The bill seeks to fundamentally alter how high-net-worth individuals and certain trusts are taxed, ensuring they pay annual taxes on their wealth. Its primary purpose is to eliminate strategies that allow for indefinite tax deferral, such as the "buy, borrow, die" approach, by introducing a comprehensive framework for taxing unrealized gains. A central provision is the implementation of mark-to-market taxation for "tradable covered assets" held by "applicable taxpayers," meaning gains and losses on these assets are recognized annually as if sold at fair market value. For "nontradable covered assets," the bill introduces a deferral recapture amount , an interest charge on deferred tax, triggered when these assets are transferred, including through gifts or at death. An "applicable taxpayer" is generally an individual, trust, or estate meeting specific income (over $100 million) or asset (over $1 billion) thresholds for three consecutive years. "Covered assets" include most assets, with distinctions between "tradable" (e.g., publicly traded securities) and "nontradable" assets (e.g., private equity, real estate). The bill also treats certain non-recognition events, like like-kind exchanges or transfers to corporations, as "disregarded nonrecognition events" that can trigger gain recognition for applicable entities. The legislation targets several existing tax provisions to prevent deferral and ensure annual taxation. For instance, it eliminates the adjusted gross income limitation for the net investment income tax for applicable taxpayers, making all their net investment income subject to the tax. It also introduces special rules for covered expatriates who are applicable taxpayers, restricting their ability to defer tax on deemed asset sales. The bill extends its reach to pass-through entities (like partnerships and S corporations) and trusts , requiring them to report gains and losses to significant owners who are applicable taxpayers. It also modifies the tax treatment of deferred compensation , imposing an interest charge on deferred amounts and a 10% additional tax on severance pay. Furthermore, it significantly alters the taxation of private placement life insurance and annuity contracts , treating distributions more like ordinary income, adding a 10% penalty on early distributions, and repealing the death benefit exclusion. Finally, the bill repeals the exclusion for qualified small business stock for applicable taxpayers, though it grandfathers stock acquired before November 30, 2025. It also terminates the ability for applicable taxpayers and entities to make new investments in qualified opportunity funds after specific dates and modifies the tax benefits for existing opportunity fund investments held for 10 years. These changes are generally effective for taxable years beginning after December 31, 2025.