[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5427 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 5427
To amend the Internal Revenue Code of 1986 to eliminate tax loopholes
that allow billionaires to defer tax indefinitely through planning
strategies such as ``buy, borrow, die'', to modify over 30 tax
provisions so that billionaires are required to pay taxes annually, and
for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 17, 2025
Mr. Cohen (for himself, Mr. Beyer, Ms. Tlaib, Mr. Garcia of Illinois,
Mr. McGovern, Ms. Norton, Mr. Davis of Illinois, Ms. DeLauro, Mr. Boyle
of Pennsylvania, Ms. McCollum, Mr. Nadler, Mr. Garamendi, Ms. Kelly of
Illinois, Ms. Dean of Pennsylvania, Mr. Mullin, Ms. Omar, Mr. Landsman,
Ms. Scanlon, Ms. Clarke of New York, Mr. Huffman, Mr. Norcross, Ms.
Sanchez, Mr. Evans of Pennsylvania, Mr. Frost, Ms. Lee of Pennsylvania,
Ms. Simon, Mr. Jackson of Illinois, and Mrs. Ramirez) 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 eliminate tax loopholes
that allow billionaires to defer tax indefinitely through planning
strategies such as ``buy, borrow, die'', to modify over 30 tax
provisions so that billionaires are required to pay taxes annually, and
for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

f495ed13bceb57d59438ffd0161f43ec89854bb3ae6edf9e1ac0983f84c4e88f

(a) Short Title.--This Act may be cited as the ``Billionaires
Income Tax Act''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
(c) Table of Contents.--The table of contents of this Act is as
follows:

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451ad7bf83bc62058fabe6f88dbf1da7b64cc16180ea3e8c42271017482e7188

TITLE I

-ELIMINATION OF DEFERRAL FOR APPLICABLE TAXPAYERS

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TITLE II

-APPLICATION OF OTHER PROVISIONS TO APPLICABLE TAXPAYERS AND

Subtitle B--Rules for Applicable Entities and Trusts

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Subtitle C--Treatment of Deferred Compensation and Certain Life
Insurance and Annuity Contracts

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contracts of applicable taxpayers.
Subtitle D--Repeal of Special Treatment for Certain Investments

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The purpose of this Act is to require billionaires to pay taxes
annually by eliminating the ability of high income and high net worth
taxpayers to use tax planning strategies such as ``buy, borrow, die''
to defer paying taxes indefinitely, specifically by--
(1) under the provisions of title I of this Act--
(A) requiring high income and high net worth
taxpayers to pay tax on the income they earn on an
annual basis, just like working people do on their
income from wages, through mark-to-market taxation, and
(B) shutting down the ability of the ultra wealthy
to buy and hold appreciating assets and borrow against
those assets to support their lavish lifestyles, all
completely tax-free, and
(2) under the provisions of title II of this Act, closing
loopholes in the tax code that allow high income and high net
worth taxpayers to shield their income from taxation, including
the loophole that allows ultra wealthy taxpayers to transfer
untaxed appreciated assets to their heirs at death and such
heirs to sell such assets completely tax-free.

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RULES.
(a) In General.--Section 1212 is amended by adding at the end the
following new subsection:
``(d) Carryback of Losses of Applicable Taxpayers From Assets
Marked to Market.--
``(1) In general.--If an applicable taxpayer elects to have
this subsection apply to any taxable year in which the taxpayer
has a net marked-to-market loss (in this subsection referred to
as the `loss year'), the amount of such net marked-to-market
loss--
``(A) shall be a carryback to each of the 3 taxable
years preceding the loss year, and
``(B) to the extent that, after the application of
paragraphs (2) and (3), such loss is allowed as a
carryback to any such preceding taxable year, the
amount so allowed shall be treated as a long-term
capital loss.
``(2) Amount carried to each taxable year.--The entire
amount of the net marked-to-market loss for any loss year shall
be carried to the earliest of the taxable years to which such
loss may be carried back under paragraph (1). The portion of
such loss which shall be carried to each of the 2 other taxable
years to which such loss may be carried back shall be the
excess (if any) of such loss over the portion of such loss
which, after the application of paragraph (3), was allowed as a
carryback for any prior taxable year.
``(3) Amount which may be used in any prior taxable year.--
An amount shall be allowed as a carryback under paragraph (1)
from a loss year to any prior taxable year only to the extent--
``(A) such amount does not exceed the net marked-
to-market gain for such prior year, and
``(B) the allowance of such carryback does not
increase or produce a net operating loss (as defined in
section 172(c)) for such year.
``(4) Net marked-to-market loss.--For purposes of this
subsection, the term `net marked-to-market loss' means, with
respect to any taxable year, an amount equal to--
``(A) the net capital loss for the taxable year
determined by taking into account only marked-to-market
gains and losses, reduced (but not below zero) by
``(B) the aggregate amount of gains from the sale
or exchange of capital assets which are not marked-to-
market gains.
``(5) Net marked-to-market gain.--For purposes of this
subsection--
``(A) In general.--The term `net marked-to-market
gain' means, with respect to any taxable year, an
amount equal to--
``(i) the capital gain net income for the
taxable year determined by taking into account
only marked-to-market gains and losses, reduced
(but not below zero) by
``(ii) the aggregate amount of losses from
the sale or exchange of capital assets which
are not marked-to-market losses.
``(B) Special rule.--The net marked-to-market gain
for any taxable year before the loss year shall be
computed without regard to the net marked-to-market
loss for the loss year or for any taxable year
thereafter.
``(6) Coordination with carryforward provisions of
subsection (b)(1).--
``(A) Carryforward amount reduced by amount used as
carryback.--For purposes of applying subsection
(b)(1)(B), if any portion of the net marked-to-market
loss for any taxable year is allowed as a carryback
under paragraph (1) to any preceding taxable year, the
amount allowed as a carryback shall be treated as a
long-term capital gain for the loss year.
``(B) Carryover loss retains character as
attributable to marked-to-market.--Any amount carried
forward as a long-term capital loss to any taxable year
under subsection (b)(1)(B) (after the application of
subparagraph (A)) shall, to the extent attributable to
marked-to-market losses, be treated as marked-to-market
loss.
``(C) Coordination with reduction in net capital
loss for credit.--For purposes of this paragraph and
paragraph (4), any reduction in net capital loss under
section 492(c)(3) (relating to reduction for credit
against tax attributable to deferral recapture amount)
shall, except as provided by the Secretary, be applied
before the application of such paragraphs.
``(7) Other definitions and rules.--For purposes of this
subsection--
``(A) Marked-to-market gains and losses.--
``(i) In general.--The terms `marked-to-
market gains' and `marked-to-market losses'
means, with respect to any applicable taxpayer
for any taxable year, gains or losses which are
recognized and taken into account by such
taxpayer for such taxable year under section
491 by reason of taxable events described in
section 491(b)(1) with respect to tradable
covered assets which are capital assets. Such
terms shall not include gains and losses from
nontradable covered assets which are treated as
tradable covered assets (and to which section
491 applies) by reason of an election under
section 496(a)(3).
``(ii) Applicable entities.--In the case of
marked-to-market gains or losses of an
applicable entity, this subsection shall be
applied at the partner or other ownership
level.
``(B) Other terms.--Any term used in this
subsection which is also used in part IV of subchapter
E shall have the same meaning as when used in such
part.''.
(b) Effective Date.--The amendment made by this section shall apply
to loss years beginning after December 31, 2025.
ENTITIES
Subtitle A--Individuals

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LIMITATION ON NET INVESTMENT TAX.
(a) In General.--Section 1411(a) is amended by adding at the end
the following new paragraph:
``(3) No adjusted gross income limit for applicable
taxpayers.--In the case of an applicable taxpayer (as defined
in section 495) for any taxable year, notwithstanding paragraph
(1) or (2), the tax under this subsection for such taxable year
shall be equal to the product of--
``(A) in the case of an individual, the rate of tax
in effect under paragraph (1) multiplied by the amount
determined under paragraph (1)(A), and
``(B) in the case of an estate or trust, the rate
of tax in effect under paragraph (2) multiplied by the
amount determined under paragraph (2)(A).''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2025.

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(a) Application of Expatriate Rules to Applicable Taxpayers.--
Section 877A is amended by redesignating subsection (i) as subsection
(j) and by inserting after subsection (h) the following new subsection:
``(i) Special Rules for Applicable Taxpayers.--
``(1) In general.--In the case of a covered expatriate who
is an applicable taxpayer (as defined in section 495) for the
taxable year which includes the expatriation date--
``(A) no election may be made under subsection (b)
with respect to any property treated as sold by reason
of subsection (a) (after application of subparagraph
(B)), and
``(B) the covered expatriate shall, for purposes of
subsection (a)(1), also be treated as having sold on
the last day of the 10-taxable-year period described in
section 495(d)(2)(A) all property held by the covered
expatriate as of the close of such day which is not
otherwise treated as sold under part IV of subchapter E
as of such time.
``(2) Application of section 877.--Notwithstanding section
877(h)--
``(A) a covered expatriate described in paragraph
(1) shall be treated as an individual to whom section
877 applies, and
``(B) such individual shall be taxable as provided
in such section for each of the taxable years in the
10-taxable-year period described in section
495(d)(2)(A).''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2025.
Subtitle B--Rules for Applicable Entities and Trusts

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(a) In General.--Section 1031 is amended by adding at the end the
following new subsection:
``(i) Special Rules for Applicable Entities.--Subsection (a) shall
not apply to an exchange by an applicable entity if a notice received
by the entity under subsection (b)(2)(A) or (c)(2) of section 493 is in
effect at the time of such exchange.''.
(b) Effective Date.--The amendment made by this section shall apply
to exchanges completed after December 31, 2025.

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STOCK.
(a) In General.--Section 351 is amended by redesignating subsection
(h) as subsection (i) and by inserting after subsection (g) the
following new subsection:
``(h) Special Rules for Applicable Entities.--
``(1) In general.--Subsection (a) shall not apply to an
exchange by an applicable entity if an applicable notice
received by the entity is in effect at the time of such
exchange.
``(2) Applicable notice.--For purposes of paragraph (1)--
``(A) In general.--The term `applicable notice'
means, with respect to any applicable entity, a
notice--
``(i) which is received by the entity under
subsection (b)(2)(A) or (c)(2) of section 493,
and
``(ii) which relates to an applicable
taxpayer who is a 20-percent owner with respect
to such entity.
``(B) 20-percent owner.--For purposes of
subparagraph (A), a 20-percent owner shall be
determined in the same manner as a 5-percent owner
under section 493(b)(4)(B), except that `20 percent'
shall be substituted for `5 percent' in applying
clauses (i) and (ii)(I) thereof.
``(3) Applicable entity.--For purposes of this subsection,
the term `applicable entity' has the meaning given such term by
section 493.''.
(b) Effective Date.--The amendments made by this section shall
apply to exchanges completed after December 31, 2025.

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(a) In-Kind Distributions.--Section 643(e)(3) is amended--
(1) in subparagraph (A), by striking ``to which an election
under this paragraph applies'' and inserting ``to which this
paragraph applies'', and
(2) by striking subparagraph (B) and inserting the
following:
``(B) Distributions to which this paragraph
applies.--This paragraph shall apply to--
``(i) any distribution of property by an
estate which is described in section
495(a)(1)(B)(ii) or by an applicable trust (as
defined in section 495(c)), and
``(ii) any distribution during the taxable
year of any other estate or trust which makes
an election under this paragraph.
Any election made under clause (ii) shall be made on
the return of such estate or trust for such taxable
year, and, once made, may be revoked only with the
consent of the Secretary.''.
(b) Treatment of Loans.--Section 643(i) is amended--
(1) by inserting ``or an applicable trust (as defined in
section 495(c))'' after ``foreign trust'' in paragraph (1),
(2) by striking ``who is a United States person'' in
paragraph (1)(A) and inserting ``who is not exempt from tax
under this chapter'',
(3) by striking ``United States person'' in paragraph
(1)(B) and inserting ``person (other than a person who is
exempt from tax under this chapter)'',
(4) by striking paragraph (2)(C), and
(5) by striking ``Foreign'' in the heading thereof and
inserting ``Certain''.
(c) Treatment of Multiple Trusts.--Section 643(f)(2) is amended by
inserting ``or the rules of part IV of subchapter E'' after ``this
chapter''.
(d) Foreign Trusts.--
(1) In general.--Subpart F of part I of subchapter J is
amended by adding at the end the following new section:
``SEC. 686. SPECIAL RULES FOR APPLICABLE FOREIGN TRUSTS.
``(a) In General.--For purposes of this part, in the case of any
beneficiary of an applicable foreign trust who is required to include
in income any amount attributable to gain on an applicable transfer of
any covered asset, the amount of tax imposed under this chapter shall
be increased by the amount which bears the same ratio to the amount of
the deferral recapture amount which would be determined on such
applicable transfer under section 492(a) (determined as if such trust
were an applicable taxpayer and section 492 applied to any covered
asset of the trust) as--
``(1) the amount required to be included in income
attributable to the gain on such applicable transfer, bears to
``(2) the total amount of the gain on such applicable
transfer.
``(b) Exception.--Subsection (a) shall not apply to any amount to
the extent that the applicable foreign trust pays (at such time and in
such manner as provided by the Secretary) the tax which would be
imposed under section 492(a) (determined as if such trust were an
applicable taxpayer and section 492 applied to any covered asset of the
trust) with respect to the applicable transfer described in subsection
(a).
``(c) Applicable Foreign Trust.--For purposes of this section, the
term `applicable foreign trust' means any foreign trust which would be
an applicable trust if such trust were a domestic trust.
``(d) Other Terms.--Any term used in this section which is also
used in part IV of subchapter E shall have the same meaning as when
used in such part.''.
(2) Reporting.--Section 6048(c)(1) is amended by striking
``and'', at the end of subparagraph (B), by redesignating
subparagraph (C) as subparagraph (D), and by inserting after
subparagraph (B) the following new subparagraph:
``(C) such information as the Secretary shall
require for purposes of determining the increase (if
any) in tax under section 686, and''.
(3) Clerical amendment.--The table of sections for subpart
F of part I of subchapter J is amended by adding at the end the
following new item:
``Sec. 686. Special rules for applicable foreign trusts.''.
(e) Coordination With Throwback Rules.--The Secretary of the
Treasury (or the Secretary's delegate) shall provide such regulations
or other guidance as necessary to coordinate the amendments made by
this section with the rules of subpart D of part I of subchapter J.
(f) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 2025.
(2) Foreign trusts.--The amendments made by subsection (e)
shall apply to applicable transfers occurring in taxable years
beginning after December 31, 2025.
Subtitle C--Treatment of Deferred Compensation and Certain Life
Insurance and Annuity Contracts

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(a) In General.--Subpart A of part I of subchapter D of chapter 1
is amended by adding at the end the following new section:
``SEC. 409B. SPECIAL RULES FOR CERTAIN DEFERRED COMPENSATION.
``(a) In General.--In the case of an individual who is an
applicable taxpayer for any taxable year, the taxpayer's tax under this
chapter for the taxable year (determined without regard to this
section) shall be increased by an amount equal to the sum of--
``(1) the deferral recapture amount determined under
subsection (b)(1) for any applicable deferred compensation
which is includible in the gross income of the individual for
the taxable year, and
``(2) 10 percent of the amount of any severance pay which
is includible in the gross income of the individual during the
taxable year.
``(b) Deferral Recapture Amount.--For purposes of this section--
``(1) In general.--The term `deferral recapture amount'
means, with respect to any applicable deferred compensation
includible in gross income for the taxable year, the aggregate
amount of interest (determined in the manner provided under
paragraph (3)) on the deemed tax amount determined under
paragraph (2) for each preceding taxable year to which
compensation is allocated under paragraph (2)(A).
``(2) Deemed tax amount.--
``(A) In general.--The deemed tax amount for any
taxable year preceding the taxable year in which
applicable deferred compensation is includible in gross
income shall be the amount determined--
``(i) first, except as provided in
subparagraph (B), by allocating the amount of
such compensation ratably to each day in the
deferral period with respect to the applicable
deferred compensation, and
``(ii) then by multiplying the amount, if
any, allocated under clause (i) to such
preceding taxable year by the highest rate of
tax in effect under section 1 for the taxable
year in which the compensation is includible in
gross income of the individual.
``(B) Special rule for periods before becoming
applicable taxpayer.--Notwithstanding subparagraph
(A)(i), any compensation which would be otherwise
allocated under such subparagraph to any taxable year
preceding the first taxable year for which the taxpayer
is treated as an applicable taxpayer shall be allocated
to such first taxable year.
``(3) Computation of interest.--
``(A) In general.--The amount of interest referred
to in paragraph (1) on any deemed tax amount determined
under paragraph (2) for any preceding taxable year with
respect to applicable deferred compensation shall be
determined for the period beginning on the due date for
such preceding taxable year and ending on the last day
of the deferral period with respect to the applicable
deferred compensation, by using the rates determined
under section 6621(b) (plus 1 percentage point), and
the method applicable under section 6621, for
underpayments of tax for such period.
``(B) Due date.--For purposes of this paragraph,
the term `due date' means, with respect to any
preceding taxable year, the date prescribed by law
(determined without regard to extensions) for filing
the return of the tax imposed by this chapter for such
taxable year.
``(4) Limitation.--In no case shall the deferral recapture
amount determined with respect to any applicable deferred
compensation which is includible in gross income for a taxable
year exceed an amount equal to 10 percent of the amount of such
compensation.
``(c) Definitions.--For purposes of this section--
``(1) Applicable taxpayer.--The term `applicable taxpayer'
has the meaning given such term by section 495.
``(2) Applicable deferred compensation.--
``(A) In general.--Except as provided in
subparagraph (B), the term `applicable deferred
compensation' means--
``(i) any compensation provided under a
nonqualified deferred compensation plan, as
defined in section 409A(d)(1), except that--
``(I) such term shall include stock
appreciation rights, and
``(II) compensation shall not fail
to be treated as deferred solely
because such compensation is not
treated as deferred for purposes of
section 409A by reason of such
compensation being includible in gross
income for the first taxable year after
a taxable year in which such
compensation is no longer subject to a
substantial risk of forfeiture, and
``(ii) any other property transferred in
connection with the performance of services
which is subject to section 83.
``(B) Exceptions.--Such term does not include--
``(i) severance pay, or
``(ii) any transfer of a profits interest
in a partnership.
``(C) Earnings and interest.--Any earnings,
interest, or similar adjustment included in an amount
of applicable deferred compensation shall not be
treated as separately deferred from such amount.
``(3) Severance pay.--The term `severance pay' means any
compensation the payment or vesting of which is contingent, in
whole or in part, upon the termination of employment or other
services, including cash, property, reimbursement or direct
provision of living, travel, and business expenses, and life,
health, or other insurance, to the extent otherwise includible
in gross income.
``(4) Deferral period.--
``(A) In general.--Except as provided in
subparagraphs (B) and (C), the term `deferral period',
with respect to any applicable deferred compensation,
means the period--
``(i) beginning on the date the
compensation was first deferred, without regard
to vesting, transferability, or risk of
forfeiture, and
``(ii) ending on the date such compensation
is includible in gross income or, if
applicable, the date described in section
83(a)(1) with respect to such compensation.
For purposes of the preceding sentence, compensation
shall be treated as first deferred as of the date the
applicable taxpayer first has a legally binding right
to the compensation or, in the case of property subject
to section 83, the date of transfer of the property.
``(B) Computation of interest.--Solely for purposes
of subsection (b)(3), the deferral period shall end on
the last day of the taxable year which includes the
date described in subparagraph (A)(ii).
``(C) Property transferred pursuant to the exercise
of an option.--In the case of property acquired
pursuant to an option described in section 83(e)(3),
the deferral period shall begin on the date of grant of
the option pursuant to which the property was acquired.
``(d) Regulations.--The Secretary shall prescribe such regulations
as may be necessary or appropriate to carry out the purposes of this
section.''.
(b) Information Reporting With Respect to Applicable Deferred
Compensation.--Subpart B of part III of subchapter A of chapter 61, as
in effect after the amendments made by section 334(d) of the SECURE 2.0
Act of 2022, is amended by adding at the end the following new section:
``SEC. 6050AA. INFORMATION WITH RESPECT TO APPLICABLE DEFERRED
COMPENSATION.
``(a) In General.--Every person making a payment to an individual
in excess of $5,000,000 of--
``(1) any applicable deferred compensation described in
section 409B(c)(2)(A), or
``(2) any severance pay (as defined in section 409B(d)(3)),
shall make a return, not later than January 31 of the first calendar
year beginning after the close of the taxable year during which such
payment is includible in gross income of the individual.
``(b) Information Required.--The return required by subsection (a)
shall include--
``(1) the name, taxpayer identification number, and address
of the individual to whom the payment of applicable deferred
compensation or severance pay is made,
``(2) the date any applicable deferred compensation was
first deferred (the date of the transfer, in the case of
property subject to section 83, or the date of grant of the
option, in the case of property acquired pursuant to an option
described in section 83(e)(3)), without regard to vesting,
transferability, or risk of forfeiture,
``(3) the amount of such compensation includible in gross
income of the individual for the taxable year,
``(4) the amount of such severance pay includible in gross
income of the individual for the taxable year, and
``(5) such other information as the Secretary may require.
``(c) Special Rules.--
``(1) Section 83 compensation.--With respect to transfers
of property to which section 83 applies, the information
required under paragraphs (2) and (3) of subsection (b) shall
be reported separately for each item of property transferred,
except that property for which the information required by such
paragraphs is identical may be aggregated.
``(2) Other compensation.--With respect to any applicable
deferred compensation not described in paragraph (1), if such
compensation is paid pursuant to more than 1 plan or
arrangement or involves amounts which were first deferred on
more than 1 date, the information required under paragraphs (2)
and (3) of subsection (b) shall be reported separately with
respect to each such plan or arrangement and each such date.
``(d) Statements To Be Furnished to Individuals With Respect to
Whom Information Is Reported.--Every person required to make a return
under subsection (a) shall furnish to each individual with respect to
whom such a return is required a written statement showing--
``(1) the name, address, and phone number of the
information contact of the person making such return, and
``(2) the information required by paragraphs (2) through
(5) of subsection (b).
The written statement required under the preceding sentence shall be
furnished to the individual on or before January 31 of the first
calendar year beginning after the close of the taxable year for which
the return under subsection (a) was made.
``(e) Adjustments for Inflation.--
``(1) In general.--In the case of any taxable year
beginning after 2026, the $5,000,000 amount under subsection
(a) shall be increased by an amount equal to the product of--
``(A) such dollar amount, and
``(B) the cost-of-living adjustment under section
1(f)(3) for the calendar year in which such taxable
year begins, determined by substituting `calendar year
2025' for `calendar year 1992' in subparagraph (B)
thereof.
``(2) Rounding.--If any amount as adjusted under paragraph
(1) is not a multiple of $250,000, such amount shall be rounded
to the next lowest multiple of $250,000.
``(f) Regulations.--The Secretary shall prescribe such regulations
as may be necessary or appropriate to carry out the purposes of this
section, including regulations specifying what constitutes a payment to
an individual of applicable deferred compensation for purposes of
subsection (a).''.
(c) Penalties.--
(1) Returns.--Section 6724(d)(1)(B), as in effect after the
amendments made by section 334(d) of the SECURE 2.0 Act of
2022, is amended by striking ``or'' at the end of clause
(xxvii), by striking ``and'' at the end of clause (xxviii) and
inserting ``or'', and by inserting after clause (xxviii) the
following new clause:
``(xxix) section 6050AA(a) (relating to
returns of information with respect to
applicable deferred compensation), and''.
(2) Statements.--Section 6724(d)(2), as so in effect, is
amended--
(A) by striking ``or'' at the end of subparagraph
(KK),
(B) by striking the period at the end of
subparagraph (LL) and inserting ``, or'', and
(C) by inserting after subparagraph (LL) the
following new subparagraph:
``(MM) section
6050AA(d) (relating to
statements of
information with
respect to applicable
deferred
compensation).''.
(d) Clerical Amendments.--
(1) In general.--The table of sections for subpart A of
part I of subchapter D of chapter 1 is amended by inserting
after the item relating to section 409A the following new item:
``Sec. 409B. Special rules for certain deferred compensation.''.
(2) Information reporting.--The table of sections for
subpart B of part III of subchapter A of chapter 61, as in
effect after the amendments made by section 334(d) of the
SECURE 2.0 Act of 2022, is amended by inserting after the item
relating to section 6050Z the following new item:
``Sec. 6050AA. Information with respect to applicable deferred
compensation.''.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2025.

a3d618e06ca7e80ae2ea8b1a12ac2298d374ea5a27ada23e05a90fbf3b5a8a29

CONTRACTS OF APPLICABLE TAXPAYERS.
(a) Treatment of Amounts Received.--
(1) In general.--Section 72(e) is amended by redesignating
paragraph (12) as paragraph (13) and by inserting after
paragraph (11) the following:
``(12) Treatment of certain amounts received under certain
life insurance and annuity contracts of applicable taxpayers.--
``(A) In general.--In the case of any applicable
amount which is received during any taxable year,
notwithstanding paragraph (5)(A) or (5)(E)--
``(i) if such amount is received on or
after the annuity starting date, paragraph
(2)(A) shall apply, and
``(ii) if such amount is received before
the annuity starting date or is received with
respect to a life insurance contract to which
this section applies, the rules of clauses (i)
and (ii) of paragraph (2)(B) shall apply.
``(B) Applicable amount.--
``(i) In general.--For purposes of this
paragraph, the term `applicable amount' means--
``(I) any amount to which this
subsection applies which is received
under an applicable private placement
life insurance or annuity contract, and
``(II) in the case of an applicable
taxpayer, notwithstanding paragraph
(5)(A), (5)(E), or (10)(A), any amount
or portion described in paragraph
(4)(A) with respect to a life insurance
or annuity contract, except that `any
applicable taxpayer or any related
person (as defined in section
144(a)(3)) to an applicable taxpayer'
shall be substituted for `an
individual' in applying such paragraph.
``(ii) Treatment of refunds, surrenders,
redemptions and maturities.--Notwithstanding
paragraph (5)(A) or (5)(E), amounts described
in clause (i)(I) shall include amounts
described in clause (i) or (ii) of paragraph
(5)(E) received under an applicable private
placement life insurance or annuity contract.
``(iii) Amounts under pre-1982 and
qualified plan contracts, etc. excluded.--Such
term shall not include amounts received--
``(I) under a contract which is
described in paragraph (5)(B) or
(5)(D), or
``(II) under a qualified tuition
program (as defined in section 529(b))
or under a Coverdell education savings
account (as defined in section 530(b)).
``(C) Applicable private placement life insurance
or annuity contract.--For purposes of this paragraph--
``(i) In general.--The term `applicable
private placement life insurance or annuity
contract' means a private placement life
insurance or annuity contract the holder of
which (whether directly or indirectly) is an
applicable taxpayer.
``(ii) Secretarial authority.--The
Secretary shall prescribe regulations or other
guidance which treat a private placement life
insurance or annuity contract as an applicable
private placement life insurance or annuity
contract in cases where an applicable taxpayer
(or a related person) has an interest in such
contract not described in clause (i) if such
treatment is necessary to prevent the avoidance
of the purposes of this paragraph.
``(D) Private placement life insurance or annuity
contract.--For purposes of this paragraph, the term
`private placement life insurance or annuity contract'
means any contract--
``(i) which is an annuity contract or a
life insurance contract, and
``(ii) with respect to which the holder of
the contract is required, for purposes of
obtaining a registration exemption under
securities laws as in effect on the date of
enactment of this section (including the
Securities Exchange Act of 1934 and the
Investment Advisors Act of 1940), to make a
representation that such owner--
``(I) has a specified minimum
amount of income or assets,
``(II) has completed a specified
minimum level of education, or
``(III) holds a specific license or
credential.
``(E) Applicable taxpayer.--For purposes of this
paragraph, the term `applicable taxpayer' has the
meaning given such term under section 495.''.
(2) Conforming amendment.--Section 72(e)(5)(C) is amended
by inserting ``or (12)'' after ``(10)''.
(3) Effective date.--The amendments made by this subsection
shall apply to amounts received in taxable years beginning
after December 31, 2025.
(b) 10-Percent Additional Tax for Distributions From Applicable
Private Placement Life Insurance or Annuity Contracts.--
(1) In general.--Section 72(v) is amended--
(A) by inserting ``or an applicable private
placement life insurance or annuity contract (as
defined in subsection (e)(12))'' after ``a modified
endowment contract (as defined in section 7702A)'' in
paragraph (1), and
(B) by inserting ``and Applicable Private Placement
Life Insurance or Annuity Contracts'' after ``Modified
Endowment Contracts'' in the heading thereof.
(2) Effective date.--The amendments made by this subsection
shall apply to amounts received in taxable years beginning
after December 31, 2025.
(c) Repeal of Exclusion for Death Benefits.--
(1) In general.--Section 101 is amended by adding at the
end the following new subsection:
``(k) Exclusion Not To Apply.--
``(1) In general.--Subsection (a)(1) shall not apply to
amounts received by reason of the death of the insured under an
applicable private placement life or annuity contract (within
the meaning of section 72(e)(12)).
``(2) Amounts previously included.--The Secretary shall
prescribe rules to ensure that paragraph (1) shall not apply to
any portion of any amount received which was previously
included in gross income.''.
(2) Conforming amendment.--Section 101(a)(1) is amended by
striking ``and subsection (j),'' and inserting ``subsection
(j), and subsection (k),''.
(3) Effective date.--The amendments made by this subsection
shall apply to amounts received in taxable years beginning
after December 31, 2025.
(d) Reporting Requirements.--
(1) In general.--Subpart B of part III of subchapter A of
chapter 61, as amended by this Act, is amended by adding at the
end the following new section:
``SEC. 6050BB. RETURNS RELATING TO AMOUNTS RECEIVED UNDER CERTAIN LIFE
INSURANCE AND ANNUITY CONTRACTS.
``(a) In General.--Every person who issues a life insurance or
annuity contract or who reinsures such a contract shall make an annual
return (at such time and in such manner as the Secretary shall
prescribe) setting forth--
``(1) the name, address, and TIN of such person,
``(2) the name, address, and TIN of each person who
receives an applicable amount (as defined in section 72(e)(12))
during the year with respect to any life insurance or annuity
contract issued or reinsured by such person,
``(3) the aggregate applicable amounts received by each
person identified in paragraph (2), and
``(4) such other information as the Secretary may require.
``(b) Statement To Be Furnished to Taxpayers With Respect to Whom
Information Is Required.--
``(1) In general.--Every person that is required to make a
return under subsection (a) shall furnish to each person whose
identity is required to be set forth under subsection (a)(2) a
written statement showing--
``(A) the name, address, and phone number of the
information contact of the person required to make such
return, and
``(B) the information required to be shown on such
return with respect to the person described in
subsection (a)(2) and with respect to applicable
amounts received by such person.
``(2) Furnishing of information.--The written statement
required under paragraph (1) shall be furnished to the person
on or before January 31 of the year following the calendar year
for which the return under subsection (a) is required to be
made.
``(c) Regulatory Authority.--The Secretary may prescribe such
regulations and other guidance as necessary for purposes of carrying
out this section, including regulations or other guidance to require
reporting under this section by such other persons as necessary to
carry out the purposes of section 72(e)(12).''.
(2) Penalties.--
(A) Returns.--Section 6724(d)(1)(B), as amended by
this Act, is amended by striking ``or'' at the end of
clause (xxviii), by striking ``and'' at the end of
clause (xxix) and inserting ``or'', and by inserting
after clause (xxix) the following new clause:
``(xxx) section 6050BB(a) (relating to
returns of information with respect to private
placement life insurance and annuity
contracts),''.
(B) Statements.--Section 6724(d)(2), as so amended,
is amended--
(i) by striking ``or'' at the end of
subparagraph (LL),
(ii) by striking the period at the end of
subparagraph (MM) and inserting ``, or'', and
(iii) by inserting after subparagraph (MM)
the following new subparagraph:
``(NN) section
6050BB(b) (relating to
statements of
information with
respect to private
placement life
insurance and annuity
contracts).''.
(3) Clerical amendment.--The table of sections for subpart
B of part III of subchapter A of chapter 61, as amended by this
Act, is amended by inserting after the item relating to section
6050AA the following new item:
``Sec. 6050BB. Returns relating to amounts received under certain life
insurance and annuity contracts.''.
(4) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31, 2025.
Subtitle D--Repeal of Special Treatment for Certain Investments

67a2cbd139ba1d9ffd2768e9a8a9af612781dc19bf10c214b280c8ae0e181dc7

(a) In General.--Section 1202(a) is amended by adding at the end
the following new paragraph:
``(5) Special rules for applicable taxpayers.--
``(A) In general.--This subsection shall not apply
to any gain from the sale or exchange of qualified
small business stock by an applicable taxpayer (as
defined in section 495).
``(B) Exception.--Subparagraph (A) shall not apply
to any qualified small business stock acquired before
November 30, 2025.''.
(b) Effective Date.--The amendment made by this subsection shall
apply to sales or exchanges on or after November 30, 2025.

5034a6f2b82de63c837c53a72f35aed11d9e89b64756abb7d90dcb5e802ec686

(a) Termination of Election.--
(1) In general.--Section 1400Z-2(a)(2)(B) is amended to
read as follows:
``(B) except as provided in paragraph (3), with
respect to any sale or exchange after the earlier of--
``(i) December 31, 2026, or
``(ii) in the case of an applicable
taxpayer, the last day of the taxable year
preceding the first taxable year for which the
taxpayer is an applicable taxpayer.''.
(2) Special rules.--Section 1400Z-2(a) is amended by adding
at the end the following new paragraph:
``(3) Special rules for applicable taxpayers and
entities.--For purposes of paragraph (2)(B)--
``(A) Applicable entities.--No election may be made
under paragraph (1) by an applicable entity with
respect to any sale or exchange if a notice received by
the entity under subsection (b)(2)(A) or (c)(2) of
section 493 is in effect at the time of such sale or
exchange.
``(B) Special rule for 2025.--In the case of a
taxpayer which would be an applicable taxpayer for its
first taxable year beginning in 2025 (determined as if
part IV of subchapter E applied to taxable years
beginning in 2025), clause (ii) of paragraph (2)(B)
shall be applied by substituting `November 30, 2025'
for the date otherwise specified in such clause.
``(C) Definitions.--For purposes of this paragraph
and subsection (c), any term used in this paragraph
which is also used in part IV of subchapter E shall
have the same meaning as when used in such part.''.
(b) Modification of Special Rule for Investments Held 10 Years.--
Section 1400Z-2(c) is amended by striking ``shall be equal to'' and all
that follows and inserting ``shall be equal to--
``(1) in the case of any taxpayer who is an applicable
taxpayer for any taxable year during which such investment was
held by the taxpayer or any taxpayer which is an applicable
entity, the lesser of--
``(A) the fair market value of such investment as
of the last day of the taxable year which includes the
later of--
``(i) the date that such investment has
been held for 10 years, or
``(ii) in the case of--
``(I) an applicable taxpayer, the
date that such taxpayer first became an
applicable taxpayer, or
``(II) an applicable entity, the
first date a notice was received by the
entity under subsection (b)(2)(A) or
(c)(2) of section 493, or
``(B) the fair market value of such investment on
the date that investment is sold or exchanged, and
``(2) in the case of any other taxpayer, the fair market
value of such investment on the date the investment is sold or
exchanged.''.
(c) Effective Date.--The amendments made by this section shall
apply to sales or exchanges after November 30, 2025, in taxable years
ending after such date.
<all>

03d9d537d4bfd2629711eeab4cd6a759144b31c86724643b743d8f024ce690da

Billionaires Income Tax Act — HR. 5427

Other Sections

TITLE I

TITLE II

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