United States HR 7760: No Capital Gains Allowance for American Adversaries Act

Bill Text

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118TH CONGRESS
2D SESSION H. R. 7760
To amend the Internal Revenue Code of 1986 to treat certain gains and
dividends derived from counties of concern as ordinary income.
IN THE HOUSE OF REPRESENTATIVES
MARCH 20, 2024
Mr. SHERMAN (for himself, Mrs. SPARTZ, Mr. DOGGETT, and Mr. FOSTER)
introduced the following bill; which was referred to the Committee on
Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to treat cer-
tain gains and dividends derived from counties of concern
as ordinary income.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘No Capital Gains Al-4
lowance for American Adversaries Act’’. 5
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SEC. 2. CERTAIN GAINS AND DIVIDENDS DERIVED FROM 1
COUNTRIES OF CONCERN TREATED AS ORDI-2
NARY INCOME. 3
(a) IN GENERAL.—Part IV of subchapter P of chap-4
ter 1 of the Internal Revenue Code of 1986 is amended 5
by adding at the end the following new section: 6
‘‘SEC. 1261. GAINS DERIVED FROM COUNTRIES OF CON-7
CERN TREATED AS ORDINARY INCOME. 8
‘‘(a) IN GENERAL.—Gain from the sale, exchange, or 9
other disposition of specified country of concern property 10
shall be treated as ordinary income. Such gain shall be 11
recognized notwithstanding any other provision of this 12
title. 13
‘‘(b) SPECIFIED COUNTRY OF CONCERN PROP-14
ERTY.—For purposes of this section: 15
‘‘(1) IN GENERAL.—The term ‘specified country 16
of concern property’ means— 17
‘‘(A) any registered or unregistered secu-18
rity of a company or other entity, as determined 19
by criteria established by the Securities and Ex-20
change Commission and the Secretary of the 21
Treasury— 22
‘‘(i) which is incorporated or otherwise 23
organized in a country of concern, 24
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‘‘(ii) which has a majority of such 1
company or other entity’s assets or em-2
ployees located in a country of concern, 3
‘‘(iii) which is owned by, controlled by, 4
or subject to the jurisdiction or direction of 5
a government of a country of concern, 6
‘‘(iv) where a majority of such com-7
pany or other entity’s value depends on the 8
revenues, profits, market capitalization, as-9
sets, or the value of a security (including 10
options to purchase or sell) of companies 11
or other entities described under clause (i), 12
(ii), or (iii), or 13
‘‘(v) where such company or other en-14
tity is controlled by any company or other 15
entity described under clause (i), (ii), or 16
(iii), and 17
‘‘(B) any property (other than securities) 18
which is located or used in a country of con-19
cern. 20
‘‘(2) ADDITIONAL DEFINITIONS.—For purposes 21
of paragraph (1): 22
‘‘(A) CONTROLLED BY.—The term ‘con-23
trolled by’ has the meaning given that term 24
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under section 230.405 of title 17, Code of Fed-1
eral Regulations. 2
‘‘(B) COUNTRY OF CONCERN.—The term 3
‘country of concern’ means the People’s Repub-4
lic of China (including Hong Kong and Macao 5
and excluding Taiwan), Russia, Belarus, Iran, 6
and North Korea.’’. 7
(b) DIVIDENDS.—Section 1(h)(11)(C)(iii) of such 8
Code is amended by striking ‘‘and’’ at the end of subclause 9
(I), by striking the period at the end of subclause (II) and 10
inserting ‘‘, and’’, and by adding at the end the following 11
new subclause: 12
‘‘(III) any foreign corporation de-13
scribed in section 1261(b)(1)(A) as of 14
the date on which the dividend is 15
paid.’’. 16
(c) DENIAL OF STEP-UPINBASIS AT DEATH.—Sec-17
tion 1014(a) of such Code is amended by striking ‘‘or’’ 18
at the end of paragraph (3), by striking the period at the 19
end of paragraph (4) and inserting ‘‘, or’’, and by adding 20
at the end the following new paragraph: 21
‘‘(5) in the case of specified country of concern 22
property (as defined in section 1261(b)), the basis in 23
the hands of the decedent.’’. 24
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(d) NOTICE TO PURCHASERS.—Not later than 180 1
days after the date of the enactment of this Act, the Secu-2
rities and Exchange Commission shall issue rules requir-3
ing any person selling, exchanging, or otherwise disposing 4
of a security that is specified country of concern property 5
(as defined under section 1261(b) of the Internal Revenue 6
Code of 1986) to notify the other party to such sale, ex-7
change, or disposition that any gains related to such secu-8
rity are treated as ordinary income under the Internal 9
Revenu