Overview
Title
To amend the Internal Revenue Code of 1986 to exclude debt held by certain insurance companies from capital assets and to extend capital loss carryovers for such companies from 5 years to 10 years.
ELI5 AI
The bill wants to make special rules for insurance companies when it comes to taxes: it would allow them to treat some debt differently and give them more time to use any financial losses to reduce future taxes, like having a special pass for longer in a game.
Summary AI
S. 1335, titled the “Secure Family Futures Act of 2025,” seeks to amend the Internal Revenue Code to benefit certain insurance companies. It proposes that debt held by these companies should not be considered as capital assets, which could potentially change the tax treatment of these assets. Additionally, the bill aims to extend the period in which these insurance companies can carry over their capital losses from five years to ten years. These changes are set to take effect for specific assets and losses incurred after December 31, 2025.
Published
Keywords AI
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Bill Statistics
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AnalysisAI
The proposed legislation, known as the “Secure Family Futures Act of 2025,” seeks to introduce specific amendments to the Internal Revenue Code of 1986. This bill focuses on altering how certain debts held by insurance companies are treated for tax purposes and extends the timeframe during which these companies can carry forward capital losses.
General Summary
The bill consists of two main provisions. Firstly, it excludes certain types of debt held by "applicable insurance companies" from being considered capital assets. This affects the way these companies report gains and losses for tax purposes. The second provision allows these companies to extend the period for carrying forward capital losses from the current five years to ten years. These changes are slated to apply to debts and losses beginning after December 31, 2025.
Significant Issues
One significant issue with the bill lies in the complexity of its language, especially concerning the amendments to Section 1221(a) of the Internal Revenue Code. The terms used, such as “note, bond, debenture, or other evidence of indebtedness,” may not be easily understood by those without expertise in tax law. This complexity could hinder public understanding and accessibility.
Another issue involves the definition of an "applicable insurance company." The conditions that exclude certain companies from these benefits involve multiple cross-references to other parts of the tax code, making it potentially confusing. This complexity might result in legal ambiguities and difficulties in enforcement and compliance.
Broad Impact
For the public, this bill aims to impact the insurance industry by potentially stabilizing their financial positions. By removing certain debts from capital asset status, insurance companies might experience moderate relief in their financial reporting, potentially leading to more competitive pricing of their products. Extending capital loss carryovers could provide these firms more flexibility in managing losses over a more extended period.
However, for laypersons and smaller insurance businesses, the bill's complexity may make it unclear how they might be directly affected. The lack of guidance on handling existing assets concerning new debt treatment could complicate the financial planning of such companies.
Stakeholder Impact
For large insurance companies, the bill could prove beneficial. By excluding certain debts from being treated as capital assets, these companies might enjoy tax reporting benefits, allowing them to manage their financial statements more favorably. In contrast, smaller companies, or those not falling under the "applicable insurance company" definition, might feel left out of these advantages, which could lead to perceptions of inequality within the industry.
Furthermore, extending the capital loss carryover period predominantly aids companies experiencing substantial fluctuations in capital assets, often affecting larger businesses disproportionately. While this could aid in financial stability for prominent players, it raises concerns about potential unintentional favoritism towards more established insurance companies.
In summary, while the bill seeks to provide financial flexibility and stability for specific insurance companies, its complexity and narrow scope could lead to disparities in how different stakeholders benefit, potentially favoring larger companies over smaller or less established ones.
Issues
The exclusion criteria in Section 2(b) for defining an 'applicable insurance company' involve complex cross-references to other sections of the tax code, which may make the definition difficult to understand without additional context or expertise. This could create legal ambiguity and challenges in enforcement and compliance, potentially favoring those with specific tax code expertise.
The provision in Section 3 that allows an extended 10-year capital loss carryover for applicable insurance companies might favor larger, more established companies depending on the definition of 'applicable insurance company.' This could engender perceptions of unfair advantage or inequality within the industry.
In Section 2(c), the effective date provision, which limits application to debt instruments acquired after December 31, 2025, creates a transitional issue for applicable insurance companies. Without guidance on handling existing assets, this could complicate investment and accounting strategies, affecting financial planning and operational stability.
The legal language used in Section 2(a) concerning the amendments to Section 1221(a) of the Internal Revenue Code may be overly complex for those not familiar with tax code legislation, especially the use of terms like 'note, bond, debenture, or other evidence of indebtedness.' This complexity could limit accessibility and understanding for the general public and smaller businesses.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of this Act specifies that it will be officially known as the “Secure Family Futures Act of 2025”.
2. Debt not treated as capital asset for applicable insurance companies Read Opens in new tab
Summary AI
In this section, a change to the tax law states that certain types of debts, like notes and bonds, held by specific insurance companies will no longer be considered capital assets. This change will apply to these debts acquired by eligible insurance companies after December 31, 2025.
3. Capital loss carryovers incurred by applicable insurance companies allowed for 10 years Read Opens in new tab
Summary AI
The section of the bill amends the Internal Revenue Code to allow applicable insurance companies to carry over their capital losses for up to 10 years, starting from losses incurred in taxable years beginning after December 31, 2025. This applies only if the losses are due to foreign expropriation or are incurred by defined applicable insurance companies.