# 119-s-4331: Modernization of Derivatives Tax Act of 2026

119-s-4331, Modernization of Derivatives Tax Act of 2026, is a 119th Congress bill sponsored by Sen. Wyden, Ron [D-OR] (D-OR); status introduced; PRIA reads it as touching household money (as of 2026-05-06).

- Canonical: https://policyrisk.com/legislation/119-s-4331
- As of: 2026-05-06
- Plain-text twin of the page above; the HTML and this file carry the same facts.

## Facts
- Bill: 119-s-4331
- Congress: 119
- Title: Modernization of Derivatives Tax Act of 2026
- Status: introduced
- Introduced: 2026-04-16
- Sponsor: Sen. Wyden, Ron [D-OR] (D-OR)
- Cosponsors: 0
- Policy area: Taxation
- Touches household money: yes
- Last recorded action: 2026-05-06

## Summary

**delta-based hedging-unit tax framework** would create a unified tax system for derivatives, derivative-like contracts, embedded derivatives, and related corporate and investment-entity rules, changing when gains and losses are recognized and how positions are valued. - Investors and investment funds would face new timing and valuation rules. Gains and losses generally must be recognized when specific events occur or at fair market value for certain year-end or hedge-close events. The bill uses a delta-based test that generally counts hedge coverage in the range -0.7 to -1.0. - Corporations and REITs would get new, special rules for stock-related and interest-rate derivatives. A reworked Section 1032 would change how corporations treat derivatives tied to their stock and REITs may elect to include fixed-rate debt and interest-rate derivatives in hedging units with transition rules for existing designations. - Traders, dealers, and tax administrators would see coordinated changes to straddle, dealer/trader, and commodities rules plus expanded reporting, documentation, and anti-avoidance measures. The Secretary would get broad authority to write implementing regulations and adjust delta or valuation details.

## Provisions PRIA read

- New rules for corporate stock forwards: cost, high. If enacted, the bill would change how corporations and forwards on their own stock are taxed. When a corporation acquires its stock and enters a forward on that stock, the corporation would include in income the excess of the forward consideration over the stock's fair market value on the forward d…
- Hedging units and 90-day cutoff: mixed, high. If enacted, the bill would delay most new derivative rules until after a 90-day window and make that date the cutoff for which positions follow the new regime. Taxpayers holding a derivative and its underlying at the end of the 90-day period would have to identify those items before the window clos…
- New federal rules for derivatives: mixed, high. If enacted, the bill would create a new federal tax part for derivatives and similar contracts. It would define what counts as a derivative and treat embedded parts as derivatives. Gains or losses would generally be measured at fair market value before many taxable events. Many derivative items wou…
- Offsetting positions, reporting, and dealers: mixed, high. If enacted, the bill would tighten straddle rules so losses are allowed only to the extent they exceed 'unrecognized gain', with any denied loss carried forward. It would define offsetting positions using a delta test from -0.7 to -1.0. Taxpayers would have to report year-end positions that have un…

## Related bills

- 119-s-891: Bipartisan Health Care Act
- 119-s-5071: Children's Safe Welcome Act of 2026
- 119-s-5022: Cannabis Administration and Opportunity Act
- 119-s-2819: Head Start for America's Children Act
- 119-s-4504: Full-Service Community School Expansion Act of 2026
- 119-s-3990: PrEP Access and Coverage Act of 2026

## Sources
- [119-s-4331 on Congress.gov](https://www.congress.gov/bill/119th-congress/senate-bill/4331)

## Related
- [119-s-891: Bipartisan Health Care Act](https://policyrisk.com/legislation/119-s-891)
- [119-s-5071: Children's Safe Welcome Act of 2026](https://policyrisk.com/legislation/119-s-5071)
- [119-s-5022: Cannabis Administration and Opportunity Act](https://policyrisk.com/legislation/119-s-5022)
- [119-s-2819: Head Start for America's Children Act](https://policyrisk.com/legislation/119-s-2819)
- [119-s-4504: Full-Service Community School Expansion Act of 2026](https://policyrisk.com/legislation/119-s-4504)
- [119-s-3990: PrEP Access and Coverage Act of 2026](https://policyrisk.com/legislation/119-s-3990)
- [All bills in Congress](https://policyrisk.com/legislation)

Source: PRIA, https://policyrisk.com/legislation/119-s-4331 (as of 2026-05-06).