I 
118TH CONGRESS 
2D SESSION 
H. R. 7760 
To amend the Internal Revenue Code of 1986 to treat certain gains and 
dividends derived from counties of concern as ordinary income. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 20, 2024 
Mr. SHERMAN (for himself, Mrs. SPARTZ, Mr. DOGGETT, and Mr. FOSTER) 
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 treat cer-
tain gains and dividends derived from counties of concern 
as ordinary income. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘No Capital Gains Al-
lowance for American Adversaries Act’’. 
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SEC. 2. CERTAIN GAINS AND DIVIDENDS DERIVED FROM 
COUNTRIES OF CONCERN TREATED AS ORDI-
NARY INCOME. 
(a) IN GENERAL.—Part IV of subchapter P of chap-
ter 1 of the Internal Revenue Code of 1986 is amended 
by adding at the end the following new section: 
‘‘SEC. 1261. GAINS DERIVED FROM COUNTRIES OF CON-
CERN TREATED AS ORDINARY INCOME. 
‘‘(a) IN GENERAL.—Gain from the sale, exchange, or 
other disposition of specified country of concern property 
shall be treated as ordinary income. Such gain shall be 
recognized notwithstanding any other provision of this 
title. 
‘‘(b) SPECIFIED
COUNTRY
OF
CONCERN
PROP-
ERTY.—For purposes of this section: 
‘‘(1) IN GENERAL.—The term ‘specified country 
of concern property’ means— 
‘‘(A) any registered or unregistered secu-
rity of a company or other entity, as determined 
by criteria established by the Securities and Ex-
change Commission and the Secretary of the 
Treasury— 
‘‘(i) which is incorporated or otherwise 
organized in a country of concern, 
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‘‘(ii) which has a majority of such 
company or other entity’s assets or em-
ployees located in a country of concern, 
‘‘(iii) which is owned by, controlled by, 
or subject to the jurisdiction or direction of 
a government of a country of concern, 
‘‘(iv) where a majority of such com-
pany or other entity’s value depends on the 
revenues, profits, market capitalization, as-
sets, or the value of a security (including 
options to purchase or sell) of companies 
or other entities described under clause (i), 
(ii), or (iii), or 
‘‘(v) where such company or other en-
tity is controlled by any company or other 
entity described under clause (i), (ii), or 
(iii), and 
‘‘(B) any property (other than securities) 
which is located or used in a country of con-
cern. 
‘‘(2) ADDITIONAL DEFINITIONS.—For purposes 
of paragraph (1): 
‘‘(A) CONTROLLED
BY.—The term ‘con-
trolled by’ has the meaning given that term 
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under section 230.405 of title 17, Code of Fed-
eral Regulations. 
‘‘(B) COUNTRY OF CONCERN.—The term 
‘country of concern’ means the People’s Repub-
lic of China (including Hong Kong and Macao 
and excluding Taiwan), Russia, Belarus, Iran, 
and North Korea.’’. 
(b) DIVIDENDS.—Section 1(h)(11)(C)(iii) of such 
Code is amended by striking ‘‘and’’ at the end of subclause 
(I), by striking the period at the end of subclause (II) and 
inserting ‘‘, and’’, and by adding at the end the following 
new subclause: 
‘‘(III) any foreign corporation de-
scribed in section 1261(b)(1)(A) as of 
the date on which the dividend is 
paid.’’. 
(c) DENIAL OF STEP-UP IN BASIS AT DEATH.—Sec-
tion 1014(a) of such Code is amended by striking ‘‘or’’ 
at the end of paragraph (3), by striking the period at the 
end of paragraph (4) and inserting ‘‘, or’’, and by adding 
at the end the following new paragraph: 
‘‘(5) in the case of specified country of concern 
property (as defined in section 1261(b)), the basis in 
the hands of the decedent.’’. 
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(d) NOTICE TO PURCHASERS.—Not later than 180 
days after the date of the enactment of this Act, the Secu-
rities and Exchange Commission shall issue rules requir-
ing any person selling, exchanging, or otherwise disposing 
of a security that is specified country of concern property 
(as defined under section 1261(b) of the Internal Revenue 
Code of 1986) to notify the other party to such sale, ex-
change, or disposition that any gains related to such secu-
rity are treated as ordinary income under the Internal 
Revenue Code of 1986 and not treated as capital gains. 
(e) PUBLICLY AVAILABLE LIST OF SECURITIES.— 
(1) IN
GENERAL.—The Securities and Ex-
change Commission shall publish on the website of 
the Commission a list of all securities described 
under section 1261(b)(1)(A) of the Internal Revenue 
Code of 1986. 
(2) REPORTING REQUIREMENTS.—The Securi-
ties and Exchange Commission may require such re-
ports as the Commission determines necessary to de-
termine which securities are described under section 
1261(b)(1)(A) of the Internal Revenue Code of 
1986. 
(f) RULEMAKING.—Not later than 180 days after the 
date of the enactment of this Act, the Secretary of the 
Treasury and the Securities and Exchange Commission 
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shall issue such rules as may be necessary to implement 
this Act and the amendments made by this Act, including 
establishing 
the 
criteria 
described 
under 
section 
1261(b)(1)(A) of the Internal Revenue Code of 1986. 
(g) EFFECTIVE DATE.—The amendments made by 
this section shall apply to dispositions of property, and 
dividends paid, on or after January 1, 2025. 
Æ 
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