No CRS summary available for this bill.
This section establishes a new IRC §1023 that substitutes an inflation-indexed basis for the adjusted basis in determining gain or loss from the sale or disposition of certain "indexed assets" held more than three years by non-corporate taxpayers, provided there is written documentation of the original purchase price. (Thus, the indexed basis equals the adjusted basis increased by the percentage change in the gross domestic product deflator from the calendar quarter before acquisition to the quarter before disposition, rounded to the nearest 0.1 percentage point; indexing does not apply to depreciation, depletion, or amortization deductions.) Indexed assets include (1) common stock in a domestic C corporation, (2) digital assets (i.e., natively electronic assets on a cryptographically secured distributed ledger designed to confer only economic or access rights), and (3) tangible property that is a capital asset or §1231 property; common stock in certain foreign corporations regularly traded on established securities markets is also included, with exceptions for foreign investment companies, passive foreign investment companies, stock triggering §1248(a)(2) treatment, and foreign personal holding companies (American depository receipts are treated as the underlying stock). The section suspends indexing during any period of substantially reduced risk of loss from related transactions; for short sales of indexed assets with a period exceeding three years, it instead increases the amount realized by the applicable inflation adjustment (treating the short-sale initiation as acquisition and closing as disposition). For regulated investment companies and real estate investment trusts, indexing applies at the entity level (including for earnings and profits), subject to regulations preventing direct or indirect benefits to corporate shareholders and excluding application for qualification purposes under §851(b).