Bill · S. 2094· Senate(119-S-2094)
Basis Shifting is a Rip-off Act
- Introduced
- 6/17/2025
- Last activity
- 6/17/2025 — Read twice and referred to the Committee on Finance.
- Sponsored by
- Ron Wyden
- Cosponsors
- None
- Introduced
- In Committee
What this bill would do
This bill, titled the "Basis Shifting is a Rip-off Act," aims to modify the Internal Revenue Code regarding how partnerships handle certain transactions. It focuses on changing the rules for taxation when property or partnership interests are distributed or transferred among related parties. The legislation introduces new requirements for recognizing gain in specific "applicable partnership" scenarios. It also establishes new rules for the basis of partnership property following these distributions or transfers. Finally, the bill increases penalties for certain understatements related to these transactions.
Yes· 3 of 5
Does this cut taxes for small businesses?+2
The bill includes a gross receipts test that exempts smaller partnerships from the new rules.
Does this make it easier to run a small business?+2
A small business exception is provided based on gross receipts to shield smaller entities from these new rules.
Does this reduce what the federal government owes?+1
By closing tax loopholes related to basis shifting, the bill may increase federal revenue.
The opposite· 3 of 8
Would people with substantial wealth be better off under this?-5
The bill directly targets transactions often used by high-net-worth individuals to shift basis without tax consequences.
Would the very wealthiest people be better off under this?-5
The bill creates new taxes and higher penalties for the types of complex transfers often used by this group.
Would billionaires be better off under this?-5
The increased tax recognition and penalties negatively impact the tax strategies available to the ultra-wealthy.
Who it would affect, and how
Potential Positive Impacts for People
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Small Business Protection: The bill includes a small business exception where a partnership is not treated as an "applicable partnership" if it meets certain gross receipts tests, providing relief for smaller entities (Section 2(a)(2)(2)(A)).
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Clarity on Basis Adjustments: The bill provides specific rules for how the basis of distributed property and partnership property should be adjusted following a distribution or transfer (Section s 2(a)(2)(A)(C) and Section 2(a)(2)(b)(2)(B)).
Potential Negative Impacts for People
-
Increased Tax Burdens for Related Parties: Partners in "applicable partnerships" may be required to recognize gain in an amount equal to an "applicable basis increase" during a distribution (Section 2(a)(2)(1)(A)).
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Increased Tax Burdens for Partnerships: Partnerships may be required to recognize gain in an amount equal to the aggregate amount of basis increases in one or more distributed properties (Section 2(a)(2)(b)(1)(A)).
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Higher Penalties for Understatements: For underpayments related to "related-party partnership distribution understatements," the penalty rate is increased from 20 percent to 40 percent (Section 2(c)(1) and Section 2(c)(2)(1)).
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Potential for Ordinary Income Treatment: If certain basis increases are suspended due to a lack of property or insufficient adjusted basis, the resulting gain may be treated as ordinary income (Section 2(a)(2)(1)(A)(D)(ii)(I)).
Groups and Interests Ranking
Every group the model scored this bill for, from -10 to +10. Hover a score for the reason it gave.
- Demographic And Interest Groups
- Good For Billionaires-5Good For High Net Worth Individuals-5Good For Ultra High Net Worth Individuals-5Good For High Income Households-4Good For Business Owners-2
- Economy And Finance
- Improves Small Business Support+2Reduces Small Business Taxes+2Improves Fiscal Responsibility+1Reduces National Debt+1Increases Wealthy Taxes-5Increases Corporate Taxes-3Reduces Capital Gains Tax-3
- Governance And Ideology
- Increases Federal Power+1
- 6/17/2025
- Read twice and referred to the Committee on Finance.
- Introduced in Senate