Are Recoveries for Losses Taxable? The Commissioner's Nonacquiescence in Cosentino Muddies the Waters

Posted: 27 May 2017

See all articles by Erik M. Jensen

Erik M. Jensen

Case Western Reserve University School of Law

Date Written: May 26, 2017

Abstract

After the recent presidential election, Section 1043 of the Internal Revenue Code has received both public visibility and substantial criticism. The section permits certain public officials to defer gain on the sale of assets required to satisfy conflict-of-interest rules, a benefit of sorts characterized by critics as an unwarranted giveaway to the wealthy. This article examines the particulars of Section 1043 and generally defends the way it works. The article also considers whether Section 1043 can be availed of by a President of the United States who divests appreciated assets because of conflict-of-interest concerns, concluding (perhaps surprisingly) that the statutory language doesn’t seem to apply to the president.

Keywords: Section 1043, conflicts of interest, Foreign Emoluments Clause, divesting assets

JEL Classification: K34

Suggested Citation

Jensen, Erik M., Are Recoveries for Losses Taxable? The Commissioner's Nonacquiescence in Cosentino Muddies the Waters (May 26, 2017). 35(1) Journal of Taxation of Investments 47 (2017); Case Legal Studies Research Paper No. 2017-8. Available at SSRN: https://ssrn.com/abstract=2975354

Erik M. Jensen (Contact Author)

Case Western Reserve University School of Law ( email )

11075 East Boulevard
Cleveland, OH 44106-7148
United States
216-368-3613 (Phone)
216-368-2086 (Fax)

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