Capital Gains Preferential Timing and Exemption Rules

← Back to Category — Healthcare & Public Health

Close Capital Gains Loopholes to Fund Medicare & Medicaid

AKA “End Bureaucratic Waste in Tax Expenditures”


Which agency/agencies promulgated the regulation? *
Department of the Treasury — Internal Revenue Service (IRS)
Which title, parts, and/or sections of the Code of Federal Regulations (C.F.R.) should be rescinded? *
26 CFR § 1.1223-1 (Capital asset holding period rules enabling strategic tax deferral) 26 CFR § 1.1411-10 (Exemptions under Net Investment Income Tax) Portions of 26 CFR § 1.1001-1 (Recognition of gain or loss upon disposition of property)
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? *
Final Rule
What is the name of the regulation being rescinded, if applicable? *
Capital Gains Preferential Timing and Exemption Rules
Please provide a short summary of the justifications for the rescission. *
These rules preserve tax advantages for asset-heavy households by allowing indefinite deferral and strategic realization of capital gains. Rescinding these provisions would expand the taxable base for high-net-worth individuals and generate reliable federal revenue—giving Congress the ability to strengthen Medicare and Medicaid.
Please insert the address of the agency. [NPRM, DFR, and IFR only]
Department of the Treasury 1500 Pennsylvania Avenue NW Washington, D.C. 20220
Please insert the contact information for the agency. *
Email: publicaffairs@treasury.gov Phone: (202) 622-2000
What is the background for the regulation being rescinded? *
Under current IRS rules, capital gains are not taxed until assets are sold, allowing indefinite deferral. Some types of investment income are further shielded from surtaxes that apply to wages. These mechanisms entrench wealth inequality and starve public programs of needed revenue. Treasury regulations currently support these loopholes by codifying strategic timing, exclusions, and realization-based taxation.
Explain the reasons for the rescission. *
Medicare and Medicaid are repeatedly called “unaffordable” while we subsidize untaxed investment gains. These regulations institutionalize capital income privilege—undermining tax fairness and reducing general revenue. Removing preferential treatment and moving toward mark-to-market taxation for ultra-high-net-worth filers would rebalance the system and create fiscal space for robust public healthcare funding.
Describe the text of the relevant C.F.R. provisions as it will exist after the rescission. *
26 CFR § 1.1223-1 will be amended to eliminate provisions allowing indefinite deferral of capital gains through asset holding strategies. 26 CFR § 1.1411-10 will be amended to remove exclusions from the Net Investment Income Tax for high-income individuals. 26 CFR § 1.1001-1 will be amended—pending legislative authorization—to support annual mark-to-market recognition of capital gains exceeding $10 million in adjusted value.
Please insert the name of the current agency head. *
Scott Bessent
Please insert the title of the agency head. *
Secretary of the Treasury

← Back to Category — Healthcare & Public Health