Summary#
The ROBINHOOD Act of 2026 would amend the Internal Revenue Code of 1986. Its stated goal is to prevent high-net-worth people from avoiding tax on income and assets by borrowing against assets instead of selling them. It is an introduced bill, not law; whether it will pass is uncertain.
- A qualifying borrower would have to treat certain long-term capital assets they identify as sold at fair market value in the year a loan is issued, if the gain on those assets is at least the loan amount. This could create taxable gain without an actual sale.
- The rule would apply to individuals who, for each of the previous three tax years, had either more than $100 million in applicable adjusted gross income or more than $1 billion in covered assets after the bill’s debt adjustment. The thresholds are half as high for married people filing separately.
- The covered-asset test includes assets such as cash, retirement and savings accounts, and some private insurance or annuity contracts. It uses different valuation rules for tradable and nontradable assets.
- Loans to partnerships, S corporations, and certain other pass-through entities would generally be assigned to owners in proportion to their ownership. The entity must notify each owner within 30 days.
- Leases longer than five years would generally be treated like loans. Extensions and leases of substantially identical property can also count; a special exception applies to leases by pass-through entities unless the transaction violates the economic substance doctrine.
What it means for you#
- Most taxpayers: The bill’s new deemed-sale rule targets people and trusts that meet its high income or asset tests. It does not directly change tax rules for people outside those groups.
- Qualifying borrowers: You would identify the long-term capital assets involved. A deemed sale could mean tax is due even though you still own the assets. The bill says the gain cannot be offset by long-term capital losses from that year or carried forward from earlier years.
- Trusts and estates: Some trusts meeting lower thresholds—more than $10 million in income or $100 million in covered assets for each of the previous three years—would qualify. Certain trusts are excluded. An estate can qualify if the deceased person was an applicable taxpayer during the specified period.
- Pass-through entities and their owners: An entity that takes a covered loan must notify all owners within 30 days. A qualifying owner’s share of the loan can trigger the deemed-sale rule.
- Lenders and other entities: The Treasury Secretary must issue rules requiring reporting by qualifying taxpayers and entities that issue loans to them.
- Taxpayers with depreciable property: The bill allows a basis increase for recognized gain, but not for depreciable property, including property that might otherwise receive section 1231 treatment. A basis increase can reduce tax on a later sale.
Money#
No cost or revenue estimate is provided in the available material.
- The bill could raise tax revenue by taxing gains on deemed sales, but it gives no estimate.
- It requires Treasury to issue regulations and require reporting. It does not provide a staffing or administrative-cost estimate.
- Taxpayers and entities may face valuation, reporting, and notice costs; the bill gives no estimate.
What is unclear#
- The text does not fully explain how to select and calculate the assets whose gain must be at least the loan amount.
- Treasury must set rules for reporting and some valuations. Until those rules exist, details for taxpayers, lenders, and entities are not fully specified.
- The bill does not establish a special process for paying tax when a deemed sale creates a tax bill but no cash from an actual sale.
- The supplied material does not include the full current Internal Revenue Code, so the bill’s overlap with existing tax rules cannot be verified here.
Case for#
- The bill appears intended to address a tax gap: borrowing against appreciated assets can provide funds without selling those assets, while a sale can trigger tax on the gain.
- Treating some assets as sold when a qualifying person borrows could make that borrowing trigger tax on gains, even if the person keeps the assets.
- Rules for pass-through loans and certain leases could limit ways of arranging borrowing through an entity or a long-term lease instead of borrowing directly.
Case against#
- A deemed sale can create a tax bill without the borrower receiving sale proceeds. That could make payment difficult if the borrower has not set aside cash.
- The rule relies on asset identification and valuations, including for nontradable assets. The bill leaves important details to Treasury regulations.
- The bill bars offsets by long-term capital losses for the deemed gain. This may produce tax even when a taxpayer has losses elsewhere.
- The bill reaches a wide range of covered assets for deciding who qualifies, while the tax event applies to long-term capital assets. How those rules interact in particular cases is not fully explained in the supplied text.