II 

118TH CONGRESS 

2D SESSION S. 5233 

To amend the Internal Revenue Code of 1986 to treat certain gains and 

dividends derived from counties of concern as ordinary income. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 25, 2024 

Mr. RICKETTS introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to treat certain gains and dividends derived from counties of concern 

as ordinary income. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘No Capital Gains Al5 lowance for American Adversaries Act’’. 


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1 SEC. 2. CERTAIN GAINS AND DIVIDENDS DERIVED FROM 

2 COUNTRIES OF CONCERN TREATED AS ORDI3 NARY INCOME. 

4 (a) IN GENERAL.—Part IV of subchapter P of chap5 ter 1 of the Internal Revenue Code of 1986 is amended 

6 by adding at the end the following new section: 

7 ‘‘SEC. 1261. GAINS DERIVED FROM COUNTRIES OF CON8 CERN TREATED AS ORDINARY INCOME. 

9 ‘‘(a) IN GENERAL.—Gain from the sale, exchange, or 

10 other disposition of specified country of concern property 

11 shall be treated as ordinary income. Such gain shall be 

12 recognized notwithstanding any other provision of this 

13 title. 

14 ‘‘(b) SPECIFIED COUNTRY OF CONCERN PROP15 ERTY.—For purposes of this section: 

16 ‘‘(1) IN GENERAL.—The term ‘specified country 

17 of concern property’ means— 

18 ‘‘(A) any registered or unregistered secu19 rity of a company or other entity, as determined 

20 by criteria established by the Securities and Ex21 change Commission and the Secretary of the 

22 Treasury— 

23 ‘‘(i) which is incorporated or otherwise 

24 organized in a country of concern, 


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1 ‘‘(ii) which has a majority of such 

2 company or other entity’s assets or em3 ployees located in a country of concern, 

4 ‘‘(iii) which is owned by, controlled by, 

5 or subject to the jurisdiction or direction of 

6 a government of a country of concern, 

7 ‘‘(iv) where a majority of such com8 pany or other entity’s value depends on the 

9 revenues, profits, market capitalization, as10 sets, or the value of a security (including 

11 options to purchase or sell) of companies 

12 or other entities described under clause (i), 

13 (ii), or (iii), or 

14 ‘‘(v) where such company or other en15 tity is controlled by any company or other 

16 entity described under clause (i), (ii), or 

17 (iii), and 

18 ‘‘(B) any property (other than securities) 

19 which is located or used in a country of con20 cern. 

21 ‘‘(2) ADDITIONAL DEFINITIONS.—For purposes 

22 of paragraph (1): 

23 ‘‘(A) CONTROLLED BY.—The term ‘con24 trolled by’ has the meaning given that term 


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1 under section 230.405 of title 17, Code of Fed2 eral Regulations. 

3 ‘‘(B) COUNTRY OF CONCERN.—The term 

4 ‘country of concern’ means the People’s Repub5 lic of China (including Hong Kong and Macao 

6 and excluding Taiwan), Russia, Belarus, Iran, 

7 and North Korea.’’. 

8 (b) DIVIDENDS.—Section 1(h)(11)(C)(iii) of such 

9 Code is amended by striking ‘‘and’’ at the end of subclause 

10 (I), by striking the period at the end of subclause (II) and 

11 inserting ‘‘, and’’, and by adding at the end the following 

12 new subclause: 

13 ‘‘(III) any foreign corporation de14 scribed in section 1261(b)(1)(A) as of 

15 the date on which the dividend is 

16 paid.’’. 

17 (c) DENIAL OF STEP-UP IN BASIS AT DEATH.—Sec18 tion 1014(a) of such Code is amended by striking ‘‘or’’ 

19 at the end of paragraph (3), by striking the period at the 

20 end of paragraph (4) and inserting ‘‘, or’’, and by adding 

21 at the end the following new paragraph: 

22 ‘‘(5) in the case of specified country of concern 

23 property (as defined in section 1261(b)), the basis in 

24 the hands of the decedent.’’. 


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1 (d) NOTICE TO PURCHASERS.—Not later than 180 

2 days after the date of the enactment of this Act, the Secu3 rities and Exchange Commission shall issue rules requir4 ing any person selling, exchanging, or otherwise disposing 

5 of a security that is specified country of concern property 

6 (as defined under section 1261(b) of the Internal Revenue 

7 Code of 1986) to notify the other party to such sale, ex8 change, or disposition that any gains related to such secu9 rity are treated as ordinary income under the Internal 

10 Revenue Code of 1986 and not treated as capital gains. 

11 (e) PUBLICLY AVAILABLE LIST OF SECURITIES.— 

12 (1) IN GENERAL.—The Securities and Ex13 change Commission shall publish on the website of 

14 the Commission a list of all securities described 

15 under section 1261(b)(1)(A) of the Internal Revenue 

16 Code of 1986. 

17 (2) REPORTING REQUIREMENTS.—The Securi18 ties and Exchange Commission may require such re19 ports as the Commission determines necessary to de20 termine which securities are described under section 

21 1261(b)(1)(A) of the Internal Revenue Code of 

22 1986. 

23 (f) RULEMAKING.—Not later than 180 days after the 

24 date of the enactment of this Act, the Secretary of the 

25 Treasury and the Securities and Exchange Commission 


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1 shall issue such rules as may be necessary to implement 

2 this Act and the amendments made by this Act, including 

3 establishing the criteria described under section 

4 1261(b)(1)(A) of the Internal Revenue Code of 1986. 

5 (g) EFFECTIVE DATE.—The amendments made by 

6 this section shall apply to dispositions of property, and 

7 dividends paid, on or after January 1, 2025. 

Æ 


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