Charles (Chuck) Rubin, in his Rubin on Tax blog, discusses the implications of Biden’s imminent plans to raise taxes, possibly through the adoption of antideferral rules, via a report by Senate Finance Committee ranking member Senator Ron Wyden. The article begins as follows:
Presently, taxpayers who own appreciating assets are not taxed on the appreciation until the sale of those assets. Further, the gains may be subject to preferential rates of tax.
Both of these concepts would go out the window in an antideferral regime. First, the report recommends the elimination of favorable capital gains rates. Second, as to publicly traded securities, taxpayers would be required to “mark-to-market” the value of their accounts each year for income tax purposes. To the extent those assets went up in value during the year, taxes would be due on that appreciation (or a deduction would be allowed for any loss) even though the asset was not sold. The taxpayer could no longer defer tax on gains until sale. Third, as to nonpublicly traded property, in lieu of a mark-to-market arrangement, a penalty would be imposed on the taxpayer which would grow for the longer the property is held, so as to deny the benefits of tax deferral to the taxpayer. The penalty might be an interest charge or a tax surcharge.
Click here to view Senator Ron Wyden’s report, titled “Treat Wealth Like Wages”
Click here to see full article: “Antideferral Tax Legislation on the Horizon? What is Antideferral Tax Legislation?”
Posted by Elise Kim, Managing Associate Editor, Wealth Strategies Journal.