S. 1839

119 S1839 IS: Generating Retirement Ownership through Long-Term Holding
 U.S. Senate
 2025-05-21
 text/xml
 EN
 Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
  II
  119th CONGRESS
  1st Session
  S. 1839
  IN THE SENATE OF THE UNITED STATES
  May 21, 2025
  Mr. Cornyn  introduced the following bill;
  which was read twice and referred to the  Committee on Finance
  A BILL
To amend the Internal Revenue Code of 1986 to allow individuals to defer
  recognition of reinvested capital gains distributions from regulated investment
  companies.
1.
Short title
This Act may be cited as the   Generating Retirement Ownership through Long-Term Holding  .
2.
Deferral of reinvested capital gain dividends of regulated investment
  companies
(a)
In general
Part III of subchapter O of  chapter 1  of the Internal Revenue Code of 1986 is amended by inserting after section 1045 the following new section:
1046.
Reinvested capital gain dividends of regulated investment
  companies
(a)
Nonrecognition of gain
In the case of an individual, no gain shall be recognized on the receipt of a capital gain dividend distributed by a regulated investment company to which part I of subchapter M applies if such capital gain dividend is automatically reinvested in additional shares of the company pursuant to a dividend reinvestment plan.
(b)
Definitions and special rules
For purposes of this section—
(1)
Capital gain dividend
The term  capital gain dividend  has the meaning given to such term by section 852(b)(3)(C).
(2)
Recognition of deferred capital gain dividends
(A)
In general
Gain treated as unrecognized in accordance with subsection (a) shall be recognized in accordance with subparagraph (B)—
(i)
upon a subsequent sale or redemption by such individual of stock in the distributing company, or
(ii)
upon the death of the individual.
(B)
Gain recognition
(i)
In general
Upon a sale or redemption described in subparagraph (A), the taxpayer shall recognize that portion of total gain treated as unrecognized in accordance with subsection (a) (and not previously recognized pursuant to this subparagraph) that is equivalent to the portion of the taxpayer’s shares in the distributing company that are sold or redeemed.
(ii)
Death of individual
Except as provided by regulations, any portion of such total gain not recognized under clause (i) prior to the taxpayer’s death shall be recognized upon the death of the taxpayer and included in the taxpayer’s gross income for the taxable year ending on the date of the taxpayer’s death.
(3)
Holding period
The taxpayer’s holding period in shares acquired through reinvestment of a capital gain dividend to which subsection (a) applies shall be determined by treating the shareholder as having held such shares for one year and a day as of the date such shares are acquired.
(c)
Section not To apply to certain taxpayers
This section shall not apply to—
(1)
an individual with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which such individual’s taxable year begins, or
(2)
an estate or trust.
(d)
Regulations
The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section.
  .
(b)
Conforming amendments
(1)
Section 852(b)(3)(B) of such Code is amended by adding at the end the following new sentence:  For rules regarding nonrecognition of gain with respect to reinvested capital gain dividends received by individuals, see section 1046. .
(2)
The table of sections for part III of subchapter O of chapter 1 of such Code is amended by inserting after the item relating to section 1045 the following new item:
Sec. 1046. Reinvested capital gain dividends
  of regulated investment companies.
  .
(c)
Effective date
The amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act.