S. 1335 — Secure Family Futures Act of 2025

This section amends IRC §1221(a) to exclude from capital assets any note, bond, debenture, or other evidence of indebtedness held by an applicable insurance company (defined in new §1221(b)(4) as any insurance company other than (i) those with an election under §831(b)(2)(A)(iii) or §835(a), (ii) foreign corporations under §842, (iii) organizations to which §833 applies, or (iv) face-amount certificate companies under the Investment Company Act of 1940). The exclusion applies to such debt acquired after December 31, 2025. (Thus, gains and losses on the excluded debt receive ordinary income tax treatment rather than preferential capital gains treatment.)

This section expands the special capital loss carryover rule—from 5 years generally to 10 taxable years succeeding the loss year—for capital losses incurred by applicable insurance companies (i.e., non-life insurance companies, as defined in IRC §1221(b)(4)), in addition to the existing allowance for foreign expropriation losses. The change applies to net capital losses arising in taxable years beginning after December 31, 2025.