Retirement Inflation Protection Act of 2021

I 117TH CONGRESS 1ST SESSION H. R. 984 To amend the Internal Revenue Code of 1986 to provide for the indexing of certain assets for purposes of determining gain or loss of eligible individuals. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 11, 2021 Mr. EMMER introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to provide for the indexing of certain assets for purposes of deter- mining gain or loss of eligible individuals. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Retirement Inflation 4 Protection Act of 2021’’. 5 VerDate Sep 11 2014 04:12 Mar 06, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H984.IH H984 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 984 IH SEC. 2. INDEXING OF CERTAIN ASSETS FOR PURPOSES OF 1 DETERMINING GAIN OR LOSS OF ELIGIBLE 2 INDIVIDUALS. 3 (a) IN GENERAL.—Part II of subchapter O of chap- 4 ter 1 of the Internal Revenue Code of 1986 is amended 5 by inserting after section 1017 the following new section: 6 ‘‘SEC. 1018. INDEXING OF CERTAIN ASSETS FOR PURPOSES 7 OF DETERMINING GAIN OR LOSS OF ELIGI- 8 BLE INDIVIDUALS. 9 ‘‘(a) IN GENERAL.— 10 ‘‘(1) INDEXED BASIS SUBSTITUTED FOR AD- 11 JUSTED BASIS.—Solely for purposes of determining 12 gain or loss on the sale or other disposition by an 13 eligible individual of an indexed asset which has 14 been held by such individual for more than 3 years, 15 the indexed basis of the asset shall be substituted 16 for its adjusted basis. 17 ‘‘(2) EXCEPTION FOR DEPRECIATION, ETC.— 18 The deductions for depreciation, depletion, and am- 19 ortization shall be determined without regard to the 20 application of paragraph (1) to the taxpayer or any 21 other person. 22 ‘‘(3) WRITTEN DOCUMENTATION REQUIRE- 23 MENT.—Paragraph (1) shall apply only with respect 24 to indexed assets for which the taxpayer has written 25 VerDate Sep 11 2014 04:12 Mar 06, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H984.IH H984 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 984 IH documentation of the original purchase price paid or 1 incurred by the taxpayer to acquire such asset. 2 ‘‘(b) ELIGIBLE INDIVIDUAL.—For purposes of this 3 section, the term ‘eligible individual’ means, with respect 4 to any indexed asset, any individual if such individual has 5 attained age 591⁄2 as of the date of the sale or other dis- 6 position of such asset. 7 ‘‘(c) INDEXED ASSET.— 8 ‘‘(1) IN GENERAL.—For purposes of this sec- 9 tion, the term ‘indexed asset’ means— 10 ‘‘(A) common stock in a C corporation 11 (other than a foreign corporation), or 12 ‘‘(B) tangible property, 13 which is a capital asset or property used in the trade 14 or business (as defined in section 1231(b)). 15 ‘‘(2) STOCK IN CERTAIN FOREIGN CORPORA- 16 TIONS INCLUDED.—For purposes of this section— 17 ‘‘(A) IN GENERAL.—The term ‘indexed 18 asset’ includes common stock in a foreign cor- 19 poration which is regularly traded on an estab- 20 lished securities market. 21 ‘‘(B) EXCEPTION.—Subparagraph (A) 22 shall not apply to— 23 ‘‘(i) stock of a foreign investment 24 company, 25 VerDate Sep 11 2014 04:12 Mar 06, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H984.IH H984 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 984 IH ‘‘(ii) stock in a passive foreign invest- 1 ment company (as defined in section 2 1296), 3 ‘‘(iii) stock in a foreign corporation 4 held by a United States person who meets 5 the requirements of section 1248(a)(2), 6 and 7 ‘‘(iv) stock in a foreign personal hold- 8 ing company. 9 ‘‘(C) TREATMENT OF AMERICAN DEPOSI- 10 TORY RECEIPTS.—An American depository re- 11 ceipt for common stock in a foreign corporation 12 shall be treated as common stock in such cor- 13 poration. 14 ‘‘(d) INDEXED BASIS.—For purposes of this sec- 15 tion— 16 ‘‘(1) IN GENERAL.—The indexed basis for any 17 asset is— 18 ‘‘(A) the adjusted basis of the asset, in- 19 creased by 20 ‘‘(B) the applicable inflation adjustment. 21 ‘‘(2) APPLICABLE INFLATION ADJUSTMENT.— 22 The applicable inflation adjustment for any asset is 23 an amount equal to— 24 VerDate Sep 11 2014 04:12 Mar 06, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H984.IH H984 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 984 IH ‘‘(A) the adjusted basis of the asset, multi- 1 plied by 2 ‘‘(B) the percentage (if any) by which— 3 ‘‘(i) C–CPI–U for the last calendar 4 month ending before the asset is disposed 5 of, exceeds 6 ‘‘(ii) C–CPI–U for the last calendar 7 month ending before the asset was ac- 8 quired by the taxpayer. 9 The percentage under subparagraph (B) shall be 10 rounded to the nearest 1⁄10 of 1 percentage point. 11 ‘‘(3) C–CPI–U.— 12 ‘‘(A) IN GENERAL.—The term ‘C–CPI–U’ 13 means the Chained Consumer Price Index for 14 All Urban Consumers (as published by the Bu- 15 reau of Labor Statistics of the Department of 16 Labor). The values of the Chained Consumer 17 Price Index for All Urban Consumers taken 18 into account for purposes of determining the 19 cost-of-living adjustment for any calendar 20 month under this subsection shall be the latest 21 values so published as of the date on which 22 such Bureau publishes the initial value of the 23 Chained Consumer Price Index for All Urban 24 VerDate Sep 11 2014 04:12 Mar 06, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H984.IH H984 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 984 IH Consumers for the month which precedes such 1 calendar month by 4 months. 2 ‘‘(B) DETERMINATION FOR CALENDAR 3 MONTH.—The C–CPI–U for any calendar 4 month is the average of the C–CPI–U as of the 5 close of the 12-month period ending with the 6 month which precedes such calendar month by 7 4 months. 8 ‘‘(e) SUSPENSION OF HOLDING PERIOD WHERE DI- 9 MINISHED RISK OF LOSS; TREATMENT OF SHORT 10 SALES.— 11 ‘‘(1) IN GENERAL.—If the taxpayer (or a re- 12 lated person) enters into any transaction which sub- 13 stantially reduces the risk of loss from holding any 14 asset, such asset shall not be treated as an indexed 15 asset for the period of such reduced risk. 16 ‘‘(2) SHORT SALES.— 17 ‘‘(A) IN GENERAL.—In the case of a short 18 sale of an indexed asset with a short sale period 19 in excess of 3 years, for purposes of this title, 20 the amount realized shall be an amount equal 21 to the amount realized (determined without re- 22 gard to this paragraph) increased by the appli- 23 cable inflation adjustment. In applying sub- 24 section (d)(2) for purposes of the preceding 25 VerDate Sep 11 2014 04:12 Mar 06, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H984.IH H984 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 984 IH sentence, the date on which the property is sold 1 short shall be treated as the date of acquisition 2 and the closing date for the sale shall be treat- 3 ed as the date of disposition. 4 ‘‘(B) SHORT SALE PERIOD.—For purposes 5 of subparagraph (A), the short sale period be- 6 gins on the day that the property is sold and 7 ends on the closing date for the sale. 8 ‘‘(f) DISPOSITIONS BETWEEN RELATED PERSONS.— 9 ‘‘(1) IN GENERAL.—This section shall not apply 10 to any sale or other disposition of property between 11 related persons except to the extent that the basis 12 of such property in the hands of the transferee is a 13 substituted basis. 14 ‘‘(2) RELATED PERSONS DEFINED.—For pur- 15 poses of this section, the term ‘related persons’ 16 means— 17 ‘‘(A) persons bearing a relationship set 18 forth in section 267(b), and 19 ‘‘(B) persons treated as single employer 20 under subsection (b) or (c) of section 414. 21 ‘‘(g) TRANSFERS TO INCREASE INDEXING ADJUST- 22 MENT.—If any person transfers cash, debt, or any other 23 property to another person and the principal purpose of 24 such transfer is to secure or increase an adjustment under 25 VerDate Sep 11 2014 04:12 Mar 06, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H984.IH H984 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 984 IH subsection (a), the Secretary may disallow part or all of 1 such adjustment or increase. 2 ‘‘(h) SPECIAL RULES.—For purposes of this sec- 3 tion— 4 ‘‘(1) TREATMENT OF IMPROVEMENTS, ETC.—If 5 there is an addition to the adjusted basis of any tan- 6 gible property or of any stock in a corporation dur- 7 ing the taxable year by reason of an improvement to 8 such property or a contribution to capital of such 9 corporation— 10 ‘‘(A) such addition shall never be taken 11 into account under subsection (d)(1)(A) if the 12 aggregate amount thereof during the taxable 13 year with respect to such property or stock is 14 less than $1,000, and 15 ‘‘(B) such addition shall be treated as a 16 separate asset acquired at the close of such tax- 17 able year if the aggregate amount thereof dur- 18 ing the taxable year with respect to such prop- 19 erty or stock is $1,000 or more. 20 A rule similar to the rule of the preceding sentence 21 shall apply to any other portion of an asset to the 22 extent that separate treatment of such portion is ap- 23 propriate to carry out the purposes of this section. 24 VerDate Sep 11 2014 04:12 Mar 06, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H984.IH H984 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 984 IH ‘‘(2) ASSETS WHICH ARE NOT INDEXED ASSETS 1 THROUGHOUT HOLDING PERIOD.—The applicable in- 2 flation adjustment shall be appropriately reduced for 3 periods during which the asset was not an indexed 4 asset. 5 ‘‘(3) TREATMENT OF CERTAIN DISTRIBU- 6 TIONS.—A distribution with respect to stock in a 7 corporation which is not a dividend shall be treated 8 as a disposition. 9 ‘‘(4) SECTION CANNOT INCREASE ORDINARY 10 LOSS.—To the extent that (but for this paragraph) 11 this section would create or increase a net ordinary 12 loss to which section 1231(a)(2) applies or an ordi- 13 nary loss to which any other provision of this title 14 applies, such provision shall not apply. The taxpayer 15 shall be treated as having a long-term capital loss in 16 an amount equal to the amount of the ordinary loss 17 to which the preceding sentence applies. 18 ‘‘(5) ACQUISITION DATE WHERE THERE HAS 19 BEEN PRIOR APPLICATION OF SUBSECTION (a)(1) 20 WITH RESPECT TO THE TAXPAYER.—If there has 21 been a prior application of subsection (a)(1) to an 22 asset while such asset was held by the taxpayer, the 23 date of acquisition of such asset by the taxpayer 24 VerDate Sep 11 2014 04:12 Mar 06, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H984.IH H984 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 984 IH shall be treated as not earlier than the date of the 1 most recent such prior application. 2 ‘‘(i) REGULATIONS.—The Secretary shall prescribe 3 such regulations as may be necessary or appropriate to 4 carry out the purposes of this section.’’. 5 (b) CLERICAL AMENDMENT.—The table of sections 6 for part II of subchapter O of chapter 1 of such Code 7 is amended by inserting after the item relating to section 8 1017 the following new item: 9 ‘‘Sec. 1018. Indexing of certain assets for purposes of determining gain or loss of eligible individuals.’’. (c) EFFECTIVE DATE.—The amendments made by 10 this section shall apply to sales or other dispositions after 11 the date of the enactment of this Act, in taxable years 12 ending after such date. 13 Æ VerDate Sep 11 2014 04:12 Mar 06, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6301 E:\BILLS\H984.IH H984 kjohnson on DSK79L0C42PROD with BILLS