Bill > HR2089

This bill introduces a new tax provision that allows individual investors to defer recognizing capital gains from reinvested dividends in regulated investment companies (RICs, commonly known as mutual funds). Under the proposed law, when an individual automatically reinvests capital gain dividends back into the same investment company, they would not have to pay taxes on those gains immediately. Instead, the tax liability would be postponed until the individual sells or redeems their shares, or upon their death. The bill specifies that when shares are sold, the taxpayer will recognize a proportional amount of the previously deferred gains. Additionally, the bill sets the holding period for reinvested shares as one year and a day, and includes some limitations, such as not applying to individuals who are claimed as dependents by another taxpayer or to estates and trusts. The legislation aims to provide tax flexibility for individual investors by allowing them to reinvest gains without triggering an immediate tax event, potentially encouraging longer-term investment strategies. The proposed changes would apply to taxable years ending after the date of the Act's enactment.

Budget and Finance

https://www.congress.gov/bill/119th-congress/house-bill/2089/all-info