S. 2047

119 S2047 IS: No Capital Gains Allowance for American Adversaries Act
 U.S. Senate
 2025-06-12
 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. 2047
  IN THE SENATE OF THE UNITED STATES
  June 12, 2025
  Mr. Ricketts  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 treat certain gains and
  dividends derived from counties of concern as ordinary income.
1.
Short title
This Act may be cited as the   No Capital Gains Allowance for American Adversaries Act  .
2.
Certain gains and dividends derived from countries of concern treated as
  ordinary income
(a)
In general
Part IV of subchapter P of  chapter 1  of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:
1261.
Gains derived from countries of concern treated as ordinary
  income
(a)
In general
Gain from the sale, exchange, or other disposition of specified country of concern property shall be treated as ordinary income. Such gain shall be recognized notwithstanding any other provision of this title.
(b)
Specified country of concern property
For purposes of this section:
(1)
In general
The term  specified country of concern property  means—
(A)
any registered or unregistered security of a company or other entity, as determined by criteria established by the Securities and Exchange Commission and the Secretary of the Treasury—
(i)
which is incorporated or otherwise organized in a country of concern,
(ii)
which has a majority of such company or other entity’s assets or employees located in a country of concern,
(iii)
which is owned by, controlled by, or subject to the jurisdiction or direction of a government of a country of concern,
(iv)
where a majority of such company or other entity’s value depends on the revenues, profits, market capitalization, assets, or the value of a security (including options to purchase or sell) of companies or other entities described under clause (i), (ii), or (iii), or
(v)
where such company or other entity is controlled by any company or other entity described under clause (i), (ii), or (iii), and
(B)
any property (other than securities) which is located or used in a country of concern.
(2)
Additional definitions
For purposes of paragraph (1):
(A)
Controlled by
The term  controlled by  has the meaning given that term under section 230.405 of title 17, Code of Federal Regulations.
(B)
Country of concern
The term  country of concern  means the People’s Republic of China (including Hong Kong and Macao and excluding Taiwan), Russia, Belarus, Iran, and North Korea.
  .
(b)
Dividends
Section 1(h)(11)(C)(iii) of such Code is amended by striking  and  at the end of subclause (I), by striking the period at the end of subclause (II) and inserting  , and , and by adding at the end the following new subclause:
(III)
any foreign corporation described in section 1261(b)(1)(A) as of the date on which the dividend is paid.
  .
(c)
Denial of step-Up in basis at death
Section 1014(a) of such Code is amended by striking  or  at the end of paragraph (3), by striking the period at the end of paragraph (4) and inserting  , or , and by adding at the end the following new paragraph:
(5)
in the case of specified country of concern property (as defined in section 1261(b)), the basis in the hands of the decedent.
  .
(d)
Notice to purchasers
Not later than 180 days after the date of the enactment of this Act, the Securities and Exchange Commission shall issue rules requiring any person selling, exchanging, or otherwise disposing of a security that is specified country of concern property (as defined under  section 1261(b)  of the Internal Revenue Code of 1986) to notify the other party to such sale, exchange, or disposition that any gains related to such security are treated as ordinary income under the Internal Revenue Code of 1986 and not treated as capital gains.
(e)
Publicly available list of securities
(1)
In general
The Securities and Exchange Commission shall publish on the website of the Commission a list of all securities described under  section 1261(b)(1)(A)  of the Internal Revenue Code of 1986.
(2)
Reporting requirements
The Securities and Exchange Commission may require such reports as the Commission determines necessary to determine which securities are described under  section 1261(b)(1)(A)  of the Internal Revenue Code of 1986.
(f)
Rulemaking
Not later than 180 days after the date of the enactment of this Act, the Secretary of the Treasury and the Securities and Exchange Commission shall issue such rules as may be necessary to implement this Act and the amendments made by this Act, including establishing the criteria described under  section 1261(b)(1)(A)  of the Internal Revenue Code of 1986.
(g)
Effective date
The amendments made by this section shall apply to dispositions of property, and dividends paid, on or after January 1, 2026.