The Treasury Dept. announced today that it plans to sell off all of the 7.7 billion shares of Citigroup it acquired as part of the bailout of the bank. This could mean a profit of upwards of $8 billion for the federal government in just a few months.

Citigroup had received a total of $45 billion in bailout money from the government. Last fall, $25 billion of that was converted to common stock at a price of $3.25/share. As of this morning, those shares were trading for $4.22/share.

Of course, the Treasury isn’t going to dump its entire 27% stake in Citi in one fell swoop. In a release on their website, the Treasury Dept. writes:

Treasury intends to sell its Citigroup common shares into the market through various means in an orderly and measured fashion. Treasury intends to initiate its disposition of the common shares pursuant to a pre-arranged written trading plan. The manner, amount and timing of the sales under the plan is dependent upon a number of factors.

Unless the Citigroup stock crashes in the months before the Treasury completes the sale, this will be the government’s most profitable return of bailout money. So far, the government has earned around $13.7 in interest and dividend payments related to the bailout.

U.S. Treasury Plans to Sell Citigroup Stake in 2010 [BusinessWeek]

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