ROBINHOOD Act of 2026
- Bill Number
- S. 4662
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-06-02: Read twice and referred to the Committee on Finance.
- Last Updated
- 2026-06-15T17:49:29Z
AI-Generated Summary
Purpose This legislation amends the Internal Revenue Code of 1986 to prevent high net-worth individuals from deferring taxes on unrealized gains by borrowing against assets or entering long-term leases. It creates a new tax treatment that treats certain loans and leases as constructive sales of long-term capital assets.
Key Provisions
- Definition of applicable taxpayer: Individuals who meet either an income test (applicable adjusted gross income exceeding $100 million, or $50 million for married filing separately) or an asset test (covered assets exceeding $1 billion, or $500 million for married filing separately) for each of the prior three years. The definition also covers certain trusts, estates, and special rules for nonresident aliens, expatriates, and married individuals.
- Treatment of loans: For applicable taxpayers, a loan triggers the deemed sale of long-term capital assets (identified by the taxpayer) equal in value to the loan amount at fair market value on the last day of the tax year. This generates taxable long-term capital gain that cannot be offset by losses.
- Basis adjustment and exceptions: Taxpayers may increase the basis of affected assets up to fair market value (with an exception for depreciable property).
- Leases: Long-term leases (over 5 years) are treated similarly to loans, with rules to prevent short-term lease extensions or substitutions from avoiding the provision.
- Existing loans: Pre-enactment loans are treated as a single loan issued on January 1, 2027.
- Anti-avoidance rules: Loans to pass-through entities (partnerships, S corporations) are attributed pro rata to owners; notification requirements apply.
- Valuation and reporting: Detailed rules for determining the value of tradable and nontradable covered assets, including reliance on broker statements or financial statements. The Secretary of the Treasury must issue regulations for compliance, reporting by borrowers and lenders, and valuation methods.
- Effective date: Applies to taxable years beginning after December 31, 2026.
Significant Changes to Existing Law The bill adds a new Part VII to Subchapter P of the Internal Revenue Code, introducing a novel constructive-sale rule for loans and leases held by ultra-high-net-worth taxpayers. This departs from current law, which generally does not treat borrowing against appreciated assets as a taxable event. It also expands reporting obligations and creates new definitions for covered assets, applicable entities, and valuation methods not previously codified in this form.
Potential Impacts
- On citizens: Ultra-high-net-worth individuals may face accelerated tax liabilities on unrealized gains when taking loans or long-term leases, potentially requiring asset sales to cover taxes.
- On government agencies: The IRS and Treasury Department will administer new valuation, reporting, and enforcement requirements, including guidance on asset identification and entity-level loans.
- On international relations: Provisions apply to nonresident aliens with U.S.-connected assets and expatriates, with adjusted thresholds; this may affect cross-border lending and expatriation planning.
Main Stakeholders Affected
- Ultra-high-net-worth individuals, trusts, and estates meeting the income or asset thresholds.
- Pass-through entities (partnerships, S corporations) and their owners.
- Lenders and lessors issuing loans or long-term leases to applicable taxpayers.
- The Internal Revenue Service and Department of the Treasury.
Notable Legal, Constitutional, or Political Implications The measure raises questions about the taxation of unrealized gains through a constructive-sale mechanism, which could face challenges regarding due process or takings concerns under the Constitution. It introduces complex attribution and valuation rules that may require extensive regulatory interpretation. Politically, the short title frames the policy as addressing overlooked debt obligations of high-income taxpayers.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Recent Actions
- 2026-06-02: Read twice and referred to the Committee on Finance.
- 2026-06-02: Introduced in Senate
Bill Versions
- Redistribution Of Billions by Instituting New High-income Obligations on Overlooked Debt Act of 2026 — issued 2026-06-02 — PDF (29 pages)