This bill creates a new tax rule for individuals who get capital gain dividends from a regulated investment company and automatically reinvest those dividends in more shares through a dividend reinvestment plan. Under the rule, the taxpayer does not have to recognize (report) the reinvested capital gain dividend as taxable income when it is paid and reinvested. Instead, the deferred gain is recognized later when the individual sells or redeems shares in the distributing company (in proportion to the shares sold or redeemed) or upon the individual's death. The bill treats the holding period for shares bought with reinvested capital gain dividends as at least one year and one day as of the acquisition date, which counts those shares as long-term holdings for holding-period purposes. The rule applies only to individuals (not to estates or trusts) and does not apply to individuals who can be claimed as dependents (a deduction under section 151 is allowable to another taxpayer). The bill adds a new Internal Revenue Code section 1046, makes a conforming change to section 852(b)(3)(B), updates the table of sections, and applies to taxable years ending after the date of enactment. The bill was referred to the House Committee on Ways and Means.
If you are an individual shareholder and your capital gain dividends are automatically reinvested through a dividend reinvestment plan, you would generally not report those reinvested capital gain dividends as taxable income when received. Instead, you would report the deferred gain when you later sell or redeem shares (in the same proportion as the shares sold) or when you die. Shares bought with reinvested capital gain dividends are treated as already meeting the one-year-plus holding period for long-term treatment. If you are an estate, trust, or someone who can be claimed as a dependent, this rule does not apply to you.
No publicly available information.
The bill's short title is "Generating Retirement Ownership through Long-Term Holding," and the text creates a deferral rule and a long-term holding treatment for reinvested capital gain dividends. No other publicly available sponsor or proponent statements are included in the provided materials.
No publicly available information.