I 

111TH CONGRESS 

1ST SESSION H. R. 3429 

To amend the Internal Revenue Code of 1986 to allow individuals to defer 

recognition of reinvested capital gains distributions from regulated investment companies. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 30, 2009 

Mr. RYAN of Wisconsin (for himself, Mr. DAVIS of Alabama, and Mr. CROWLEY) 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 allow individuals to defer recognition of reinvested capital gains 

distributions from regulated investment companies. 

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 ‘‘Generate Retirement 

5 Ownership Through Long-Term Holding Act of 2009’’. 


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1 SEC. 2. DEFERRAL OF REINVESTED CAPITAL GAIN DIVI2 DENDS OF REGULATED INVESTMENT COMPA3 NIES. 

4 (a) IN GENERAL.—Part III of subchapter O of chap5 ter 1 of the Internal Revenue Code of 1986 (relating to 

6 common nontaxable exchanges) is amended by inserting 

7 after section 1045 the following new section: 

8 ‘‘SEC. 1046. REINVESTED CAPITAL GAIN DIVIDENDS OF 

9 REGULATED INVESTMENT COMPANIES. 

10 ‘‘(a) NONRECOGNITION OF GAIN.—In the case of an 

11 individual, no gain shall be recognized on the receipt of 

12 a capital gain dividend distributed by a regulated invest13 ment company to which part I of subchapter M applies 

14 if such capital gain dividend is automatically reinvested 

15 in additional shares of the company pursuant to a dividend 

16 reinvestment plan. 

17 ‘‘(b) DEFINITIONS AND SPECIAL RULES.—For pur18 poses of this section— 

19 ‘‘(1) CAPITAL GAIN DIVIDEND.—The term ‘cap20 ital gain dividend’ has the meaning given to such 

21 term by section 852(b)(3)(C). 

22 ‘‘(2) RECOGNITION OF DEFERRED CAPITAL

23 GAIN DIVIDENDS.— 

24 ‘‘(A) IN GENERAL.—Gain treated as unrec25 ognized in accordance with subsection (a) shall 


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1 be recognized in accordance with subparagraph 

2 (B)— 

3 ‘‘(i) upon a subsequent sale or re4 demption by such individual of stock in the 

5 distributing company, or 

6 ‘‘(ii) upon the death of the individual. 

7 ‘‘(B) GAIN RECOGNITION.— 

8 ‘‘(i) IN GENERAL.—Upon a sale or re9 demption described in subparagraph (A), 

10 the taxpayer shall recognize that portion of 

11 total gain treated as unrecognized in ac12 cordance with subsection (a) (and not pre13 viously recognized pursuant to this sub14 paragraph) that is equivalent to the por15 tion of the taxpayer’s shares in the distrib16 uting company that are sold or redeemed. 

17 ‘‘(ii) DEATH OF INDIVIDUAL.—Except 

18 as provided by regulations, any portion of 

19 such total gain not recognized under clause 

20 (i) prior to the taxpayer’s death shall be 

21 recognized upon the death of the taxpayer 

22 and included in the taxpayer’s gross in23 come for the taxable year ending on the 

24 date of the taxpayer’s death. 


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1 ‘‘(3) HOLDING PERIOD.—The taxpayer’s hold2 ing period in shares acquired through reinvestment 

3 of a capital gain dividend to which subsection (a) ap4 plies shall be determined by treating the shareholder 

5 as having held such shares for one year and a day 

6 as of the date such shares are acquired. 

7 ‘‘(c) SECTION NOT TO APPLY TO CERTAIN TAX8 PAYERS.—This section shall not apply to— 

9 ‘‘(1) an individual with respect to whom a de10 duction under section 151 is allowable to another 

11 taxpayer for a taxable year beginning in the cal12 endar year in which such individual’s taxable year 

13 begins, or 

14 ‘‘(2) an estate or trust. 

15 ‘‘(d) REGULATIONS.—The Secretary shall prescribe 

16 such regulations as may be necessary to carry out the pur17 poses of this section.’’. 

18 (b) CONFORMING AMENDMENTS.— 

19 (1) Section 852(b)(3)(B) of such Code is 

20 amended by adding at the end the following new 

21 sentence: ‘‘For rules regarding nonrecognition of 

22 gain with respect to reinvested capital gain dividends 

23 received by individuals, see section 1046.’’. 

24 (2) The table of sections for part III of sub25 chapter O of chapter 1 of such Code is amended by 


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1 inserting after the item relating to section 1045 the 

2 following new item: 

‘‘Sec. 1046. Reinvested capital gain dividends of regulated investment companies.’’. 

3 (c) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to taxable years ending after the 

5 date of the enactment of this Act. 

Æ 


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