Full Text
Official text as published. Use Ctrl+F / Cmd+F to search within the document.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 4662 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
2d Session
S. 4662
To amend the Internal Revenue Code of 1986 to ensure that high net-
worth individuals cannot avoid paying taxes on their income and assets.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 2, 2026
Mr. Gallego 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 ensure that high net-
worth individuals cannot avoid paying taxes on their income and assets.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Redistribution Of Billions by
Instituting New High-income Obligations on Overlooked Debt Act of
2026'' or the ``ROBINHOOD Act of 2026''.
SEC. 2. TREATMENT OF LOANS FOR HIGH NET-WORTH INDIVIDUALS.
(a) In General.--Subchapter P of chapter 1 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new part:
``PART VII--TREATMENT OF LOANS FOR APPLICABLE TAXPAYERS
``Sec. 1299. Treatment of loans for applicable taxpayers.
``Sec. 1299A. Applicable taxpayer defined.
``Sec. 1299B. Terms and rules relating to covered assets.
``SEC. 1299. TREATMENT OF LOANS FOR APPLICABLE TAXPAYERS.
``(a) In General.--In the case of any loan issued to an applicable
taxpayer, an amount of long-term capital assets (as identified by the
applicable taxpayer) held by the applicable taxpayer for which the
long-term capital gain is equal to or greater than the amount of the
loan shall be treated as sold for their fair market value on the last
day of the taxable year in which such loan was issued.
``(b) Adjustment of Basis.--
``(1) In general.--In the case of any applicable taxpayer
to which subsection (a) applies, such taxpayer may increase the
basis of any long-term capital asset held by such taxpayer to
the extent of the gain recognized pursuant to subsection (a)
with respect to such long-term capital asset, provided that the
basis of the long-term capital asset does not exceed the fair
market value of such asset.
``(2) Exception.--Paragraph (1) shall not apply with
respect to any property of a character which is subject to the
allowance for depreciation provided in section 167, including
any property to which section 1231 would otherwise apply.
``(c) Treatment of Long-Term Capital Gain.--For purposes of section
1(h) and determining net long-term capital gain, the amount of any
long-term capital gain from assets treated as sold pursuant to
subsection (a) during any taxable year may not be reduced or offset by
any long-term capital losses for such taxable year, including any
losses carried forward to such taxable year.
``(d) Long-Term Capital Asset.--The term `long-term capital asset'
means a capital asset held for more than 1 year.
``(e) Special Rules.--
``(1) Nonresident alien.--In the case of any loan issued to
an applicable taxpayer who is a nonresident alien individual,
subsection (a) shall apply with respect to long-term capital
assets (as identified by the applicable taxpayer) which are
effectively connected with the conduct of a trade or business
within the United States.
``(2) Citizens and residents living abroad.--The amount to
which subsection (a) applies shall be reduced by any amounts
excluded from the taxpayer's gross income under section 911.
``(f) Treatment of Leases.--
``(1) In general.--For purposes of this section, in the
case of an applicable taxpayer that enters into a lease with
respect to any property for which the term is greater than 5
years--
``(A) such lease shall be treated in the same
manner as a loan issued to such taxpayer, and
``(B) for purposes of the application of subsection
(a)--
``(i) the fair market value of such
property on the last day of the taxable year in
which the applicable taxpayer entered into the
lease shall be treated as the amount of the
loan, and
``(ii) the taxable year in which the
applicable taxpayer entered into the lease
shall be treated as the taxable year in which
the loan was issued.
``(2) Subsequent leases.--
``(A) In general.--For purposes of this subsection,
in the case of an applicable taxpayer that enters into
a lease with respect to any property for a term of not
greater than 5 years (referred to in this paragraph as
the `original lease') and--
``(i) subsequently extends the term of the
original lease, or
``(ii) enters into a lease for any term
with respect to any other property which is
substantially identical to the property under
the original lease,
the term of the original lease shall include the period
of the extension described in clause (i) or the term of
the lease described in clause (ii), as applicable.
``(B) Realization and valuation.--In the case of a
lease to which subparagraph (A) applies, the taxable
year in which the original lease is extended (as
described in clause (i) of such subparagraph) or a
lease is entered into for property which is
substantially identical (as described in clause (ii) of
such subparagraph), as applicable, shall be deemed to
be the taxable year in which the applicable taxpayer
entered into the lease for purposes of paragraph
(1)(B).
``(g) Existing Loans.--In the case of any loans which were issued
to an applicable taxpayer prior to the date of enactment of this
section--
``(1) the total principal balance of such loans which is
outstanding as of such date shall be deemed to be one loan that
was issued to the applicable taxpayer on January 1, 2027, and
``(2) the requirements under subsection (i)(3)(B) shall not
apply.
``(h) Non-Avoidance Rules.--
``(1) In general.--In the case of any loan issued to an
applicable entity--
``(A) the loan shall be deemed to have been issued
to the owners of such applicable entity on a pro rata
basis, and
``(B) if any owner described in subparagraph (A) is
an applicable taxpayer, subsection (a) shall apply with
respect to such taxpayer's pro rata share of such loan.
``(2) Notification.--Not later than 30 days after a loan
described in paragraph (1) has been issued, the applicable
entity shall provide notice to all owners that--
``(A) a loan has been issued to the applicable
entity, and
``(B) the amount of such loan and the pro rata
share that each owner has been assigned pursuant to
paragraph (1)(A).
``(3) Owner.--
``(A) In general.--The term `owner' means, with
respect to any applicable entity, a taxpayer who owns
(or is considered as owning within the meaning of
section 318) capital or profits interests in such
entity.
``(B) Constructive ownership rules.--For purposes
of this subparagraph, ownership in such entity shall be
determined in accordance with regulations prescribed by
the Secretary which shall be based on principles
similar to the principles of section 318.
``(4) Certain leases.--For purposes of this subsection, in
the case of an applicable entity that enters into a lease,
subsection (f) shall not apply with respect to such lease
unless the transaction is in violation of the economic
substance doctrine (as described in section 7701(o)).
``(i) Regulations and Guidance.--The Secretary shall prescribe such
guidance and regulations as may be necessary to carry out the purposes
of this section, including guidance and regulations--
``(1) to assist taxpayers in complying with the
requirements of this section,
``(2) that specifies required content to be included in the
notification under subsection (h)(2), and
``(3) to require reporting by--
``(A) any applicable taxpayer to which a loan was
issued, and
``(B) any entity that issues a loan to an
applicable taxpayer.
``SEC. 1299A. APPLICABLE TAXPAYER DEFINED.
``(a) In General.--For purposes of this part--
``(1) In general.--The term `applicable taxpayer' means,
with respect to any taxable year, any taxpayer--
``(A) which is an individual who met either the
income test of paragraph (2) or the asset test of
paragraph (3) for each of the 3 immediately preceding
taxable years (including taxable years beginning before
the date of the enactment of this part which are
included in any such 3-taxable-year period), or
``(B) which is--
``(i) an applicable trust, or
``(ii) the estate of an individual who was
an applicable taxpayer for any taxable year
during the 4-taxable-year period ending with
the taxable year in which the individual died.
``(2) Income test.--The requirements of this paragraph are
met for any taxable year if the applicable adjusted gross
income of the taxpayer for the taxable year exceeds
$100,000,000 ($50,000,000 in the case of a married individual
filing separately).
``(3) Asset test.--
``(A) In general.--The requirements of this
paragraph are met for any taxable year if the aggregate
applicable value of all tradable and nontradable
covered assets held by the taxpayer as of the close of
the taxable year exceeds $1,000,000,000 ($500,000,000
in the case of a married individual filing separately).
``(B) Treatment of ownership interests in
applicable entities.--For purposes of subparagraph (A),
any ownership interest in an applicable entity which
is--
``(i) held directly (or indirectly through
1 or more nontradable interests) by an
applicable taxpayer, and
``(ii) a tradable or nontradable covered
asset,
shall be treated in the same manner as any other
tradable or nontradable covered asset.
``(4) Special rules relating to applicable taxpayer
status.--
``(A) Termination of status of individual
taxpayers.--A taxpayer who is treated as an applicable
taxpayer under paragraph (1)(A) for any taxable year
shall continue to be so treated until the first taxable
year with respect to which--
``(i) the taxpayer does not, for each of
the 3 taxable years immediately preceding such
taxable year, meet either--
``(I) the income test of paragraph
(2) in effect for such preceding
taxable year, or
``(II) the asset test of paragraph
(3) in effect for such preceding
taxable year,
except that each such paragraph shall be
applied for purposes of this clause by
substituting an amount equal to one-half of the
dollar amount otherwise in effect for such
taxpayer under such paragraph for each such
preceding taxable year for such dollar amount,
and
``(ii) the taxpayer elects, in such manner
and form and at such time as the Secretary may
prescribe, not to be so treated for such first
taxable year.
``(B) Earlier termination election of applicable
taxpayer status for divorced individuals.--If--
``(i) an applicable taxpayer ceases to be a
married individual by reason of a decree of
divorce or separate maintenance issued during
any taxable year, and
``(ii) such taxpayer, for the first taxable
year following the taxable year described in
clause (i), does not meet either--
``(I) the income test of paragraph
(2), except that such paragraph shall
be applied for purposes of this
subclause by substituting `$1,000,000'
for the dollar amount otherwise in
effect for such taxpayer under such
paragraph, or
``(II) the asset test of paragraph
(3), except that such paragraph shall
be applied for purposes of this
subclause by substituting `$10,000,000'
for the dollar amount otherwise in
effect for such taxpayer under such
paragraph,
then such taxpayer may elect, in such manner and form
and at such time as the Secretary may prescribe, not to
be treated as an applicable taxpayer beginning with
such first taxable year.
``(C) Election.--An election under subparagraph (A)
or (B)--
``(i) shall be made with the taxpayer's
return of tax for the taxable year to which
such election first applies (or such other time
as the Secretary shall prescribe) and shall be
in such form and manner as the Secretary may
prescribe, and
``(ii) shall apply to such first taxable
year and all subsequent taxable years until the
first taxable year for which the taxpayer is
again treated as an applicable taxpayer by
reason of meeting the requirements of paragraph
(1)(A).
``(5) Special rules for married individuals.--
``(A) Applicable taxpayers becoming married
individuals.--If an individual was an applicable
taxpayer for the taxable year before the individual
became a married individual (within the meaning of
section 7703), such individual and the individual's
spouse shall be treated as applicable taxpayers for
such taxable year of marriage and subsequent taxable
years until such status is otherwise terminated under
this section.
``(B) Married individuals filing separately.--If a
married individual filing separately is treated as an
applicable taxpayer for any taxable year, such
individual's spouse shall be treated as an applicable
taxpayer for such taxable year.
``(C) First-year elections.--Under rules prescribed
by the Secretary, if an individual is first treated as
an applicable taxpayer for a taxable year by reason of
the application of subparagraph (A) or (B), section 496
shall apply to such taxpayer for such first taxable
year only with respect to assets held separately by
such individual unless such taxable year is also the
first taxable year for which the individual's spouse is
an applicable taxpayer.
``(6) Regulatory authority.--The Secretary shall prescribe
such regulations and guidance as may be necessary to carry out
the provisions of this subsection, including--
``(A) rules waiving the application of paragraph
(5)(B) in cases where the Secretary determines
equitable relief is appropriate,
``(B) rules providing for the application of this
subsection in cases where the filing status of a
taxpayer changes between any taxable year and any of
the 3 immediately preceding taxable years, including
the first taxable year in which a taxpayer files a
joint return after becoming married, and
``(C) rules requiring such information reporting as
the Secretary determines necessary to determine whether
a taxpayer is an applicable taxpayer.
``(b) Applicable Adjusted Gross Income.--For purposes of this
section, the term `applicable adjusted gross income' means modified
adjusted gross income as defined in section 36B(d)(2)(B), except that--
``(1) clause (i) thereof shall be applied by substituting
`sections 911, 931, and 933' for `section 911', and
``(2) in the case of a trust, no deduction under section
651 or 661 shall be allowed.
``(c) Applicable Trust.--For purposes of this section--
``(1) In general.--The term `applicable trust' means a
trust (other than a grantor trust) which, for each of the 3
taxable years immediately preceding such taxable year
(including taxable years beginning before the date of the
enactment of this part which are included in any such 3-
taxable-year period), meets either--
``(A) the income test of subsection (a)(2), except
that such subsection shall be applied for purposes of
this subparagraph by substituting `$10,000,000' for the
dollar amount otherwise in effect for such taxable year
under such paragraph, or
``(B) the asset test of subsection (a)(3), except
that such subsection shall be applied for purposes of
this subparagraph by substituting `$100,000,000' for
the dollar amount otherwise in effect for such taxable
year under such paragraph.
``(2) Exceptions.--Such term shall not include--
``(A) a qualified disability trust (as defined in
section 642(b)(2)(C)(ii)),
``(B) any portion of a trust which consists of
property permanently set aside for the exclusive use of
an organization described in section 170(c),
``(C) a pooled income fund (as defined in section
642(c)(5)) or a cemetery perpetual care fund (as
described in section 642(i)),
``(D) a settlement trust (as defined in section
646),
``(E) any charitable remainder annuity trust (as
defined in section 664),
``(F) any charitable remainder unitrust (as defined
in section 664), or
``(G) any other category of trust identified in
regulations or guidance provided by the Secretary.
``(3) Grantor trusts.--
``(A) Grantor trust defined.--For purposes of this
section, the term `grantor trust' means any portion of
a trust with respect to which the grantor or any other
person is considered the owner under subpart E of part
I of subchapter J.
``(B) Assets of grantor trust taken into account.--
For purposes of subsection (a)(1)(A), the assets of a
grantor trust shall be included in the assets of--
``(i) the grantor of such trust if the
grantor is considered the owner of such assets,
and
``(ii) if a person other than the grantor
is considered the owner of such assets, both
the grantor and such person.
``(d) Special Rules for Foreign Persons and Expatriates.--For
purposes of this part--
``(1) Nonresident alien individuals.--The following rules
shall apply in determining whether a nonresident alien
individual is an applicable taxpayer:
``(A) Income test.--For purposes of the income test
under subsection (a)(2)--
``(i) such subsection shall be applied for
purposes of this subparagraph by substituting
`$50,000,000' for the dollar amount otherwise
in effect for such taxable year under such
paragraph, and
``(ii) the applicable adjusted gross income
of such individual shall be equal to the
taxable income of such individual, determined
by only taking into account items of income,
gain, deduction, and loss which are effectively
connected with the conduct of trades or
businesses within the United States.
``(B) Asset test.--For purposes of the asset test
under subsection (a)(3)--
``(i) such subsection shall be applied for
purposes of this subparagraph by substituting
`$500,000,000' for the dollar amount otherwise
in effect for such taxable year under such
paragraph, and
``(ii) only assets which produce income
described in subparagraph (A) shall be taken
into account.
``(2) Expatriates.--
``(A) In general.--If, for the taxable year which
includes a covered expatriate's expatriation date, such
expatriate--
``(i) was an applicable taxpayer (without
regard to this paragraph), or
``(ii) is an applicable taxpayer under the
rules of subparagraph (B),
such expatriate shall be treated as an applicable
taxpayer during each of the taxable years during the
10-taxable-year period beginning with such taxable year
(and such status shall not be terminated during such
period by reason of any other provision of this part).
``(B) Special rules for determining status.--For
purposes of subparagraph (A)(ii), a covered expatriate
not otherwise treated as an applicable taxpayer shall
be treated as an applicable taxpayer if, during any of
the 5 taxable years immediately preceding the taxable
year which includes the covered expatriate's
expatriation date (including taxable years beginning
before the date of the enactment of this part which are
included in any such 5-taxable-year period), the
expatriate meets either--
``(i) the income test of subsection (a)(2),
except that such subsection shall be applied
for purposes of this subparagraph by
substituting `$50,000,000' for the dollar
amount otherwise in effect for such taxable
year under such paragraph, or
``(ii) the asset test of subsection (a)(3),
except that such subsection shall be applied
for purposes of this subparagraph by
substituting `$500,000,000' for the dollar
amount otherwise in effect for such taxable
year under such paragraph.
``(C) Definitions.--Any term used in this paragraph
which is also used in section 877A shall have the same
meaning as when used in such section.
``SEC. 1299B. TERMS AND RULES RELATING TO COVERED ASSETS.
``(a) Covered Asset.--For purposes of this part, the term `covered
asset' means any tradable covered asset and any nontradable covered
asset.
``(b) Tradable Covered Asset.--For purposes of this part, the term
`tradable covered asset' means--
``(1) any asset if--
``(A) interests in such asset are traded on an
established securities market,
``(B) interests in such assets are readily tradable
on a secondary market (or the substantial equivalent
thereof),
``(C) interests in such assets are available on an
online or electronic platform that regularly matches,
or facilitates the matching of, buyers and sellers of
such assets, or
``(D) such asset is an asset for which the
Secretary determines there is a reasonable basis to
determine the asset's fair market value annually, and
``(2) any derivative with respect to an underlying
investment which--
``(A) is an asset described in paragraph (1), or
``(B) is a nontradable covered asset which is
identified in regulations or other guidance provided by
the Secretary.
``(c) Nontradable Covered Asset.--For purposes of this part--
``(1) In general.--The term `nontradable covered asset'
means any asset which is not a tradable covered asset,
including--
``(A) any interest of the taxpayer in an applicable
savings plan or in a defined benefit plan,
``(B) any cash or cash equivalent, or
``(C) any private placement life insurance or
annuity contract described in section 72(e)(12)(D).
``(2) Investments in qualified opportunity funds.--
Notwithstanding subsection (b), any investment in a qualified
opportunity fund (as defined in section 1400Z-2(d)) shall be
treated as a nontradable covered asset.
``(d) Applicable Value.--For purposes of this part--
``(1) Tradable covered assets.--The applicable value of any
tradable covered asset as of any date shall be its fair market
value on such date.
``(2) Nontradable covered assets.--The applicable value of
any nontradable covered asset as of any date shall be the
greatest of--
``(A) the original cost basis of such asset,
``(B) the adjusted basis of such asset,
``(C) the value determined as of the date of the
last event with respect to the asset which establishes
such value,
``(D) in the case of an asset the value of which is
included in an applicable financial statement, the
value in the latest available statement,
``(E) the value of such asset determined for
purposes of using such asset to secure any
indebtedness, and
``(F) the value of such asset determined under such
other valuation method as the Secretary may prescribe.
If a covered asset would, but for subsection (c)(2) or any
other provision of this part, be treated as a tradable covered
asset, the asset's applicable value shall be determined under
paragraph (1).
``(3) Adjustment for debt and other liabilities of the
taxpayer.--Except as provided by the Secretary, the aggregate
applicable value of all covered assets of the taxpayer as of
any date (determined without regard to this paragraph) shall be
reduced by the aggregate outstanding amount of--
``(A) indebtedness of the taxpayer as of such date,
and
``(B) any other liabilities (other than
indebtedness) of the taxpayer as of such date which the
Secretary determines are appropriate to be taken into
account for such purpose.
``(4) Reliance on valuation.--In determining the applicable
value of any tradable covered asset for purposes of this
section, the taxpayer may rely on a valuation which is--
``(A) provided to the taxpayer by a broker under
section 6045(b),
``(B) provided to the taxpayer by a dealer in
securities or a dealer in commodities, within the
meaning of section 475,
``(C) determined under an applicable financial
statement, or
``(D) provided to the taxpayer by such other
persons as may be designated by the Secretary.
``(5) Private placement life insurance and annuity
contracts.--
``(A) In general.--The applicable value of a
private placement life insurance or annuity contract
(as defined in section 72(e)(12)(D)) as of any date
shall be its cash surrender value (as determined under
section 7702(f)(2)(A)) on such date.
``(B) Adjustments.--The Secretary shall by
regulation provide for adjustments to the cash
surrender value determined under subparagraph (A) with
respect to any contract to the extent necessary to
prevent the avoidance of the purposes of this part,
including regulations which ensure that such value as
of any time properly reflects the value of any
underlying investments with respect to such contract as
of such time.
``(6) Special rules for applicable entities.--In the case
of an applicable entity--
``(A) the value of a partner's ownership interest
in such partnership under paragraph (2)(C) shall not be
less than the value of the partner's capital account
under section 704, and
``(B) the Secretary shall provide rules for
determining the share of a holder of an ownership
interest in such an entity of amounts included in an
applicable financial statement of such entity for
purposes of applying paragraph (2)(D).
``(7) Secretarial authority.--The Secretary shall prescribe
such regulations, rules, and guidance as may be necessary to
carry out the purposes of this subsection, including
regulations, rules, and guidance which--
``(A) prevent the avoidance of such purposes,
``(B) provide rules for the application of
paragraph (2)(C), including in cases of transactions in
which gain or loss is not recognized in connection with
contributions, distributions, and sales of
substantially similar property from which value may be
derived, and
``(C) provide rules for determining the applicable
value of assets in taxable years beginning before the
date of the enactment of this part.
``(e) Other Definitions.--For purposes of this part--
``(1) Applicable entity.--The term `applicable entity'
means any--
``(A) partnership,
``(B) S corporation, or
``(C) other pass-through entity specified in
regulations or guidance prescribed by the Secretary.
``(2) Applicable financial statement.--For purposes of this
subsection, the term `applicable financial statement' has the
meaning given such term by section 451(b)(3).
``(3) Applicable savings plan.--The term `applicable
savings plan' means--
``(A) a defined contribution plan to which section
401(a) or 403(a) applies,
``(B) an annuity contract under section 403(b),
``(C) an eligible deferred compensation plan
described in section 457(b) which is maintained by an
eligible employer described in section 457(e)(1)(A),
``(D) an individual retirement plan,
``(E) an Archer MSA (within the meaning of section
220(d)),
``(F) a qualified tuition program (as defined in
section 529(b)),
``(G) an ABLE account (as defined in section
529A(e)(6)),
``(H) a Coverdell education savings account (as
defined in section 530), or
``(I) a health savings account (within the meaning
of section 223(d)).
``(4) Derivative.--The term `derivative' has the meaning
given such term under section 59A(h)(4).
``(5) Nontradable interest.--The term `nontradable
interest' means any ownership interest in an applicable entity
which is a nontradable covered asset.
``(6) Underlying investment.--The term `underlying
investment' means, with respect to any derivative, any item--
``(A) which is described in clauses (i) through (v)
of section 59A(h)(4)(A) (or any item substantially the
same as any such item), and
``(B) by reference to which the value of the
derivative, or any payment or other transfer with
respect to the derivative, is determined either
directly or indirectly.''.
(b) Clerical Amendment.--The table of parts for subchapter P of
chapter 1 of such Code is amended by adding at the end the following
new item:
``Part VII--Treatment of Loans for Applicable Taxpayers''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2026.
<all>