furthermore, the sale hasn’t even closed yet. The deal is currently pending regulatory approval by the Committee on Foreign Investment in the United States (CFIUS).
If Scaramucci is offered another job in the administration, he could still qualify for the tax break when and if the SkyBridge deal is closed, but that doesn’t look likely under Kelly, who Trump has given “full authority” with regards White House operations.
“The law is quite clear about the tax relief issue. The tax code defines who’s an ‘eligible person.’ Only a current employee, a spouse, a minor child, or a trust for one of them can get a Certificate of Divestiture,” said Walter Shaub, former director of the Office of Government Ethics (OGE), the agency which issues certificates of divestitures. “If he’s no longer an employee he’s no longer eligible to get one.”
Shaub resigned from his position at the OGE in July, after multiple clashes with President Trump over his own conflicts of interest and failure to divest himself from his business empire. “The current situation has made it clear that the ethics program needs to be stronger than it is,” he told NPR on the day of his resignation.
Shaub’s replacement, David Apol, is more lenient on rules regarding conflicts of interest. Shaub has described Apol’s approach to ethics as “loosey-goosey.” Whether or not Scaramucci is granted a tax break will be one of the first tests of just how loosely Apol interprets government ethics law.
Scaramucci got fired and it could cost him millions was originally published in ThinkProgress on Medium, where people are continuing the conversation by highlighting and responding to this story.