Generating Retirement Ownership through Long-Term Holding
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Progress
Where this bill stands in the legislative process.
- Introduced
- Passed House
- Passed Senate
- To President
- Became Law
Overview
This bill amends the Internal Revenue Code to allow individuals to defer recognizing capital gains when they automatically reinvest dividends from regulated investment companies through dividend reinvestment plans. Specifically, it prevents recognition of gain when dividends are reinvested, but requires the gain to be recognized upon a subsequent sale of stock or the individual’s death. The bill also clarifies definitions and establishes a holding period for shares acquired through reinvestment.
Key provisions
- Prevents recognition of capital gains when dividends are automatically reinvested in regulated investment companies.
- Requires recognition of deferred capital gains upon a sale of stock or the death of the individual.
- Establishes a one-year-and-one-day holding period for shares acquired through reinvestment.
- Defines ‘capital gain dividend’ and provides special rules for recognition.
- Excludes certain taxpayers, including those with deductions allowable to others and estates/trusts, from the provisions.
- Updates section 852(b)(3)(B) to reference the new section 1046.
Who is affected
- Individuals
- Regulated Investment Companies
- Taxpayers
- Investors
Notable changes
- Introduces a new provision (section 1046) to address reinvested capital gain dividends.
Bill text
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Sponsors
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