Capital gains and losses—definitions and treatment

Eliminate Capital Gains Abuse of Artificial Gain/Loss Timing

AKA “Simplify and Standardize Capital Gains Recognition”


Which agency/agencies promulgated the regulation? *
Internal Revenue Service (IRS)
Which title, parts, and/or sections of the Code of Federal Regulations (C.F.R.) should be rescinded? *
Rescind interpretive rules and exemptions within the following regulations that enable artificial capital gains/loss timing through non-substantive transactions: 26 CFR § 1.1222-1 (definitions of capital gains and losses used to support asset category manipulation) 26 CFR § 1.1091-1 (wash sales involving substantially identical securities) 26 CFR § 1.1259-1 (constructive sales used to lock in gain without realizing it) 26 CFR § 1.267(a)-1 (related-party sales allowing artificial losses) 26 CFR §§ 1.701-2 and 1.704-3 (partnership allocations used to engineer timing advantages or defer recognition) The above provisions and associated safe harbors shall be amended or rescinded where they permit deferral, duplication, or artificial realization of capital gains or losses inconsistent with the economic substance of a transaction.
What is your name?
—OPTIONAL--
Is your proposed rescission a notice of proposed rulemaking, final rule, direct final rule, interim final rule, or interpretive rule? *
Notice of Proposed Rulemaking
What is the name of the regulation being rescinded, if applicable? *
Capital gains and losses—definitions and treatment
Please provide a short summary of the justifications for the rescission. *
Simplifying capital gains and losses treatment by eliminating mechanisms that enable artificial loss recognition and deferred gains through nonproductive asset transfers.
Please insert the address of the agency. [NPRM, DFR, and IFR only]
Department of the Treasury Internal Revenue Service 1111 Constitution Avenue, NW Washington, D.C. 20224
Please insert the contact information for the agency. *
public_liaison@irs.gov
What is the background for the regulation being rescinded? *
The current definitions of capital gains and losses provide opportunities for artificial loss creation and deferred tax obligations through asset manipulation, increasing administrative burden and reducing transparency.
Explain the reasons for the rescission. *
Removing these loopholes would reduce taxpayer manipulation, simplify tax compliance, and ensure a more equitable and transparent application of capital gains taxation.
Describe the text of the relevant C.F.R. provisions as it will exist after the rescission. *
The definitions of capital gains and losses will no longer allow for artificial timing advantages or deferral through asset category manipulation.
Please insert the name of the current agency head. *
Michael Faulkender
Please insert the title of the agency head. *
Acting Commissioner of Internal Revenue