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Read. Follow. Verify.Capital Gains Inflation Relief Act of 2023
Last action · April 20, 2023: Read twice and referred to the Committee on Finance.Sponsor: Ted Cruz
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What This Bill Would Do
This bill proposes allowing individual taxpayers to adjust the cost basis of certain assets for inflation when calculating capital gains taxes. By indexing assets held for more than three years to inflation, the bill aims to prevent taxes from being applied to gains that are purely the result of rising prices rather than real value growth.
If passed, individual investors would pay lower capital gains taxes on assets held for over three years, as the taxable gain would be reduced by the inflation that occurred during the holding period.
Who It Would Affect
Groups the bill's text would affect if enacted, as described in the record. Being affected is not a position for or against it.
Individual Investors
Individual taxpayers holding capital assets for over three years would see a change in how their taxable capital gains are calculated.
Corporations
Corporations are excluded from the indexing benefit and are subject to specific regulatory adjustments regarding distributions from investment entities.
Regulated Investment Companies and REITs
These entities must apply specific adjustments to their assets and distributions to comply with the new indexing rules.
Key Facts
- The bill allows individual taxpayers (excluding corporations) to use an 'indexed basis' instead of an 'adjusted basis' for assets held for more than three years.
- The indexed basis is calculated by increasing the original purchase price by an inflation adjustment based on the GDP deflator.
- Eligible assets include common stock in C corporations, digital assets, and tangible property used in a trade or business.
- Digital assets are defined as natively electronic assets recorded on a cryptographically secured distributed ledger that confer economic or access rights.
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- Common stock in foreign corporations is eligible if regularly traded on an established securities market, with specific exceptions for investment companies.
- Taxpayers must maintain written documentation of the original purchase price to qualify for the inflation adjustment.
- The inflation adjustment is calculated using the GDP deflator from the quarter of disposition compared to the quarter of acquisition.
- The adjustment does not apply to depreciation, depletion, or amortization deductions.
- Assets are disqualified from indexing during any period where the taxpayer enters a transaction that substantially reduces their risk of loss.
- Special rules apply to regulated investment companies (RICs) and real estate investment trusts (REITs) to allow indexing at the entity level while preventing corporate shareholders from receiving the benefit.
Frequently Asked Questions
Does this bill apply to corporations?
What happens if I sell an asset I've held for less than three years?
Are cryptocurrencies included in this bill?
What else do you want to know?
News Coverage
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Votes, people, money & the original sourceWhere This Stands
Currently in committee. The next step in the legislative lifecycle is Floor Vote.
Version history
Only one version on file - nothing to compare yet. As later stages (committee substitute, engrossed, enrolled) are captured, the redline appears here.
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Who this bill affects and the strongest case for and against it, written only from the bill’s own text.
Sponsors
Discoveries
Patterns POLISCOPE noticed across the record. These are observations to investigate, not conclusions.
Inclusion of Digital Assets
The bill explicitly categorizes digital assets (cryptocurrency) as eligible for inflation indexing, signaling a legislative effort to integrate digital assets into standard tax treatment for capital gains.
Connected Entities
Sources
www.congress.gov
Analysis Score
0–100- Significance75How much this matters to a regular citizen
- Controversy60Intensity of disagreement among stakeholders
- Entertainment10Compellingness for a non-policy-wonk reader
- Buzz30Current news / social attention level
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