# Capital Gains Inflation Relief Act of 2023

This bill would change how the government taxes profits from selling investments like stocks, real estate, or other assets. Right now, when you sell something for more than you paid for it, you owe taxes on that profit (called a capital gain). This bill would let you adjust the original purchase price upward based on inflation before calculating your taxes, meaning you'd only pay taxes on the "real" profit after accounting for inflation.

Here's a practical example: Say you bought stock for $10,000 in 2010 and sold it for $20,000 in 2023. Normally, you'd owe taxes on the full $10,000 gain. But under this bill, if inflation increased the value of that $10,000 to $14,000 in today's dollars, you'd only owe taxes on a $6,000 gain instead. This adjustment would apply to long-term investments—generally assets held for more than a year.

The main people affected would be investors and property owners who sell assets at a profit. Supporters argue this is fairer because it prevents people from paying taxes on gains that just reflect inflation rather than real economic growth. Critics worry it would reduce government tax revenue and primarily benefit wealthy people who own significant investments. The bill would essentially lower the tax burden on investment income, which could encourage people to buy and hold stocks, real estate, and other assets longer before selling them.

Capital Gains Inflation Relief Act of 2023

Cruz, Ted

Capital Gains Inflation Relief Act of 2023 This bill allows the adjusted basis of certain assets (including any common stock in a C corporation, any digital asset, and tangible property used in a trade or business) to be indexed for inflation for the purpose of determining the gain or loss of a taxpayer (other than a corporation) who has held the asset for more than three years. The bill sets forth rules for applying the inflation adjustment to <ul> <li>short sales; </li> <li>regulated investment companies; </li> <li>real estate investment trusts;</li> <li>other pass-through entities, including partnerships, S corporations, and common trust funds;</li> <li>dispositions between related persons; and </li> <li>improvements to property or contributions of capital.</li> </ul> The Internal Revenue Service may disallow an adjustment if any person transfers cash, debt, or any other property to another person for the principal purpose of securing or increasing the adjustment allowed by this bill.