,,ii #aaith ,,congress #b;d ,session ,s4 #dffb ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,june #b1 #bjbf,mr4 ,gallego introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to ensure that high net-worth individuals cannot avoid paying taxes on their income and assets4 #a4 ,short title ,this ,act may be cited as the ,redistribution ,of ,billions by ,instituting ,new ,high-income ,obligations on ,overlooked ,debt ,act of #bjbf or the ,,robinhood ,act of #bjbf4 #b4 ,treatment of loans for high net-worth individuals 7a7 ,in general ,subchapter ,p of chapter #a of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new part3 ,,vii ,treatment of loans for applicable taxpayers ,sec4 #abii4 ,treatment of loans for applicable taxpayers4,sec4 #abii;,a4 ,applicable taxpayer defined4,sec4 #abii;,b4 ,terms and rules relating to covered assets4 #abii4 ,treatment of loans for applicable taxpayers 7a7 ,in general ,in the case of any loan issued to an applicable taxpayer1 an amount of long-term capital assets 7as identified by the applicable taxpayer7 held by the applicable taxpayer for which the long-term capital gain is equal to or greater than the amount of the loan shall be treated as sold for their fair market value on the last day of the taxable year in which such loan was issued4 7b7 ,adjustment of basis 7#a7 ,in general ,in the case of any applicable taxpayer to which subsection 7a7 applies1 such taxpayer may increase the basis of any long-term capital asset held by such taxpayer to the extent of the gain recognized pursuant to subsection 7a7 with respect to such long-term capital asset1 provided that the basis of the long-term capital asset does not exceed the fair market value of such asset4 7#b7 ,exception ,paragraph 7#a7 shall not apply with respect to any property of a character which is subject to the allowance for depreciation provided in section #afg1 including any property to which section #abca would otherwise apply4 7c7 ,treatment of long-,term capital gain ,for purposes of section #a7;h7 and determining net long-term capital gain1 the amount of any long-term capital gain from assets treated as sold pursuant to subsection 7a7 during any taxable year may not be reduced or offset by any long-term capital losses for such taxable year1 including any losses carried forward to such taxable year4 7d7 ,long-,term capital asset ,the term long-term capital asset means a capital asset held for more than #a year4 7e7 ,special rules 7#a7 ,nonresident alien ,in the case of any loan issued to an applicable taxpayer who is a nonresident alien individual1 subsection 7a7 shall apply with respect to long-term capital assets 7as identified by the applicable taxpayer7 which are effectively connected with the conduct of a trade or business within the ,united ,states4 7#b7 ,citizens and residents living abroad ,the amount to which subsection 7a7 applies shall be reduced by any amounts excluded from the taxpayer's gross income under section #iaa4 7f7 ,treatment of leases 7#a7 ,in general ,for purposes of this section1 in the case of an applicable taxpayer that enters into a lease with respect to any property for which the term is greater than #e years-- 7,a7 such lease shall be treated in the same manner as a loan issued to such taxpayer1 and 7,b7 for purposes of the application of subsection 7a7-- 7i7 the fair market value of such property on the last day of the taxable year in which the applicable taxpayer entered into the lease shall be treated as the amount of the loan1 and 7ii7 the taxable year in which the applicable taxpayer entered into the lease shall be treated as the taxable year in which the loan was issued4 7#b7 ,subsequent leases 7,a7 ,in general ,for purposes of this subsection1 in the case of an applicable taxpayer that enters into a lease with respect to any property for a term of not greater than #e years 7referred to in this paragraph as the original lease7 and-- 7i7 subsequently extends the term of the original lease1 or 7ii7 enters into a lease for any term with respect to any other property which is substantially identical to the property under the original lease1 the term of the original lease shall include the period of the extension described in clause 7i7 or the term of the lease described in clause 7ii71 as applicable4 7,b7 ,realization and valuation ,in the case of a lease to which subparagraph 7,a7 applies1 the taxable year in which the original lease is extended 7as described in clause 7i7 of such subparagraph7 or a lease is entered into for property which is substantially identical 7as described in clause 7ii7 of such subparagraph71 as applicable1 shall be deemed to be the taxable year in which the applicable taxpayer entered into the lease for purposes of paragraph 7#a77;,b74 7g7 ,existing loans ,in the case of any loans which were issued to an applicable taxpayer prior to the date of enactment of this section-- 7#a7 the total principal balance of such loans which is outstanding as of such date shall be deemed to be one loan that was issued to the applicable taxpayer on ,january #a1 #bjbg1 and 7#b7 the requirements under subsection 7i77#c77;,b7 shall not apply4 7h7 ,non-,avoidance rules 7#a7 ,in general ,in the case of any loan issued to an applicable entity-- 7,a7 the loan shall be deemed to have been issued to the owners of such applicable entity on a pro rata basis1 and 7,b7 if any owner described in subparagraph 7,a7 is an applicable taxpayer1 subsection 7a7 shall apply with respect to such taxpayer's pro rata share of such loan4 7#b7 ,notification ,not later than #cj days after a loan described in paragraph 7#a7 has been issued1 the applicable entity shall provide notice to all owners that-- 7,a7 a loan has been issued to the applicable entity1 and 7,b7 the amount of such loan and the pro rata share that each owner has been assigned pursuant to paragraph 7#a77;,a74 7#c7 ,owner 7,a7 ,in general ,the term owner means1 with respect to any applicable entity1 a taxpayer who owns 7or is considered as owning within the meaning of section #cah7 capital or profits interests in such entity4 7,b7 ,constructive ownership rules ,for purposes of this subparagraph1 ownership in such entity shall be determined in accordance with regulations prescribed by the ,secretary which shall be based on principles similar to the principles of section #cah4 7#d7 ,certain leases ,for purposes of this subsection1 in the case of an applicable entity that enters into a lease1 subsection 7f7 shall not apply with respect to such lease unless the transaction is in violation of the economic substance doctrine 7as described in section #ggja7o774 7i7 ,regulations and guidance ,the ,secretary shall prescribe such guidance and regulations as may be necessary to carry out the purposes of this section1 including guidance and regulations-- 7#a7 to assist taxpayers in complying with the requirements of this section1 7#b7 that specifies required content to be included in the notification under subsection 7h77#b71 and 7#c7 to require reporting by-- 7,a7 any applicable taxpayer to which a loan was issued1 and 7,b7 any entity that issues a loan to an applicable taxpayer4 #abii;,a4 ,applicable taxpayer defined 7a7 ,in general ,for purposes of this part-- 7#a7 ,in general ,the term applicable taxpayer means1 with respect to any taxable year1 any taxpayer-- 7,a7 which is an individual who met either the income test of paragraph 7#b7 or the asset test of paragraph 7#c7 for each of the #c immediately preceding taxable years 7including taxable years beginning before the date of the enactment of this part which are included in any such #c-taxable-year period71 or 7,b7 which is-- 7i7 an applicable trust1 or 7ii7 the estate of an individual who was an applicable taxpayer for any taxable year during the #d-taxable-year period ending with the taxable year in which the individual died4 7#b7 ,income test ,the requirements of this paragraph are met for any taxable year if the applicable adjusted gross income of the taxpayer for the taxable year exceeds #ajj1jjj1jjj 7#ej1jjj1jjj in the case of a married individual filing separately74 7#c7 ,asset test 7,a7 ,in general ,the requirements of this paragraph are met for any taxable year if the aggregate applicable value of all tradable and nontradable covered assets held by the taxpayer as of the close of the taxable year exceeds #a1jjj1jjj1jjj 7#ejj1jjj1jjj in the case of a married individual filing separately74 7,b7 ,treatment of ownership interests in applicable entities ,for purposes of subparagraph 7,a71 any ownership interest in an applicable entity which is-- 7i7 held directly 7or indirectly through #a or more nontradable interests7 by an applicable taxpayer1 and 7ii7 a tradable or nontradable covered asset1 shall be treated in the same manner as any other tradable or nontradable covered asset4 7#d7 ,special rules relating to applicable taxpayer status 7,a7 ,termination of status of individual taxpayers ,a taxpayer who is treated as an applicable taxpayer under paragraph 7#a77;,a7 for any taxable year shall continue to be so treated until the first taxable year with respect to which-- 7i7 the taxpayer does not1 for each of the #c taxable years immediately preceding such taxable year1 meet either-- 7,i7 the income test of paragraph 7#b7 in effect for such preceding taxable year1 or 7,,ii7 the asset test of paragraph 7#c7 in effect for such preceding taxable year1 except that each such paragraph shall be applied for purposes of this clause by substituting an amount equal to one-half of the dollar amount otherwise in effect for such taxpayer under such paragraph for each such preceding taxable year for such dollar amount1 and 7ii7 the taxpayer elects1 in such manner and form and at such time as the ,secretary may prescribe1 not to be so treated for such first taxable year4 7,b7 ,earlier termination election of applicable taxpayer status for divorced individuals ,if-- 7i7 an applicable taxpayer ceases to be a married individual by reason of a decree of divorce or separate maintenance issued during any taxable year1 and 7ii7 such taxpayer1 for the first taxable year following the taxable year described in clause 7i71 does not meet either-- 7,i7 the income test of paragraph 7#b71 except that such paragraph shall be applied for purposes of this subclause by substituting #a1jjj1jjj for the dollar amount otherwise in effect for such taxpayer under such paragraph1 or 7,,ii7 the asset test of paragraph 7#c71 except that such paragraph shall be applied for purposes of this subclause by substituting #aj1jjj1jjj for the dollar amount otherwise in effect for such taxpayer under such paragraph1 then such taxpayer may elect1 in such manner and form and at such time as the ,secretary may prescribe1 not to be treated as an applicable taxpayer beginning with such first taxable year4 7,c7 ,election ,an election under subparagraph 7,a7 or 7,b7-- 7i7 shall be made with the taxpayer's return of tax for the taxable year to which such election first applies 7or such other time as the ,secretary shall prescribe7 and shall be in such form and manner as the ,secretary may prescribe1 and 7ii7 shall apply to such first taxable year and all subsequent taxable years until the first taxable year for which the taxpayer is again treated as an applicable taxpayer by reason of meeting the requirements of paragraph 7#a77;,a74 7#e7 ,special rules for married individuals 7,a7 ,applicable taxpayers becoming married individuals ,if an individual was an applicable taxpayer for the taxable year before the individual became a married individual 7within the meaning of section #ggjc71 such individual and the individual's spouse shall be treated as applicable taxpayers for such taxable year of marriage and subsequent taxable years until such status is otherwise terminated under this section4 7,b7 ,married individuals filing separately ,if a married individual filing separately is treated as an applicable taxpayer for any taxable year1 such individual's spouse shall be treated as an applicable taxpayer for such taxable year4 7,c7 ,first-year elections ,under rules prescribed by the ,secretary1 if an individual is first treated as an applicable taxpayer for a taxable year by reason of the application of subparagraph 7,a7 or 7,b71 section #dif shall apply to such taxpayer for such first taxable year only with respect to assets held separately by such individual unless such taxable year is also the first taxable year for which the individual's spouse is an applicable taxpayer4 7#f7 ,regulatory authority ,the ,secretary shall prescribe such regulations and guidance as may be necessary to carry out the provisions of this subsection1 including-- 7,a7 rules waiving the application of paragraph 7#e77;,b7 in cases where the ,secretary determines equitable relief is appropriate1 7,b7 rules providing for the application of this subsection in cases where the filing status of a taxpayer changes between any taxable year and any of the #c immediately preceding taxable years1 including the first taxable year in which a taxpayer files a joint return after becoming married1 and 7,c7 rules requiring such information reporting as the ,secretary determines necessary to determine whether a taxpayer is an applicable taxpayer4 7b7 ,applicable adjusted gross income ,for purposes of this section1 the term applicable adjusted gross income means modified adjusted gross income as defined in section #cf;,b7d77#b77;,b71 except that-- 7#a7 clause 7i7 thereof shall be applied by substituting sections #iaa1 #ica1 and #icc for section #iaa1 and 7#b7 in the case of a trust1 no deduction under section #fea or #ffa shall be allowed4 7c7 ,applicable trust ,for purposes of this section-- 7#a7 ,in general ,the term applicable trust means a trust 7other than a grantor trust7 which1 for each of the #c taxable years immediately preceding such taxable year 7including taxable years beginning before the date of the enactment of this part which are included in any such #c-taxable-year period71 meets either-- 7,a7 the income test of subsection 7a77#b71 except that such subsection shall be applied for purposes of this subparagraph by substituting #aj1jjj1jjj for the dollar amount otherwise in effect for such taxable year under such paragraph1 or 7,b7 the asset test of subsection 7a77#c71 except that such subsection shall be applied for purposes of this subparagraph by substituting #ajj1jjj1jjj for the dollar amount otherwise in effect for such taxable year under such paragraph4 7#b7 ,exceptions ,such term shall not include-- 7,a7 a qualified disability trust 7as defined in section #fdb7;b77#b77;,c77ii771 7,b7 any portion of a trust which consists of property permanently set aside for the exclusive use of an organization described in section #agj7;c71 7,c7 a pooled income fund 7as defined in section #fdb7;c77#e77 or a cemetery perpetual care fund 7as described in section #fdb7;i771 7,d7 a settlement trust 7as defined in section #fdf71 7,e7 any charitable remainder annuity trust 7as defined in section #ffd71 7,f7 any charitable remainder unitrust 7as defined in section #ffd71 or 7,g7 any other category of trust identified in regulations or guidance provided by the ,secretary4 7#c7 ,grantor trusts 7,a7 ,grantor trust defined ,for purposes of this section1 the term grantor trust means any portion of a trust with respect to which the grantor or any other person is considered the owner under subpart ,e of part ,i of subchapter ,j4 7,b7 ,assets of grantor trust taken into account ,for purposes of subsection 7a77#a77;,a71 the assets of a grantor trust shall be included in the assets of-- 7i7 the grantor of such trust if the grantor is considered the owner of such assets1 and 7ii7 if a person other than the grantor is considered the owner of such assets1 both the grantor and such person4 7d7 ,special rules for foreign persons and expatriates ,for purposes of this part-- 7#a7 ,nonresident alien individuals ,the following rules shall apply in determining whether a nonresident alien individual is an applicable taxpayer3 7,a7 ,income test ,for purposes of the income test under subsection 7a77#b7-- 7i7 such subsection shall be applied for purposes of this subparagraph by substituting #ej1jjj1jjj for the dollar amount otherwise in effect for such taxable year under such paragraph1 and 7ii7 the applicable adjusted gross income of such individual shall be equal to the taxable income of such individual1 determined by only taking into account items of income1 gain1 deduction1 and loss which are effectively connected with the conduct of trades or businesses within the ,united ,states4 7,b7 ,asset test ,for purposes of the asset test under subsection 7a77#c7-- 7i7 such subsection shall be applied for purposes of this subparagraph by substituting #ejj1jjj1jjj for the dollar amount otherwise in effect for such taxable year under such paragraph1 and 7ii7 only assets which produce income described in subparagraph 7,a7 shall be taken into account4 7#b7 ,expatriates 7,a7 ,in general ,if1 for the taxable year which includes a covered expatriate's expatriation date1 such expatriate-- 7i7 was an applicable taxpayer 7without regard to this paragraph71 or 7ii7 is an applicable taxpayer under the rules of subparagraph 7,b71 such expatriate shall be treated as an applicable taxpayer during each of the taxable years during the #aj-taxable-year period beginning with such taxable year 7and such status shall not be terminated during such period by reason of any other provision of this part74 7,b7 ,special rules for determining status ,for purposes of subparagraph 7,a77ii71 a covered expatriate not otherwise treated as an applicable taxpayer shall be treated as an applicable taxpayer if1 during any of the #e taxable years immediately preceding the taxable year which includes the covered expatriate's expatriation date 7including taxable years beginning before the date of the enactment of this part which are included in any such #e-taxable-year period71 the expatriate meets either-- 7i7 the income test of subsection 7a77#b71 except that such subsection shall be applied for purposes of this subparagraph by substituting #ej1jjj1jjj for the dollar amount otherwise in effect for such taxable year under such paragraph1 or 7ii7 the asset test of subsection 7a77#c71 except that such subsection shall be applied for purposes of this subparagraph by substituting #ejj1jjj1jjj for the dollar amount otherwise in effect for such taxable year under such paragraph4 7,c7 ,definitions ,any term used in this paragraph which is also used in section #hgg;,a shall have the same meaning as when used in such section4 #abii;,b4 ,terms and rules relating to covered assets 7a7 ,covered asset ,for purposes of this part1 the term covered asset means any tradable covered asset and any nontradable covered asset4 7b7 ,tradable covered asset ,for purposes of this part1 the term tradable covered asset means-- 7#a7 any asset if-- 7,a7 interests in such asset are traded on an established securities market1 7,b7 interests in such assets are readily tradable on a secondary market 7or the substantial equivalent thereof71 7,c7 interests in such assets are available on an online or electronic platform that regularly matches1 or facilitates the matching of1 buyers and sellers of such assets1 or 7,d7 such asset is an asset for which the ,secretary determines there is a reasonable basis to determine the asset's fair market value annually1 and 7#b7 any derivative with respect to an underlying investment which-- 7,a7 is an asset described in paragraph 7#a71 or 7,b7 is a nontradable covered asset which is identified in regulations or other guidance provided by the ,secretary4 7c7 ,nontradable covered asset ,for purposes of this part-- 7#a7 ,in general ,the term nontradable covered asset means any asset which is not a tradable covered asset1 including-- 7,a7 any interest of the taxpayer in an applicable savings plan or in a defined benefit plan1 7,b7 any cash or cash equivalent1 or 7,c7 any private placement life insurance or annuity contract described in section #gb7;e77#ab77;,d74 7#b7 ,investments in qualified opportunity funds ,notwithstanding subsection 7b71 any investment in a qualified opportunity fund 7as defined in section #adjj,z-#b7;d77 shall be treated as a nontradable covered asset4 7d7 ,applicable value ,for purposes of this part-- 7#a7 ,tradable covered assets ,the applicable value of any tradable covered asset as of any date shall be its fair market value on such date4 7#b7 ,nontradable covered assets ,the applicable value of any nontradable covered asset as of any date shall be the greatest of-- 7,a7 the original cost basis of such asset1 7,b7 the adjusted basis of such asset1 7,c7 the value determined as of the date of the last event with respect to the asset which establishes such value1 7,d7 in the case of an asset the value of which is included in an applicable financial statement1 the value in the latest available statement1 7,e7 the value of such asset determined for purposes of using such asset to secure any indebtedness1 and 7,f7 the value of such asset determined under such other valuation method as the ,secretary may prescribe4 ,if a covered asset would1 but for subsection 7c77#b7 or any other provision of this part1 be treated as a tradable covered asset1 the asset's applicable value shall be determined under paragraph 7#a74 7#c7 ,adjustment for debt and other liabilities of the taxpayer ,except as provided by the ,secretary1 the aggregate applicable value of all covered assets of the taxpayer as of any date 7determined without regard to this paragraph7 shall be reduced by the aggregate outstanding amount of-- 7,a7 indebtedness of the taxpayer as of such date1 and 7,b7 any other liabilities 7other than indebtedness7 of the taxpayer as of such date which the ,secretary determines are appropriate to be taken into account for such purpose4 7#d7 ,reliance on valuation ,in determining the applicable value of any tradable covered asset for purposes of this section1 the taxpayer may rely on a valuation which is-- 7,a7 provided to the taxpayer by a broker under section #fjde7;b71 7,b7 provided to the taxpayer by a dealer in securities or a dealer in commodities1 within the meaning of section #dge1 7,c7 determined under an applicable financial statement1 or 7,d7 provided to the taxpayer by such other persons as may be designated by the ,secretary4 7#e7 ,private placement life insurance and annuity contracts 7,a7 ,in general ,the applicable value of a private placement life insurance or annuity contract 7as defined in section #gb7;e77#ab77;,d77 as of any date shall be its cash surrender value 7as determined under section #ggjb7;f77#b77;,a77 on such date4 7,b7 ,adjustments ,the ,secretary shall by regulation provide for adjustments to the cash surrender value determined under subparagraph 7,a7 with respect to any contract to the extent necessary to prevent the avoidance of the purposes of this part1 including regulations which ensure that such value as of any time properly reflects the value of any underlying investments with respect to such contract as of such time4 7#f7 ,special rules for applicable entities ,in the case of an applicable entity-- 7,a7 the value of a partner's ownership interest in such partnership under paragraph 7#b77;,c7 shall not be less than the value of the partner's capital account under section #gjd1 and 7,b7 the ,secretary shall provide rules for determining the share of a holder of an ownership interest in such an entity of amounts included in an applicable financial statement of such entity for purposes of applying paragraph 7#b77;,d74 7#g7 ,secretarial authority ,the ,secretary shall prescribe such regulations1 rules1 and guidance as may be necessary to carry out the purposes of this subsection1 including regulations1 rules1 and guidance which-- 7,a7 prevent the avoidance of such purposes1 7,b7 provide rules for the application of paragraph 7#b77;,c71 including in cases of transactions in which gain or loss is not recognized in connection with contributions1 distributions1 and sales of substantially similar property from which value may be derived1 and 7,c7 provide rules for determining the applicable value of assets in taxable years beginning before the date of the enactment of this part4 7e7 ,other definitions ,for purposes of this part-- 7#a7 ,applicable entity ,the term applicable entity means any-- 7,a7 partnership1 7,b7 ,s corporation1 or 7,c7 other pass-through entity specified in regulations or guidance prescribed by the ,secretary4 7#b7 ,applicable financial statement ,for purposes of this subsection1 the term applicable financial statement has the meaning given such term by section #dea7;b77#c74 7#c7 ,applicable savings plan ,the term applicable savings plan means-- 7,a7 a defined contribution plan to which section #dja7;a7 or #djc7;a7 applies1 7,b7 an annuity contract under section #djc7;b71 7,c7 an eligible deferred compensation plan described in section #deg7;b7 which is maintained by an eligible employer described in section #deg7;e77#a77;,a71 7,d7 an individual retirement plan1 7,e7 an ,archer ,,msa 7within the meaning of section #bbj7;d771 7,f7 a qualified tuition program 7as defined in section #ebi7;b771 7,g7 an ,,able account 7as defined in section #ebi;,a7e77#f771 7,h7 a ,coverdell education savings account 7as defined in section #ecj71 or 7,i7 a health savings account 7within the meaning of section #bbc7;d774 7#d7 ,derivative ,the term derivative has the meaning given such term under section #ei;,a7h77#d74 7#e7 ,nontradable interest ,the term nontradable interest means any ownership interest in an applicable entity which is a nontradable covered asset4 7#f7 ,underlying investment ,the term underlying investment means1 with respect to any derivative1 any item-- 7,a7 which is described in clauses 7i7 through 7v7 of section #ei;,a7h77#d77;,a7 7or any item substantially the same as any such item71 and 7,b7 by reference to which the value of the derivative1 or any payment or other transfer with respect to the derivative1 is determined either directly or indirectly4 4 7b7 ,clerical amendment ,the table of parts for subchapter ,p of chapter #a of such ,code is amended by adding at the end the following new item3 ,part ,,vii--,treatment of loans for applicable taxpayers 4 7c7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjbf4