,,ii  #aag? ,,congress  #a/ ,session    
,s4 #caec  ,,9 ,,! ,,s5ate ,,( ,,!      
,,unit$ ,,/ates  ,novemb] #c1 #bjba,mr4 
,cruz 7= himself1 ,mr4 ,tillis1 ,mr4    
,braun1 ,mr4 ,b>rasso1 ,mr4 ,toomey1    
,mr4 ,lank=d1 & ,mr4 ,inh(e7 introduc$ !
 foll[+ bill2 :i* 0 read twice & ref]r$ 
to ! ,committee on ,f9ance  ,a ,,bill   
,to am5d ! ,int]nal ,rev5ue ,code (     
#aihf to provide = ! index+ ( c]ta9     
assets = purposes ( det]m9+ ga9 or loss4
  #a4 ,%ort title ,?is ,act may be cit$ 
z ! ,capital ,ga9s ,inflation ,relief   
,act ( #bjba4  #b4 ,index+ ( c]ta9      
assets = purposes ( det]m9+ ga9 or loss 
7a7 ,9 ,g5]al ,"p ,,ii ( sub*apt] ,o (  
*apt] #a ( ! ,int]nal ,rev5ue ,code (   
#aihf 7relat+ to basis rules ( g5]al    
application7 is am5d$ by r$esignat+     
section #ajbc z section #ajbd & by      
ins]t+ aft] section #ajbb ! foll[+ new  
section3  #ajbc4 ,index+ ( c]ta9 assets 
= purposes ( det]m9+ ga9 or loss  7a7   
,g5]al rule  7#a7 ,index$ basis         
sub/itut$ = adju/$ basis ,solely =      

purposes ( det]m9+ ga9 or loss on ! sale
 or o!r disposition by a taxpay] 7o!r   
?an a corporation7 ( an index$ asset :i*
 has be5 held = m ?an #c ye>s1 ! index$ 
basis ( ! asset %all be sub/itut$ = its 
adju/$ basis4  7#b7 ,exception =        
depreciation1 etc ,! d$uctions =        
depreciation1 depletion1 & amortization 
%all be det]m9$ )\t reg>d to !          
application ( p>agraph 7#a7 to ! taxpay]
 or any o!r p]son4  7#c7 ,writt5        
docum5tation requirem5t ,p>agraph 7#a7  
%all apply only ) respect to index$     
assets = :i* ! taxpay] has writt5       
docum5tation ( ! orig9al pur*ase price  
paid or incurr$ by ! taxpay] to acquire 
su* asset4  7b7 ,index$ asset  7#a7 ,9  
g5]al ,= purposes ( ?is section1 ! t]m  
index$ asset means-- 7,a7 any common    
/ock 9 a ,c corporation 7o!r ?an a =eign
 corporation71  7,b7 any digital asset1 
or  7,c7 any tangible prop]ty1  :i* is a
 capital asset or prop]ty us$ 9 ! trade 
or bus9ess 7z def9$ 9 section           
#abca7;b774  7#b7 ,/ock 9 c]ta9 =eign   

corporations includ$ ,= purposes ( ?is  
section-- 7,a7 ,9 g5]al ,! t]m index$   
asset includes common /ock 9 a =eign    
corporation :i* is regul>ly trad$ on an 
e/abli%$ securities m>ket4  7,b7        
,exception ,subp>agraph 7,a7 %all n     
apply to-- 7i7 /ock ( a =eign inve/m5t  
company1  7ii7 /ock 9 a passive =eign   
inve/m5t company 7z def9$ 9 section     
#abif71  7iii7 /ock 9 a =eign           
corporation held by a ,unit$ ,/ates     
p]son :o meets ! requirem5ts ( section  
#abdh7;a77#b71 &  7iv7 /ock 9 a =eign   
p]sonal hold+ company4  7,c7 ,treatm5t (
 ,am]ican depository receipts ,an       
,am]ican depository receipt = common    
/ock 9 a =eign corporation %all be      
treat$ z common /ock 9 su* corporation4 
7#c7 ,digital asset ,= purposes ( ?is   
section1 ! t]m digital asset means any  
natively electronic asset :i*-- 7,a7 is 
record$ on a cryptographically secur$   
di/ribut$ l$g]1 &  7,b7 is design$ to   
conf] only economic or access rights4   
7c7 ,index$ basis ,= purposes ( ?is     

section-- 7#a7 ,g5]al rule ,! index$    
basis = any asset is-- 7,a7 ! adju/$    
basis ( ! asset1 increas$ by  7,b7 !    
applicable inflation adju/m5t4  7#b7    
,applicable inflation adju/m5t ,!       
applicable inflation adju/m5t = any     
asset is an am\nt equal to-- 7,a7 !     
adju/$ basis ( ! asset1 multipli$ by    
7,b7 ! p]c5tage 7if any7 by :i*-- 7i7 ! 
gross dome/ic product deflator = ! la/  
cal5d> qu>t] end+ be=e ! asset is       
dispos$ (1 exce$s  7ii7 ! gross dome/ic 
product deflator = ! la/ cal5d> qu>t]   
end+ be=e ! asset 0 acquir$ by !        
taxpay]4  ,! p]c5tage "u subp>agraph    
7,b7 %all be r\nd$ to ! ne>e/ #a_/aj (  
#a p]c5tage po9t4  7#c7 ,gross dome/ic  
product deflator ,! gross dome/ic       
product deflator = any cal5d> qu>t] is !
 implicit price deflator = ! gross      
dome/ic product = su* qu>t] 7z %[n 9 !  
la/ revision !re( releas$ by ! ,secret>y
 ( ,comm]ce be=e ! close ( ! foll[+     
cal5d> qu>t]74  7d7 ,susp5sion ( hold+  
p]iod :]e dim9i%$ risk ( loss2 treatm5t 

( %ort sales  7#a7 ,9 g5]al ,if !       
taxpay] 7or a relat$ p]son7 ent]s into  
any transaction :i* sub/antially r$uces 
! risk ( loss f hold+ any asset1 su*    
asset %all n be treat$ z an index$ asset
 = ! p]iod ( su* r$uc$ risk4  7#b7 ,%ort
 sales  7,a7 ,9 g5]al ,9 ! case ( a %ort
 sale ( an index$ asset ) a %ort sale   
p]iod 9 excess ( #c ye>s1 = purposes (  
?is title1 ! am\nt realiz$ %all be an   
am\nt equal to ! am\nt realiz$ 7det]m9$ 
)\t reg>d to ?is p>agraph7 increas$ by !
 applicable inflation adju/m5t4 ,9      
apply+ subsection 7c77#b7 = purposes ( !
 prec$+ s5t5ce1 ! date on :i* ! prop]ty 
is sold %ort %all be treat$ z ! date (  
acquisition & ! clos+ date = ! sale %all
 be treat$ z ! date ( disposition4  7,b7
 ,%ort sale p]iod ,= purposes (         
subp>agraph 7,a71 ! %ort sale p]iod     
beg9s on ! day t ! prop]ty is sold &    
ends on ! clos+ date = ! sale4  7e7     
,treatm5t ( regulat$ inve/m5t companies 
& real e/ate inve/m5t tru/s  7#a7       
,adju/m5ts at entity level  7,a7 ,9     

g5]al ,except z o!rwise provid$ 9 ?is   
p>agraph1 ! adju/m5t "u subsection 7a7  
%all be all[$ to any qualifi$ inve/m5t  
entity 7includ+ = purposes ( det]m9+ !  
e>n+s & pr(its ( su* entity74  7,b7     
,exception = corporate %>ehold]s ,"u    
regulations-- 7i7 9 ! case ( a          
di/ribution by a qualifi$ inve/m5t      
entity 7directly or indirectly7 to a    
corporation-- 7,i7 ! det]m9ation ( :e!r 
su* di/ribution is a divid5d %all be    
made )\t reg>d to ?is section1 &  7,,ii7
 ! am\nt treat$ z ga9 by reason ( !     
receipt ( any capital ga9 divid5d %all  
be increas$ by ! p]c5tage by :i* !      
entity's net capital ga9 = ! taxable ye>
 7det]m9$ )\t reg>d to ?is section7     
exce$s ! entity's net capital ga9 = su* 
ye> det]m9$ ) reg>d to ?is section1 &   
7ii7 !re %all be o!r appropriate        
adju/m5ts 7includ+ deem$ di/ributions7 s
 z to ensure t ! b5efits ( ?is section  
are n all[$ 7directly or indirectly7 to 
corporate %>ehold]s ( qualifi$ inve/m5t 
entities4  ,= purposes ( ! prec$+       

s5t5ce1 any am\nt includible 9 gross    
income "u section #heb7;b77#c77;,d7 %all
 be treat$ z a capital ga9 divid5d & an 
,s corporation %all n be treat$ z a     
corporation4  7,c7 ,exception =         
qualification purposes ,?is section %all
 n apply = purposes ( sections #hea7;b7 
& #hef7;c74  7,d7 ,exception = c]ta9    
taxes impos$ at entity level  7i7 ,tax  
on failure to di/ribute entire ga9 ,if  
any am\nt is subject to tax "u section  
#heb7;b77#c77;,a7 = any taxable ye>1 !  
am\nt on :i* tax is impos$ "u su*       
section %all be increas$ by ! p]c5tage  
det]m9$ "u subp>agraph 7,b77i77,,ii74 ,a
 simil> rule %all apply 9 ! case ( any  
am\nt subject to tax "u p>agraph 7#b7 or
 7#c7 ( section #heg7;b7 to ! ext5t     
attributable to ! excess ( ! net capital
 ga9 ov] ! d$uction = divid5ds paid     
det]m9$ ) ref]5ce to capital ga9        
divid5ds only4 ,! fir/ s5t5ce ( ?is     
clause %all n apply to s mu* ( ! am\nt  
subject to tax "u section               
#heb7;b77#c77;,a7 z is designat$ by !   

company "u section #heb7;b77#c77;,d74   
7ii7 ,o!r taxes ,?is section %all n     
apply = purposes ( det]m9+ ! am\nt ( any
 tax impos$ by p>agraph 7#d71 7#e71 or  
7#f7 ( section #heg7;b74  7#b7          
,adju/m5ts to int]e/s held 9 entity     
7,a7 ,regulat$ inve/m5t companies ,/ock 
9 a regulat$ inve/m5t company 7)9 !     
mean+ ( section #hea7 %all be an index$ 
asset = any cal5d> qu>t] 9 ! same ratio 
z-- 7i7 ! av]age ( ! fair m>ket values (
 ! index$ assets held by su* company at 
! close ( ea* mon? dur+ su* qu>t]1 be>s 
to  7ii7 ! av]age ( ! fair m>ket values 
( all assets held by su* company at !   
close ( ea* su* mon?4  7,b7 ,real e/ate 
inve/m5t tru/s ,/ock 9 a real e/ate     
inve/m5t tru/ 7)9 ! mean+ ( section     
#hef7 %all be an index$ asset = any     
cal5d> qu>t] 9 ! same ratio z-- 7i7 !   
fair m>ket value ( ! index$ assets held 
by su* tru/ at ! close ( su* qu>t]1 be>s
 to  7ii7 ! fair m>ket value ( all      
assets held by su* tru/ at ! close ( su*
 qu>t]4  7,c7 ,ratio ( #hj p]c5t or m   

,if ! ratio = any cal5d> qu>t] det]m9$  
"u subp>agraph 7,a7 or 7,b7 w\ld 7b =   
?is subp>agraph7 be #hj p]c5t or m1 su* 
ratio = su* qu>t] %all be #ajj p]c5t4   
7,d7 ,ratio ( #bj p]c5t or less ,if !   
ratio = any cal5d> qu>t] det]m9$ "u     
subp>agraph 7,a7 or 7,b7 w\ld 7b = ?is  
subp>agraph7 be #bj p]c5t or less1 su*  
ratio = su* qu>t] %all be z]o4  7,e7    
,look-?ru ( p>tn]%ips ,= purposes ( ?is 
p>agraph1 a qualifi$ inve/m5t entity :i*
 holds a p>tn]%ip int]e/ %all be treat$ 
79 lieu ( hold+ a p>tn]%ip int]e/7 z    
hold+ its proportionate %>e ( ! assets  
held by ! p>tn]%ip4  7#c7 ,treatm5t (   
return ( capital di/ributions ,except z 
o!rwise provid$ by ! ,secret>y1 a       
di/ribution ) respect to /ock 9 a       
qualifi$ inve/m5t entity :i* is n a     
divid5d & :i* results 9 a r$uction 9 !  
adju/$ basis ( su* /ock %all be treat$ z
 allocable to /ock acquir$ by ! taxpay] 
9 ! ord] 9 :i* su* /ock 0 acquir$4  7#d7
 ,qualifi$ inve/m5t entity ,= purposes (
 ?is subsection1 ! t]m qualifi$ inve/m5t

 entity means-- 7,a7 a regulat$ inve/m5t
 company 7)9 ! mean+ ( section #hea71 & 
7,b7 a real e/ate inve/m5t tru/ 7)9 !   
mean+ ( section #hef74  7f7 ,o!r        
pass-,?ru entities  7#a7 ,p>tn]%ips     
7,a7 ,9 g5]al ,9 ! case ( a p>tn]%ip1 ! 
adju/m5t made "u subsection 7a7 at !    
p>tn]%ip level %all be pass$ ?r\gh to ! 
p>tn]s4  7,b7 ,special rule 9 ! case (  
section #ged elections ,9 ! case ( a    
transf] ( an int]e/ 9 a p>tn]%ip )      
respect to :i* ! election provid$ 9     
section #ged is 9 effect-- 7i7 !        
adju/m5t "u section #gdc7;b77#a7 %all1 )
 respect to ! transf]or p>tn]1 be treat$
 z a sale ( ! p>tn]%ip assets = purposes
 ( apply+ ?is section1 &  7ii7 ) respect
 to ! transf]ee p>tn]1 ! p>tn]%ip's     
hold+ p]iod = purposes ( ?is section 9  
su* assets %all be treat$ z beg9n+ on ! 
date ( su* adju/m5t4  7#b7 ,s           
corporations ,9 ! case ( an ,s          
corporation1 ! adju/m5t made "u         
subsection 7a7 at ! corporate level %all
 be pass$ ?r\gh to ! %>ehold]s4 ,?is    

section %all n apply = purposes (       
det]m9+ ! am\nt ( any tax impos$ by     
section #acgd or #acge4  7#c7 ,common   
tru/ funds ,9 ! case ( a common tru/    
fund1 ! adju/m5t made "u subsection 7a7 
at ! tru/ level %all be pass$ ?r\gh to !
 p>ticipants4  7#d7 ,index+ adju/m5t    
disreg>d$ 9 det]m9+ loss on sale (      
int]e/ 9 entity ,not)/&+ ! prec$+       
provisions ( ?is subsection1 = purposes 
( det]m9+ ! am\nt ( any loss on a sale  
or ex*ange ( an int]e/ 9 a p>tn]%ip1 ,s 
corporation1 or common tru/ fund1 !     
adju/m5t made "u subsection 7a7 %all n  
be tak5 into acc\nt 9 det]m9+ ! adju/$  
basis ( su* int]e/4  7g7 ,dispositions  
betwe5 relat$ p]sons  7#a7 ,9 g5]al ,?is
 section %all n apply to any sale or o!r
 disposition ( prop]ty betwe5 relat$    
p]sons except to ! ext5t t ! basis ( su*
 prop]ty 9 ! h&s ( ! transf]ee is a     
sub/itut$ basis4  7#b7 ,relat$ p]sons   
def9$ ,= purposes ( ?is section1 ! t]m  
relat$ p]sons means-- 7,a7 p]sons be>+ a
 relation%ip set =? 9 section #bfg7;b71 

&  7,b7 p]sons treat$ z s+le employ] "u 
subsection 7b7 or 7c7 ( section #dad4   
7h7 ,transf]s ,to increase index+       
adju/m5t ,if any p]son transf]s ca%1    
debt1 or any o!r prop]ty to ano!r p]son 
& ! pr9cipal purpose ( su* transf] is to
 secure or increase an adju/m5t "u      
subsection 7a71 ! ,secret>y may disall[ 
"p or all ( su* adju/m5t or increase4   
7i7 ,special rules ,= purposes ( ?is    
section-- 7#a7 ,treatm5t ( improvem5ts1 
etc ,if !re is an addition to ! adju/$  
basis ( any tangible prop]ty or ( any   
/ock 9 a corporation dur+ ! taxable ye> 
by reason ( an improvem5t to su* prop]ty
 or a contribution to capital ( su*     
corporation-- 7,a7 su* addition %all    
nev] be tak5 into acc\nt "u subsection  
7c77#a77;,a7 if ! aggregate am\nt !re(  
dur+ ! taxable ye> ) respect to su*     
prop]ty or /ock is less ?an #a1jjj1 &   
7,b7 su* addition %all be treat$ z a    
sep>ate asset acquir$ at ! close ( su*  
taxable ye> if ! aggregate am\nt !re(   
dur+ ! taxable ye> ) respect to su*     

prop]ty or /ock is #a1jjj or m4  ,a rule
 simil> to ! rule ( ! prec$+ s5t5ce %all
 apply to any o!r portion ( an asset to 
! ext5t t sep>ate treatm5t ( su* portion
 is appropriate to c>ry out ! purposes (
 ?is section4  7#b7 ,assets :i* are n   
index$ assets ?r\gh\t hold+ p]iod ,!    
applicable inflation adju/m5t %all be   
appropriately r$uc$ = p]iods dur+ :i* ! 
asset 0 n an index$ asset4  7#c7        
,treatm5t ( c]ta9 di/ributions ,a       
di/ribution ) respect to /ock 9 a       
corporation :i* is n a divid5d %all be  
treat$ z a disposition4  7#d7 ,section  
_c increase ord9>y loss ,to ! ext5t t 7b
 = ?is p>agraph7 ?is section w\ld create
 or increase a net ord9>y loss to :i*   
section #abca7;a77#b7 applies or an     
ord9>y loss to :i* any o!r provision (  
?is title applies1 su* provision %all n 
apply4 ,! taxpay] %all be treat$ z hav+ 
a long-t]m capital loss 9 an am\nt equal
 to ! am\nt ( ! ord9>y loss to :i* !    
prec$+ s5t5ce applies4  7#e7            
,acquisition date :]e !re has be5 prior 

application ( subsection 7a77#a7 )      
respect to ! taxpay] ,if !re has be5 a  
prior application ( subsection 7a77#a7  
to an asset :ile su* asset 0 held by !  
taxpay]1 ! date ( acquisition ( su*     
asset by ! taxpay] %all be treat$ z n   
e>li] ?an ! date ( ! mo/ rec5t su* prior
 application4  7j7 ,regulations ,!      
,secret>y %all prescribe su* regulations
 z may be necess>y or appropriate to    
c>ry out ! purposes ( ?is section4  4   
7b7 ,cl]ical am5dm5t ,! table ( sections
 = "p ,,ii ( sub*apt] ,o ( *apt] #a ( ! 
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by /rik+ ! item relat+ to section #ajbc 
& by ins]t+ aft] ! item relat+ to       
section #ajbb ! foll[+ new item3  ,sec4 
#ajbb4 ,index+ ( c]ta9 assets = purposes
 ( det]m9+ ga9 or loss4,sec4 #ajbc4     
,cross ref]5ces4  4  7c7 ,effective date
 ,! am5dm5ts made by ?is section %all   
apply to index$ assets acquir$ by !     
taxpay] aft] ,decemb] #ca1 #bjba1 9     
taxable ye>s end+ aft] su* date4