II 119th CONGRESS 1st Session S. 2047 IN THE SENATE OF THE UNITED STATES June 12, 2025 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. Short title This Act may be cited as the No Capital Gains Allowance for American Adversaries Act . 2. Certain gains and dividends derived from countries of concern treated as ordinary income (a) In general Part IV of subchapter P of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: 1261. Gains derived from countries of concern 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 property For purposes of this section: (1) In general The term specified country of concern property means— (A) any registered or unregistered security of a company or other entity, as determined by criteria established by the Securities and Exchange Commission and the Secretary of the Treasury— (i) which is incorporated or otherwise organized in a country of concern, (ii) which has a majority of such company or other entity’s assets or employees 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 company or other entity’s value depends on the revenues, profits, market capitalization, assets, 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 entity 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 concern. (2) Additional definitions For purposes of paragraph (1): (A) Controlled by The term controlled by has the meaning given that term under section 230.405 of title 17, Code of Federal Regulations. (B) Country of concern The term country of concern means the People’s Republic 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 described 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 Section 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. . (d) Notice to purchasers Not later than 180 days after the date of the enactment of this Act, the Securities and Exchange Commission shall issue rules requiring 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, exchange, or disposition that any gains related to such security 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 Exchange 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 Securities and Exchange Commission may require such reports as the Commission determines necessary to determine 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 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, 2026.