S. 2845: Billionaires Income Tax Act (119th Congress) Bill Summary

The "Billionaires Income Tax Act" is designed to ensure that billionaires pay annual taxes by eliminating specific tax strategies and loopholes that have allowed them to minimize their tax obligations. The bill proposes changes to more than 30 provisions within the Internal Revenue Code.

Ownership Transfers and Tax Obligations

The bill sets forth criteria regarding transfers that might impact ownership. It defines terms like "applicable grantor trust" and provides exemptions for spousal transfers and charitable contributions. Additionally, it outlines guidelines regarding taxpayer status and how assets are valued, especially for non-tradable assets, which will influence tax obligations during transfers or upon death of the owner.

Asset Basis and Reporting Requirements

There are new regulations for applicable entities regarding adjustments to asset basis, partner ownership interest valuation, and mandates for the Secretary to create regulations to ensure compliance. The legislation introduces definitions for significant terms, including "applicable transfer" and "applicable savings plan," and establishes reporting requirements that will take effect after December 31, 2025.

Changes to Life Insurance and Annuity Contracts

This bill also modifies tax regulations related to life insurance and annuity contracts for applicable taxpayers. It introduces a 10% additional tax on withdrawals from certain types of contracts and repeals existing exclusions for death benefits pertaining to specific contracts. New reporting requirements will also be enforced following December 31, 2025.