,i #aai? ,,congress #b;d ,session ,h4 ,r4 #ajceg ,,9 ,,! ,,h\se ,,( ,,repres5tatives ,septemb] #ad1 #bjbf,mr4 ,smi? ( ,miss\ri 7= himself1 ,mr4 ,arr+ton1 ,mr4 ,bean ( ,florida1 ,mr4 ,c>ey1 ,mr4 ,hors=d1 ,mr4 ,kelly ( ,p5nsylvania1 ,mr4 ,ku/(f1 ,mr4 ,mill] ( ,ohio1 & ,mr4 ,yakym7 introduc$ ! foll[+ bill2 :i* 0 ref]r$ to ! ,committee on ,ways & ,means ,a ,,bill ,to am5d ! ,int]nal ,rev5ue ,code ( #aihf to re=m ! tax treatm5t ( digital assets1 & = o!r purposes4 #a4 ,%ort title2 etc 7a7 ,%ort title ,?is ,act may be cit$ z ! ,digital ,asset ,tax ,c]ta9ty ,act4 7b7 ,ref]5ces ,except z o!rwise expressly provid$1 :5ev] 9 ?is ,act an am5dm5t or repeal is express$ 9 t]ms ( an am5dm5t to1 or repeal (1 a section or o!r provision1 ! ref]5ce %all be consid]$ to be made to a section or o!r provision ( ! ,int]nal ,rev5ue ,code ( #aihf4 7c7 ,table ( cont5ts ,! table ( cont5ts = ?is ,act is z foll[s3 ,sec4 #a4 ,%ort title2 etc4 ,title ,i--,remov+ tax b>ri]s to ! use ( digital assets z a m$ium ( ex*ange ,sec4 #aja4 ,treatm5t ( de m9imis digital asset fees4 ,sec4 #ajb4 ,simplifi$ acc\nt+ = ga9 & loss on widely trad$ digital assets4 ,sec4 #ajc4 ,treatm5t ( ,u4,s4 doll> /ableco9 transactions4 ,title ,,ii--,provid+ p>ity betwe5 digital assets & comp>able traditional f9ancial assets ,sec4 #bja4 ,transf]s ( trad$ digital assets pursuant to a l5d+ agreem5t4 ,sec4 #bjb4 ,deal]s & trad]s ( widely trad$ digital assets4 ,sec4 #bjc4 ,digital asset trad+ safe h>bor4 ,sec4 #bjd4 ,*>itable contributions ( c]ta9 digital assets4 ,title ,,iii--,apply+ exi/+ tax anti-abuse rules to digital assets ,sec4 #cja4 ,application ( wa% sale rules to trad$ digital assets4 ,sec4 #cjb4 ,application ( con/ructive sale rules to digital assets4 ,sec4 #cjc4 ,application ( subp>t ,f & ,,pfic rules4 ,sec4 #cjd4 ,rules relat$ to possessions = det]m9+ s\rce ( ga9 or loss on disposition ( trad$ digital assets4 ,sec4 #cje4 ,application ( regi/ration-requir$ obligation rules4 ,sec4 #cjf4 ,c]ta9 rules relat$ to "* ( ga9s & losses relat+ to digital assets4 ,sec4 #cjg4 ,miscellane\s provisions4 ,title ,,iv--,cl>ify+ ! tax treatm5t ( m9+ & /ak+ ,sec4 #dja4 ,s\rce & "* ( m9+ & /ak+ income4 ,sec4 #djb4 ,inve/m5t tru/s engag$ 9 digital asset /ak+4 ,title ,v--,ensur+ t own]s & us]s ( digital assets face an appropriate tax compliance burd5 ,sec4 #eja4 ,brok] requirem5ts4 ,sec4 #ejb4 ,e/abli%m5t ( ,digital ,asset ,volunt>y ,disclosure ,program4 ,sec4 #ejc4 ,treasury /udy & report4 ,title ,,vi--,def9itions2 regulations2 rules ( con/ruction ,sec4 #fja4 ,def9itions4 ,sec4 #fjb4 ,regulations4 ,sec4 #fjc4 ,rules ( con/ruction4 ,title ,,vii--,full ,h\se ,act ,sec4 #gja4 ,re9/atem5t ( rules = wag]+ losses4 7d7 ,cross ref]5ce to def9$ t]ms relat$ to digital assets ,= def9itions ( c]ta9 t]ms relat$ to digital assets us$ 9 ! am5dm5ts made by ?is ,act to ! ,int]nal ,rev5ue ,code ( #aihf1 see ! am5dm5ts made by section #fja ( ?is ,act4 ,i ,remov+ tax b>ri]s to ! use ( digital assets z a m$ium ( ex*ange #aja4 ,treatm5t ( de m9imis digital asset fees 7a7 ,9 g5]al ,"p ,,iii ( sub*apt] ,o ( *apt] #a ( subtitle ,a is am5d$ by ins]t+ aft] section #ajdc ! foll[+ new section3 #ajdd4 ,de m9imis digital asset fee exception 7a7 ,9 g5]al ,no ga9 or loss %all be recogniz$ on ! disposition ( a digital asset 9 paym5t (-- 7#a7 a de m9imis network fee1 or 7#b7 a de m9imis transaction fee4 7b7 ,de m9imis network fee ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m de m9imis network fee means an am\nt paid or incurr$ 9 a digital asset transaction to validate ano!r digital asset transaction if ! aggregate am\nt s paid or incurr$ ) respect to ! validation ( su* o!r digital asset transaction does n exce$ #aj4 7#b7 ,network fee ,! t]m network fee means any am\nt :i* w\ld be a de m9imis network fee if p>agraph 7#a7 7 appli$ )\t reg>d to ! doll> limitation specifi$ !re94 7c7 ,de m9imis transaction fee ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m de m9imis transaction fee means an am\nt 7o!r ?an a network fee7 paid or incurr$ z a brok]age fee1 trad+ fee1 liquidity fee1 or simil> fee1 to facilitate a transf] ( a digital asset 7h]eaft] ref]r$ to z ! und]ly+ digital asset transf]7 if-- 7,a7 ! digital asset dispos$ ( 9 paym5t ( su* fee is a digital asset ( ! same type z ! type ( digital asset dispos$ ( or acquir$ by ! taxpay] 9 ! und]ly+ digital asset transf]1 & 7,b7 ! aggregate ( su* am\nts ) respect to su* und]ly+ digital asset transf] does n exce$ #aj4 7#b7 ,transaction fee ,! t]m transaction fee means any am\nt :i* w\ld be a de m9imis transaction fee if p>agraph 7#a7 7 appli$ )\t reg>d to ! doll> limitation specifi$ !re94 7#c7 ,type ( digital asset ,a type ( digital asset %all be det]m9$ "u rules simil> to ! rules ( section #ajea7;b77#b74 7d7 ,disposition ( digital asset us$ to pay network or transaction fee ,= purposes ( ?is title1 any paym5t ( a network fee or transaction fee us+ a digital asset %all be treat$ z a disposition ( su* asset 9 ex*ange = consid]ation equal to ! fair m>ket value ( su* asset 7&1 9 ! case ( a network fee1 %all n fail to be treat$ z su* a paym5t m]ely because su* asset is n acquir$ by ano!r p]son74 7e7 ,treatm5t ( unrecogniz$ ga9 or loss ,! am\nt ( any network fee or transaction fee t is tak5 into acc\nt 9 det]m9+ ! am\nt ( ga9 or loss on ! disposition ( any asset1 9 det]m9+ ! am\nt ( any d$uction1 or 9 det]m9+ ! basis ( any asset acquir$1 %all be r$uc$ by ! am\nt ( any ga91 or increas$ by ! am\nt ( any loss1 n recogniz$ by reason ( subsection 7a7 ) respect to ! disposition ( ! digital asset us$ to pay su* network fee or transaction fee4 7f7 ,exclusions 7#a7 ,trade or bus9ess 7,a7 ,9 g5]al ,subsection 7a7 %all n apply to ! disposition ( a digital asset by-- 7i7 a trad]1 brok]1 or deal] 9 digital assets1 7ii7 a p]son 9 ! trade or bus9ess ( bat*+ or facilitat+ ! validation ( digital asset transactions on behalf ( o!rs1 7iii7 to ! ext5t provid$ by ! ,secret>y1 any p]son 9 a trade or bus9ess :i* is sub/antially simil> to a trade or bus9ess describ$ 9 clause 7i7 or 7ii71 or 7iv7 any p]son t engag$ 9 m ?an #e1jjj transf]s ( digital assets dur+ ! prec$+ taxable ye> 7det]m9$ )\t reg>d to any transf] made 9 paym5t ( a de m9imis network fee or a de m9imis transaction fee74 7,b7 ,adm9i/rative conv5i5ce exception 7i7 ,9 g5]al ,subp>agraph 7,a7 %all n apply to any taxpay] t demon/rates to ! ,secret>y t su* taxpay] is ( a type ) respect to :i* n apply+ subp>agraph 7,a7 w n result 9 a sub/antial ,f$]al rev5ue loss4 7ii7 ,guidance ,! ,secret>y %all issue regulations or o!r guidance t-- 7,i7 id5tifies diff]5t types ( taxpay]s ) respect to :i* n apply+ subp>agraph 7,a7 w n result 9 sub/antial ,f$]al rev5ue loss1 & 7,,ii7 specifies ) respect to ea* su* type ( taxpay] ! in=mation t su* taxpay] mu/ provide to make ! demon/ration describ$ 9 clause 7i74 7iii7 ,c]ta9 factors requir$ to be tak5 into acc\nt ,! regulations or o!r guidance issu$ by ! ,secret>y "u clause 7ii7 %all-- 7,i7 = purposes ( det]m9+ ! classification ( types ( taxpay]s1 & :e!r any ,f$]al rev5ue loss f n apply+ subp>agraph 7,a7 ) respect to any su* type ( taxpay] w\ld be sub/antial1 take into acc\nt ! me?od or me?ods us$ by su* type ( taxpay] = select+ ! digital assets us$ to pay network & transaction fees & ! av]age hold+ p]iod ( su* digital assets by su* type ( taxpay]1 & 7,,ii7 det]m9e ,f$]al rev5ue loss by r$uc+ su* loss by a reasonable approximation ( ! additional adm9i/rative co/s ( ! ,dep>tm5t ( ! ,treasury1 & ! additional compliance co/s ( su* type ( taxpay] 7& any p]son :o w\ld be requir$ to make additional in=mation return report+ ) respect to su* type ( taxpay]71 :i* w\ld be impos$ if subp>agraph 7,a7 7 to apply to su* type ( taxpay]4 7#b7 ,c]ta9 acc\nt+ me?ods ,subsection 7a7 %all n apply to any digital asset-- 7,a7 to :i* subsection 7a71 7e71 7f71 or 7g7 ( section #dge1 section #ajea7;a71 or section #abef7;a7 applies1 or 7,b7 except z o!rwise provid$ by ! ,secret>y1 to :i* a m>k-to-m>ket me?od applies "u any o!r provision ( ?is subtitle4 7g7 ,regulations ,! ,secret>y %all issue su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ! purposes ( ?is section1 includ+ regulations or guidance to prev5t ! abuse ( ?is section ?r\gh-- 7#a7 transaction /ructur+ = ! purpose ( qualify+ = ! exclusion provid$ 9 subsection 7a71 & 7#b7 ! receipt ( any value 9 ex*ange = a network fee or transaction fee o!r ?an-- 7,a7 9 ! case ( a network fee1 ! validation ( a digital asset transaction1 or 7,b7 9 ! case ( a transaction fee1 ! brok]age1 trad+1 liquidity1 or simil> digital asset transf] s]vice4 4 7b7 ,cl]ical am5dm5t ,! table ( sections = "p ,,iii ( sub*apt] ,o ( *apt] #a ( subtitle ,a is am5d$ by ins]t+ aft] ! item relat+ to section #ajdc ! foll[+ new item3 ,sec4 #ajdd4 ,de m9imis digital asset fee exception4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to ! disposition ( assets aft] ,decemb] #ca1 #bjbg4 #ajb4 ,simplifi$ acc\nt+ = ga9 & loss on widely trad$ digital assets 7a7 ,9 g5]al ,"p ,,iv ( sub*apt] ,o ( *apt] #a ( subtitle ,a is am5d$ by ins]t+ be=e section #ajeb ! foll[+ new section3 #ajea4 ,election to apply simplifi$ acc\nt+ = ga9 & loss on widely trad$ digital assets 7a7 ,9 g5]al ,9 ! case ( any designat$ type ( digital asset ) respect to any taxpay] = any taxable ye>-- 7#a7 su* taxpay] %all recognize ga9 on su* designat$ type ( digital asset = su* taxable ye> equal to ! excess 7if any7 (-- 7,a7 ! sum (-- 7i7 ! aggregate am\nt realiz$ by ! taxpay] on sales or ex*anges 7includ+ nonrecognition transactions7 ( widely trad$ digital assets ( su* designat$ type dur+ su* taxable ye>1 7ii7 9 ! case ( dispositions 7includ+ nonrecognition transactions71 o!r ?an sales or ex*anges describ$ 9 clause 7i71 ( widely trad$ digital assets ( su* designat$ type1 ! fair m>ket value ( su* widely trad$ digital assets 7det]m9$ z ( ! "t ( su* dispositions71 & 7iii7 ! fair m>ket value ( widely trad$ digital assets ( su* designat$ type held by su* taxpay] z ( ! close ( ! taxable ye>1 ov] 7,b7 ! sum (-- 7i7 ! fair m>ket value ( consid]ation provid$ by ! taxpay] = ! acquisition ( widely trad$ digital assets ( su* designat$ type dur+ ! taxable ye> 7o!r ?an any portion ( su* acquisition to :i* clause 7iii7 applies71 7ii7 9 ! case ( any disposition describ$ 9 subp>agraph 7,a77ii71 any am\nts :i* w\ld h r$uc$ ! am\nt realiz$ by ! taxpay] on su* disposition if su* disposition _h be5 a sale or ex*ange1 7iii7 9 ! case ( ! acquisition ( widely trad$ digital assets ( su* designat$ type dur+ ! taxable ye> ! basis ( :i* 9 ! h&s ( ! taxpay] is det]m9$ by ref]5ce to ! basis ( su* assets 9 ! h&s ( ! transf]or1 ! basis ( su* assets 9 ! h&s ( ! taxpay] imm$iately aft] su* acquisition1 7iv7 9 ! case ( any adju/m5t to ! basis ( a widely trad$ digital asset ( su* designat$ type 7includ+ adju/m5ts "u sections #gcd7;b7 & #gdc7;b771 ! net doll> am\nt 7positive or negative7 ( any adju/m5t to basis ( su* widely trad$ digital asset1 & 7v7 ! fair m>ket value ( widely trad$ digital assets ( su* designat$ type held by su* taxpay] z ( ! close ( ! prec$+ taxable ye>1 7#b7 su* taxpay] %all recognize loss on su* designat$ type ( digital asset = su* taxable ye> equal to ! excess 7if any7 (-- 7,a7 ! am\nt describ$ 9 p>agraph 7#a77;,b71 ov] 7,b7 ! am\nt describ$ 9 p>agraph 7#a77;,a71 & 7#c7 except z provid$ 9 p>agraphs 7#a7 & 7#b71 su* taxpay] %all n recognize any ga9 or loss on ! disposition ( widely trad$ digital assets ( su* designat$ type4 7b7 ,designat$ type ( digital asset ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m designat$ type ( digital asset means1 ) respect to any taxpay] = any taxable ye>1 any type ( widely trad$ digital asset 7o!r ?an any qualifi$ ,u4,s4 doll> /ableco97 ) respect to :i* su* taxpay] elects ! application ( ?is section = su* taxable ye>4 7#b7 ,type ( widely trad$ digital asset ,widely trad$ digital assets %all be treat$ z be+ ( ! same type if1 & only if-- 7,a7 su* assets are fungible1 or 7,b7 su* assets are det]m9$ "u rules provid$ by ! ,secret>y to h values t are directly l9k$ or highly correlat$4 7#c7 ,pool tok5 assets 7,a7 ,9 g5]al ,= purposes ( ?is section1 qualifi$ pool tok5 assets %all be treat$ z widely trad$ digital assets1 b %all be treat$ z widely trad$ digital assets ) respect to any taxpay] if1 & only if-- 7i7 n m ?an #aj p]c5t ( su* tok5s are own$1 directly or indirectly1 by ! taxpay] or any p]son describ$ ) respect to ! taxpay] "u section #bfg7;b7 7appli$ )\t reg>d to section #bfg7;c77#c77 or section #gjg7;b77#a71 & 7ii7 ! taxpay] & su* p]sons d n h control or effective managem5t ( ! composition ( ! assets to :i* ! value ( su* tok5s is attributable1 includ+ 9 a mann] simil> to a manag]1 sponsor1 director1 %>ehold]1 g5]al p>tn]1 commonly controll$ affiliate1 or o!r simil> role4 7,b7 ,qualifi$ pool tok5 asset ,= purposes ( ?is subsection1 ! t]m qualifi$ pool tok5 asset means any type ( digital asset 7det]m9$ "u p>agraph 7#b7 by sub/itut+ digital assets = widely trad$ digital assets7 = any taxable ye> if-- 7i7 at sub/antially all times dur+ ! cal5d> ye> :i* ends 9 or ) ! taxable ye> prec$+ su* taxable ye>-- 7,i7 sub/antially all ( ! value ( su* type ( digital asset is attributable to widely trad$ digital assets 7det]m9$ aft] ! application ( subp>agraph 7,a771 & 7,,ii7 su* type ( digital asset is r$eemable on dem& = a proportionate %>e ( ! assets to :i* ! value ( su* digital asset is attributable1 & 7ii7 ! ,secret>y has det]m9$ t all[+ su* type ( digital asset to be treat$ z a widely trad$ digital asset = purposes ( ?is section is consi/5t ) effici5t tax adm9i/ration & n subject to abuse4 7,c7 ,prev5tion ( d\ble c\nt+ ,9 ! case ( any designat$ type ( qualifi$ pool tok5 assets ) respect to any taxpay]1 su* taxpay] %all n recognize ga9 or loss ) respect to ! p>ticul> assets to :i* ! value ( su* designat$ type ( qualifi$ pool tok5 assets is attributable4 7c7 ,ga9 or loss treat$ z %ort-t]m ,any ga9 or loss det]m9$ "u subsection 7a7 %all be treat$ z %ort-t]m capital ga9 or %ort-t]m capital loss1 respectively4 7d7 ,treatm5t ( l5d+ transactions 7#a7 ,c]ta9 l5d+ agreem5ts ,9 ! case ( any transf] ( widely trad$ digital assets to :i* section #ajeh7;a7 applies1 su* assets %all be treat$ = purposes ( ?is section z cont9u+ to be held by ! transf]or4 7#b7 ,o!r l5d+ transactions ,9 ! case ( any loan ( widely trad$ digital assets :i* is n describ$ 9 p>agraph 7#a71 except z o!rwise provid$ by ! ,secret>y1 su* assets %all be treat$ = purposes ( ?is section z cont9u+ to be held by ! l5d]4 7e7 ,election 7#a7 ,application ( election 7,a7 ,9 g5]al ,an election "u ?is section ) respect to any designat$ type ( digital asset %all apply to ! fir/ taxable ye> :i* beg9s aft] ! date on :i* ! taxpay] makes su* election & to ea* taxable ye> !reaft] unless revok$ z provid$ 9 p>agraph 7#e74 7,b7 ,application to curr5t taxable ye> ,if ! taxpay] has n held any unit ( a designat$ type ( digital asset at any "t dur+ ! #b-ye> p]iod end+ on ! date on :i* ! taxpay] makes ! election describ$ 9 subp>agraph 7,a7 ) respect to su* designat$ type ( digital asset1 su* taxpay] may elect to apply subp>agraph 7,a7 by sub/itut+ ! taxable ye> 9 :i* = ! fir/ taxable ye> :i* beg9s aft] ! date on :i*4 7#b7 ,p>tn]%ips & ,s corporations ,9 ! case ( any p>tn]%ip or ,s corporation1 ! election "u ?is section %all be made at ! p>tn]%ip or ,s corporation level4 7#c7 ,exclusion ( deal]s eligible to make m>k-to-m>ket election ,a deal] t is eligible to make an election "u section #dge7;g7 ) respect to any taxable ye> may n make an election "u ?is section ) respect to su* taxable ye>4 7#d7 ,exclusion ( trad]s ) a m>k-to-m>ket election 9 effect ,a trad] :i* has an election 9 effect "u section #dge7;f77#c7 ) respect to any taxable ye> may n make an election "u ?is section ) respect to su* taxable ye>4 7#e7 ,revocation 7,a7 ,9 g5]al ,a taxpay] may revoke an election "u ?is section ) respect to a taxable ye> :i*-- 7i7 has n begun z ( ! date on :i* su* taxpay] reque/s su* revocation1 & 7ii7 is n "o ( ! fir/ #e taxable ye>s to :i* su* election applies4 7,b7 ,deem$ revocation ,9 ! case ( any designat$ type ( digital asset :i* has ceas$ to be a widely trad$ digital asset1 ! election "u ?is section ) respect to su* designat$ type %all be treat$ z revok$ ) respect to ! fir/ taxable ye> beg9n+ aft] ! date on :i* su* designat$ type ceases to be a widely trad$ digital asset4 7,c7 #e-ye> wait+ p]iod ,9 ! case ( any revocation "u ?is p>agraph ) respect to any designat$ type ( digital asset1 ! taxpay] may n make an election "u ?is section ) respect to su* designat$ type if su* election w\ld apply to any ( ! fir/ #e taxable ye>s to :i* su* revocation applies4 7,d7 ,special rule = trad]s mak+ m>k-to-m>ket election ,if a taxpay] has 9 effect "o or m elections "u ?is section & su* taxpay] makes ! election "u section #dge7;f77#c7 ) respect to any taxable ye>1 ! taxpay] %all 7not)/&+ subp>agraph 7,a77 be treat$ z revok+ all su* elections "u ?is section beg9n+ ) su* taxable ye>4 7f7 ,special rules relat$ to election1 revocation1 & c]ta9 transf]s 7#a7 ,treatm5t ( assets ^u election ,9 ! case ( an election "u ?is section1 ) respect to any designat$ type ( digital asset1 any widely trad$ digital assets ( su* designat$ type held by ! taxpay] %all be treat$ z sold = fair m>ket value on ! la/ day ( ! taxable ye> prec$+ ! fir/ taxable ye> to :i* su* election applies4 7#b7 ,adju/m5ts ^u revocation ,9 ! case ( a revocation ( an election "u ?is section1 prop] adju/m5ts %all be made 9 ! am\nt ( any ga9 or loss subsequ5tly realiz$ = ga9 or loss tak5 into acc\nt "u subsection 7a74 7#c7 ,c]ta9 transf]s ,9 ! case ( any transf] ( a widely trad$ digital asset :i* is a designat$ type ( digital asset ) respect to ! transf]or = ! taxable ye> 9 :i* ! transf] occurs1 if ! basis ( su* asset 9 ! h&s ( ! transf]ee is det]m9$ by ref]5ce to ! basis ( su* asset 9 ! h&s ( ! transf]or1 ! basis ( su* asset 9 ! h&s ( ! transf]or 7solely = purposes ( det]m9+ ! basis ( su* asset 9 ! h&s ( ! transf]ee7 %all be treat$ z be+ equal to ! fair m>ket value ( su* asset at ! "t ( su* transf]4 7g7 ,special rules relat$ to p>tn]%ips 7#a7 ,sale or ex*ange ( int]e/ 9 p>tn]%ip ,! am\nt ( any money1 or ! fair m>ket value ( any prop]ty1 receiv$ by a transf]or p>tn] 9 ex*ange = all or a "p ( su* p>tn]'s int]e/ 9 ! p>tn]%ip attributable to a designat$ type ( digital asset ( ! p>tn]%ip %all be consid]$ z an am\nt realiz$ f ! sale or ex*ange ( a capital asset held = less ?an #a ye> 7"u rules simil> to ! rules t apply = purposes ( section #gea7;a771 by treat+ su* designat$ type ( digital asset 9 ! same mann] z an unrealiz$ receivable4 7#b7 ,c]ta9 di/ributions treat$ z sales or ex*anges ,9 ! case ( any designat$ type ( digital asset ( a p>tn]%ip1 rules simil> to ! rules ( section #gea7;b7 %all apply by treat+ su* designat$ type ( digital asset 9 ! same mann] z an unrealiz$ receivable & by treat+ any result+ ga9 or loss z %ort-t]m capital ga9 or %ort-t]m capital loss4 7#c7 ,allocations ( basis ,= purposes ( any allocation ( basis to a designat$ type ( digital asset ( a p>tn]%ip1 rules simil> to ! rules = allocat+ basis to unrealiz$ receivables 7includ+ sections #gee & #gcb7;c77 %all apply except t prop] adju/m5ts %all be made to treat ! designat$ type ( digital asset z a capital asset held = less ?an #a ye>4 7#d7 ,c]ta9 contributions to p>tn]%ip 7,a7 ,9 g5]al ,except to ! ext5t o!rwise provid$ by ! ,secret>y1 9 ! case ( a contribution ( any widely trad$ digital asset to a p>tn]%ip by a p>tn] 9 a contribution to :i* section #gba applies 9 a taxable ye> ( ! p>tn]%ip = :i* su* widely trad$ digital asset is a designat$ type ( digital asset ) respect to su* p>tn]%ip1 any ga9 or loss recogniz$ by ! p>tn]%ip "u ?is section ) respect to su* designat$ type ( widely trad$ digital asset %all be allocat$ to ! contribut+ p>tn] to ! ext5t ( ! built-9 ga9 or built-9 loss 7z ! case may be7 ( ! widely trad$ digital asset s contribut$4 7,b7 ,built-9 ga9 ,= purposes ( ?is p>agraph1 ! t]m built-9 ga9 means ! excess 7if any7 ( ! fair m>ket value ( ! prop]ty at ! "t ( contribution ov] ! adju/$ basis ( su* prop]ty 79 ! h&s ( ! p>tn]7 at su* "t4 7,c7 ,built-9 loss ,= purposes ( ?is p>agraph1 ! t]m built-9 loss means ! excess 7if any7 ( ! adju/$ basis ( ! prop]ty 79 ! h&s ( ! p>tn]7 at ! "t ( contribution ov] ! fair m>ket value ( su* prop]ty at su* "t4 7h7 ,coord9ation ) c]ta9 o!r provisions 7#a7 ,det]m9$ )\t reg>d to wa% & con/ructive sale rules ,sections #ajia & #abei %all n apply to any transaction ) respect to :i* ga9 or loss is n recogniz$ by reason ( subsection 7a77#c74 7#b7 ,coord9ation ) relat$ p>ty transaction rules ,section #bfg %all n apply ) respect to a sale or ex*ange ( prop]ty if ! transf]or has an election 9 effect "u ?is section = ! taxable ye> ) respect to su* prop]ty4 7i7 ,cl>ification t c]ta9 transf]s are treat$ z dispositions ,! foll[+ %all n fail to be treat$ z a disposition = purposes ( ?is section3 7#a7 ,! di/ribution ( any digital asset f a tru/ to a b5efici>y4 7#b7 ,! transf] ( any digital asset f a dec$5t 7:e!r or n incid5t to ! dec$5t's dea?74 7j7 ,regulatory au?ority ,! ,secret>y %all prescribe su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ! purposes ( ?is section1 includ+ regulations or guidance relat+ to-- 7#a7 ! =m & mann] ( mak+ an election or revocation "u ?is section1 7#b7 adju/m5ts necess>y by reason ( su* election or revocation 7includ+ adju/m5ts to basis ( widely trad$ digital assets ( a designat$ type71 7#c7 adju/m5ts to report+ requirem5ts relat+ to widely trad$ digital assets ) respect to :i* an election is 9 effect "u ?is section1 7#d7 ! treatm5t ( a d]ivative ( a designat$ type ( digital asset1 & 7#e7 prev5t+ abuse ( ?is section4 4 7b7 ,cl]ical am5dm5t ,! table ( sections = "p ,,iv ( sub*apt] ,o ( *apt] #a ( subtitle ,a is am5d$ by ins]t+ be=e ! item relat+ to section #ajeb ! foll[+ new item3 ,sec4 #ajea4 ,election to apply simplifi$ acc\nt+ = ga9 & loss on widely trad$ digital assets4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjbg4 #ajc4 ,treatm5t ( ,u4,s4 doll> /ableco9 transactions 7a7 ,9 g5]al ,"p ,,iv ( sub*apt] ,o ( *apt] #a ( subtitle ,a is am5d$ by r$esignat+ section #ajfc z section #ajfd & by ins]t+ aft] section #ajfb ! foll[+ new section3 #ajfc4 ,c]ta9 ,u4,s4 doll> /ableco9 transactions 7a7 ,treatm5t ( acquisitions ( ,u4,s4 doll> /ableco9s 7#a7 ,det]m9ation ( basis ,! basis ( any qualifi$ ,u4,s4 doll> /ableco9 acquir$ by a taxpay] 9 any sale or ex*ange %all be ! r$emption value ( su* /ableco94 ,! prec$+ s5t5ce %all n apply if x is unreasonable "u ! facts & circum/ances to conclude t ! value ( ! consid]ation provid$ = su* /ableco9 9 su* sale or ex*ange is n less ?an #ii4e p]c5t ( su* r$emption value4 7#b7 ,treatm5t ( consid]ation provid$ 9 ex*ange ,= purposes ( ?is title1 9 ! case ( any consid]ation o!r ?an money provid$ 9 ex*ange = a qualifi$ ,u4,s4 doll> /ableco91 ! income1 ga91 or loss result+ f ! provision ( su* consid]ation %all be det]m9$ by treat+ ! value ( su* qualifi$ ,u4,s4 doll> /ableco9 z be+ equal to ! r$emption value ( su* /ableco94 ,! prec$+ s5t5ce %all n apply if x is unreasonable "u ! facts & circum/ances to conclude t ! value ( su* /ableco9 is n less ?an #ii4e p]c5t1 & n m ?an #ajj4e p]c5t1 ( su* r$emption value4 7b7 ,treatm5t ( sale or ex*ange ( qualifi$ ,u4,s4 doll> /ableco9s 7#a7 ,det]m9ation ( ga9 or loss ,if ! taxpay]'s basis 9 any qualifi$ ,u4,s4 doll> /ableco9 0 det]m9$ "u subsection 7a77#a71 ga9 or loss on su* taxpay]'s sale or ex*ange ( su* /ableco9 %all be det]m9$ z ?\gh su* /ableco9 7 sold or ex*ang$ = ! r$emption value ( su* /ableco94 ,! prec$+ s5t5ce %all n apply if x is unreasonable "u ! facts & circum/ances to conclude t ! value ( ! consid]ation receiv$ = su* /ableco9 9 su* sale or ex*ange is n m ?an #ajj4e p]c5t ( su* r$emption value4 7#b7 ,treatm5t ( consid]ation receiv$ 9 ex*ange ,= purposes ( ?is title1 9 ! case ( any consid]ation o!r ?an money receiv$ 9 ex*ange = a qualifi$ ,u4,s4 doll> /ableco91 ! co/ ( 7& am\nt paid or incurr$ =7 su* consid]ation %all be det]m9$ by treat+ ! value ( su* qualifi$ ,u4,s4 doll> /ableco9 z be+ equal to ! r$emption value ( su* /ableco94 ,! prec$+ s5t5ce %all n apply if x is unreasonable "u ! facts & circum/ances to conclude t ! value ( su* /ableco9 is n less ?an #ii4e p]c5t1 & n m ?an #ajj4e p]c5t1 ( su* r$emption value4 7c7 ,exceptions 7#a7 ,9 g5]al ,subsections 7a7 & 7b7 %all n apply ) respect to any taxpay] = any taxable ye> if su* taxpay] is-- 7,a7 a trad]1 brok]1 or deal] 9 qualifi$ ,u4,s4 doll> /ableco9s1 7,b7 to ! ext5t provid$ by ! ,secret>y1 any p]son 9 a trade or bus9ess :i* is sub/antially simil> to a trade or bus9ess describ$ 9 subp>agraph 7,a71 or 7,c7 any o!r p]son :o 9 ! prec$+ taxable ye> engag$ 9 m ?an #e1jjj transactions to :i* subsection 7a7 or 7b7 appli$1 det]m9$ )\t reg>d to-- 7i7 any su* transaction :i* is ) respect to a trade or bus9ess 7o!r ?an a trade or bus9ess describ$ 9 subp>agraph 7,a7 or 7,b771 includ+ ! acceptance ( qualifi$ ,u4,s4 doll> /ableco9s at r$emption value z a paym5t = goods or s]vices 9 su* trade or bus9ess & ! use ( qualifi$ ,u4,s4 doll> /ableco9s at r$emption value to acquire goods & s]vices = use 9 su* trade or bus9ess1 & 7ii7 any su* transaction :i* is a sale 7= money7 ( a qualifi$ ,u4,s4 doll> /ableco9 at or bel[ r$emption value4 7#b7 ,functional curr5cy o!r ?an ! doll> ,subsections 7a7 & 7b7 %all n apply to any taxpay] or qualifi$ bus9ess unit 7z def9$ 9 section #ihi7;a77 t uses a functional curr5cy o!r ?an ! doll>4 7#c7 ,relat$ p>ties ,9 ! case ( any sale or ex*ange betwe5 p]sons describ$ 9 section #bfg7;b7 7appli$ )\t reg>d to section #bfg7;c77#c77 or section #gjg7;b77#a7-- 7,a7 subsections 7a77#a71 7a77#b71 & 7b77#b7 %all be appli$ by sub/itut+ #ajj p]c5t = #ii4e p]c5t1 & 7,b7 subsections 7a77#b71 7b77#a71 & 7b77#b7 %all be appli$ by sub/itut+ #ajj p]c5t = #ajj4e p]c5t4 7d7 ,r$emption value ,= purposes ( ?is section1 ! t]m r$emption value means1 ) respect to a qualifi$ ,u4,s4 doll> /ableco91 ! doll> am\nt = :i* ! issu] is obligat$ to conv]t1 r$eem1 or repur*ase su* /ableco94 7e7 ,regulations ,! ,secret>y %all issue su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ! purposes ( ?is section1 includ+ regulations or o!r guidance-- 7#a7 describ+ ! factors consid]$1 & docum5tation or sub/antiation requir$1 ) respect to ! facts & circum/ances te/s describ$ 9 subsections 7a77#a71 7a77#b71 7b77#a71 & 7b77#b71 7#b7 provid+ = ! application ( subsection 7c77#a7 ) respect to a portion ( a taxable ye> if ! taxpay] only regul>ly pur*ases1 ex*anges1 or sells qualifi$ ,u4,s4 doll> /ableco9s = pr(it = a portion ( su* taxable ye>1 & 7#c7 to prev5t abuse ( ?is section4 4 7b7 ,cl]ical am5dm5t ,! table ( sections = "p ,,iv ( sub*apt] ,o ( *apt] #a ( subtitle ,a is am5d$ by r$esignat+ ! item relat+ to section #ajfc z an item relat+ to section #ajfd & by ins]t+ aft] ! item relat+ to section #ajfb ! foll[+ new item3 ,sec4 #ajfc4 ,c]ta9 ,u4,s4 doll> /ableco9 transactions4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjbf4 7d7 ,transition rules ,! ,secret>y ( ! ,treasury1 or ! ,secret>y's delegate1 %all1 consi/5t ) ! purposes ( section #ajfc ( ! ,int]nal ,rev5ue ,code ( #aihf1 provide tempor>y rules = taxpay]s address+ p]iods prior to ! issuance ( f9al regulations or guidance "u section #ajfc7;e7 ( su* ,code4 ,,ii ,provid+ p>ity betwe5 digital assets & comp>able traditional f9ancial assets #bja4 ,transf]s ( trad$ digital assets pursuant to a l5d+ agreem5t 7a7 ,9 g5]al ,subsections 7a7 & 7b7 ( section #ajeh are ea* am5d$ by /rik+ securities ea* place x appe>s & ins]t+ specifi$ assets4 7b7 ,specifi$ assets ,section #ajeh is am5d$ by add+ at ! end ! foll[+ new subsection3 7d7 ,specifi$ assets ,= purposes ( ?is section1 ! t]m specifi$ assets means-- 7#a7 securities 7z def9$ 9 section #abcf7;c771 & 7#b7 trad$ digital assets4 4 7c7 ,treatm5t ( c]ta9 legal entitlem5ts & obligations :i* accrue dur+ p]iod ( agreem5t ,section #ajeh7;b77#b71 z am5d$ by subsection 7a71 is am5d$-- 7#a7 by /rik+ require t paym5ts & ins]t+ require t-- 7,a7 paym5ts 1 7#b7 by ins]t+ & aft] transf]or21 & 7#c7 by add+ at ! end ! foll[+ new subp>agraph3 7,b7 9 ! case ( any transf] ( trad$ digital assets-- 7i7 paym5ts %all be made to ! transf]or ( am\nts equival5t to1 except z o!rwise provid$ by ! ,secret>y1 all prop]ty & o!r legal entitlem5ts :i* ! own] ( ! trad$ digital assets is entitl$ to receive dur+ ! p]iod describ$ 9 subp>agraph 7,a71 & 7ii7 ! transf]or %all assume all obligations impos$ on ! own] ( su* trad$ digital assets dur+ ! p]iod describ$ 9 subp>agraph 7,a72 4 7d7 ,con=m+ am5dm5ts 7#a7 ,section #ajeh7;a7 is am5d$ by /rik+ 7z def9$ 9 section #abcf7;c774 7#b7 ,! head+ ( section #ajeh1 & ! item relat+ to section #ajeh 9 ! table ( sections = "p ,,iv ( sub*apt] ,o ( *apt] #a1 are ea* am5d$ by /rik+ securities & ins]t+ specifi$ assets4 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to transf]s made aft] ! date ( ! enactm5t ( ?is ,act4 #bjb4 ,deal]s & trad]s ( widely trad$ digital assets 7a7 ,9 g5]al ,section #dge is am5d$ by r$esignat+ subsection 7g7 z subsection 7h7 & by ins]t+ aft] subsection 7f7 ! foll[+ new subsection3 7g7 ,election ( m>k to m>ket = deal]s 9 cov]$ digital assets 7#a7 ,9 g5]al ,9 ! case ( a deal] 9 cov]$ digital assets :o elects ! application ( ?is subsection1 ?is section %all apply to cov]$ digital assets held by su* deal] 9 ! same mann] z ?is section applies to securities held by a deal] 9 securities4 7#b7 ,cov]$ digital asset ,= purposes ( ?is section1 ! t]m cov]$ digital asset means-- 7,a7 any specifi$ trad$ digital asset1 7,b7 any notional pr9cipal contract ) respect to any specifi$ trad$ digital asset1 7,c7 any evid5ce ( an int]e/ 91 or a d]ivative in/rum5t 91 any digital asset describ$ 9 subp>agraph 7,a7 or 7,b71 includ+ any option1 =w>d contract1 futures contract1 %ort position1 & any simil> in/rum5t 9 su* a digital asset1 & 7,d7 any position :i*-- 7i7 is n a cov]$ digital asset describ$ 9 subp>agraph 7,a71 7,b71 or 7,c71 7ii7 is a h$ge ) respect to su* a cov]$ digital asset1 & 7iii7 is cle>ly id5tifi$ 9 ! taxpay]'s records z be+ describ$ 9 ?is subp>agraph be=e ! close ( ! day on :i* x 0 acquir$ or ent]$ into 7or su* o!r "t z ! ,secret>y may by regulations prescribe74 7#c7 ,specifi$ trad$ digital asset ,= purposes ( p>agraph 7#b7-- 7,a7 ,9 g5]al ,! t]m specifi$ trad$ digital asset means-- 7i7 any widely trad$ digital asset1 7ii7 any qualifi$ ,u4,s4 doll> /ableco91 7iii7 any qualifi$ pool tok5 asset 7z def9$ 9 section #ajea7;b77#c77;,b771 7iv7 any trad$ digital asset :i*-- 7,i7 w\ld be a widely trad$ digital asset b = ! requirem5t ( clause 7ii7 ( section #ggja7p77#c77;,a71 & 7,,ii7 has an av]age daily trad+ volume1 det]m9$ on ! basis ( bus9ess days dur+ ! cal5d> ye> t ends 9 or ) ! prec$+ taxable ye>1 t exce$s #e1jjj1jjj1 or 7v7 any trad$ digital asset :i*-- 7,i7 w\ld be a widely trad$ digital asset b = ! requirem5t ( clause 7iii7 ( section #ggja7p77#c77;,a71 & 7,,ii7 con/itutes ! pr9cipal asset held by an entity t is n regi/]$ "u ! ,inve/m5t ,company ,act ( #aidj & ! securities ( :i* are li/$ & trad$ on a national securities ex*ange regi/]$ "u section #f ( ! ,securities & ,ex*ange ,act ( #aicd4 7,b7 ,limit$ cont9u$ treatm5t ,9 ! case ( any taxpay] = any taxable ye>1 ! t]m specifi$ trad$ digital asset also includes any trad$ digital asset t w\ld be a widely trad$ digital asset b = ! requirem5t ( clause 7ii7 ( section #ggja7p77#c77;,a7 if1 ) respect to "o or m ( ! #c prec$+ taxable ye>s-- 7i7 su* trad$ digital asset 0 a specifi$ trad$ digital asset describ$ 9 clause 7i7 or 7ii7 ( subp>agraph 7,a7 ) respect to su* taxable ye>1 7ii7 ! taxpay] _h an election 9 effect "u ?is subsection t appli$ to su* taxable ye> & ea* int]v5+ taxable ye>1 & 7iii7 ! taxpay] held specifi$ trad$ digital assets ( su* type 7det]m9$ "u rules simil> to ! rules ( section #ajea7;b77#b771 or cov]$ digital assets describ$ 9 subp>agraph 7,b71 7,c71 or 7,d7 ( p>agraph 7#b7 ) respect to su* type ( specifi$ trad$ digital asset1 to :i* p>agraph 7#a7 appli$ = su* taxable ye>4 7#d7 ,election ,an election "u ?is subsection may be made )\t ! cons5t ( ! ,secret>y4 ,su* an election1 once made1 %all apply to ! taxable ye> = :i* made & all subsequ5t taxable ye>s unless revok$ ) ! cons5t ( ! ,secret>y4 4 7b7 ,application ( m>k to m>ket rules to cov]$ digital assets ,section #dge7;f7 is am5d$-- 7#a7 9 ! head+1 by /rik+ or commodities & ins]t+ 1 commodities1 or cov]$ digital assets1 7#b7 by r$esignat+ p>agraph 7#c7 z p>agraph 7#d7 & by ins]t+ aft] p>agraph 7#b7 ! foll[+ new p>agraph3 7#c7 ,trad]s 9 cov]$ digital assets ,9 ! case ( a p]son :o is engag$ 9 a trade or bus9ess z a trad] 9 cov]$ digital assets & :o elects to h ?is p>agraph apply to su* trade or bus9ess1 p>agraph 7#a7 %all apply to cov]$ digital assets held by su* trad] 9 connection ) su* trade or bus9ess 9 ! same mann] z p>agraph 7#a7 applies to securities held by a trad] 9 securities4 1 & 7#c7 9 p>agraph 7#d71 z s r$esignat$1 by /rik+ p>agraphs 7#a7 & 7#b7 & ins]t+ p>agraphs 7#a71 7#b71 & 7#c74 7c7 ,treatm5t ( cov]$ digital assets :i* are securities or commodities ,section #dge7;d7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#d7 ,treatm5t ( cov]$ digital assets :i* are securities or commodities ,9 ! case ( any cov]$ digital asset :i* is a security or commodity 7det]m9$ )\t reg>d to ?is p>agraph71 su* cov]$ digital asset %all n be treat$ z a security or commodity = purposes ( subsections 7b7 ?r\gh 7g74 4 7d7 ,treatm5t ( adju/m5ts attributable to election ( m>k to m>ket ,section #dge7;d71 z am5d$ by subsection 7c71 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#e7 ,adju/m5ts attributable to m>k to m>ket treatm5t ( securities1 commodities1 or cov]$ digital assets ,9 ! case ( an adju/m5t describ$ 9 section #dha7;a7 by reason ( ! taxpay]'s *ange to1 or f1 a me?od ( acc\nt+ provid$ 9 subsection 7a71 7e71 7f71 or 7g7 ( ?is section1 ! "* ( any income or loss ) respect to any prop]ty z a result ( su* adju/m5t %all be ! same z ! "* ( ! ga9 or loss :i* w\ld h result$ f ! sale ( su* prop]ty z ( ! close ( ! taxable ye> prec$+ ! ye> ( ! *ange 7)9 ! mean+ ( section #dha7 "u ! me?od ( acc\nt+ us$ = su* prec$+ taxable ye>4 4 7e7 ,treatm5t z specifi$ s]vice trade or bus9ess ,section #aii;,a7d77#b77;,b7 is am5d$ by /rik+ or commodities 7z def9$ 9 section #dge7;e77#b77 & ins]t+ commodities 7z def9$ 9 section #dge7;e77#b771 trad$ digital assets1 or cov]$ digital assets 7z def9$ 9 section #dge7;g77#b774 7f7 ,con=m+ am5dm5ts 7#a7 ,section #dge7;e77#b7 is am5d$ by /rik+ ?is subsection & subsection 7f7 & ins]t+ ?is section4 7#b7 ,! head+ ( section #dge is am5d$ by /rik+ deal]s 9 securities & ins]t+ c]ta9 deal]s & trad]s4 7#c7 ,! table ( sections = subp>t ,d ( "p ,,ii ( sub*apt] ,e ( *apt] #a is am5d$ by /rik+ ! item relat+ to section #dge & ins]t+ ! foll[+3 ,sec4 #dge4 ,m>k to m>ket acc\nt+ me?od = c]ta9 deal]s & trad]s4 4 7g7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ! date ( ! enactm5t ( ?is ,act4 7h7 #d-ye> spread ( adju/m5ts ,9 ! case ( a taxpay] t elects "u subsection 7f77#c7 or 7g7 ( section #dge ( ! ,int]nal ,rev5ue ,code ( #aihf 7z add$ by ?is section7 to *ange su* taxpay]'s me?od ( acc\nt+ = ! taxpay]'s fir/ taxable ye> beg9n+ aft] ! date ( ! enactm5t ( ?is ,act & be=e ,janu>y #a1 #bjbh-- 7#a7 any id5tification requir$ ) respect to su* subsection ) respect to cov]$ digital assets held on ! fir/ day ( su* taxable ye> %all be treat$ z timely made if made on or be=e ! #cj? day ( su* taxable ye>1 & 7#b7 ! net am\nt ( ! adju/m5ts requir$ to be tak5 into acc\nt by ! taxpay] "u section #dha ( su* ,code by reason ( su* subsection %all be tak5 into acc\nt ratably ov] ! #d-taxable ye> p]iod beg9n+ ) su* taxable ye>4 7i7 ,transitional coord9ation ) wa% sale rules 7#a7 ,9 g5]al ,9 ! case ( a taxpay] t elects "u subsection 7f77#c7 or 7g7 ( section #dge ( ! ,int]nal ,rev5ue ,code ( #aihf 7z add$ by ?is section7 = ! taxpay]'s fir/ taxable ye> beg9n+ aft] ! date ( ! enactm5t ( ?is ,act & be=e ,janu>y #a1 #bjbh1 section #ajia %all be appli$ )\t reg>d to any specifi$ transaction made by ! taxpay] dur+ ! prec$+ taxable ye> if ! taxpay] does n1 dur+ su* fir/ taxable ye>1 id5tify "u section #dge7;b77#b7 ( su* ,code any built-9-ga9 security z be+ describ$ 9 subp>agraph 7,a7 ( section #dge7;b77#a7 ( su* ,code4 7#b7 ,specifi$ transaction ,= purposes ( ?is subsection1 ! t]m specifi$ transaction means any acquisition or disposition ( a cov]$ digital asset 7z def9$ 9 section #dge7;g7 ( su* ,code7 made 9 ! ord9>y c\rse ( ! taxpay]'s activity z a deal] or trad]1 z ! case may be4 7#c7 ,built-9-ga9 security ,= purposes ( ?is subsection1 ! t]m built-9-ga9 security means any security if 7z ( ! "t ( ! id5tification ref]r$ to 9 p>agraph 7#a77 ! fair m>ket value ( su* security exce$s ! adju/$ basis ( su* security4 7j7 ,au?ority to provide additional transition rules ,! ,secret>y ( ! ,treasury1 or ! ,secret>y's delegate1 may issue su* regulations or o!r guidance z may be necess>y or appropriate to provide additional transitional rules ) respect to taxpay]s t make ! election "u subsection 7f77#c7 or 7g7 ( section #dge ( ! ,int]nal ,rev5ue ,code ( #aihf 7z add$ by ?is section7 = ! taxpay]'s fir/ taxable ye> beg9n+ aft] ! date ( ! enactm5t ( ?is ,act & be=e ,janu>y #a1 #bjbh1 includ+ regulations or o!r guidance to provide = simplifi$ adju/m5ts 9 ! case ( su* an election :i* w apply to digital assets to :i* an election "u section #dge7;e7 ( su* ,code appli$ = ! prec$+ taxable ye>4 #bjc4 ,digital asset trad+ safe h>bor 7a7 ,9 g5]al ,section #hfd7;b77#b7 is am5d$-- 7#a7 9 ! head+1 by /rik+ or commodities & ins]t+ commodities1 or trad$ digital assets1 7#b7 by r$esignat+ subp>agraph 7,c7 z subp>agraph 7,d7 & by ins]t+ ! foll[+ new subp>agraph aft] subp>agraph 7,b73 7,c7 ,trad$ digital assets 7i7 ,9 g5]al ,trad+ 9 trad$ digital assets ?r\gh a resid5t brok]1 commission ag5t1 cu/odian1 /ak+ s]vice provid]1 or o!r indep5d5t ag5t4 7ii7 ,trad+ = taxpay]'s own acc\nt ,trad+ 9 trad$ digital assets = ! taxpay]'s own acc\nt1 :e!r by ! taxpay] or 8 employees or ?r\gh a resid5t brok]1 commission ag5t1 cu/odian1 /ak+ s]vice provid]1 or o!r ag5t1 & :e!r or n any su* employee or ag5t has discretion>y au?ority to make decisions 9 effect+ ! transactions4 ,?is clause %all n apply 9 ! case ( a deal] 9 digital assets4 7iii7 ,coord9ation ) rules = securities & commodities ,a trad$ digital asset %all n be treat$ z a security or commodity = purposes ( ?is p>agraph4 1 & 7#c7 9 subp>agraph 7,d71 z s r$esignat$-- 7,a7 by /rik+ & 7,b77i7 & ins]t+ 1 7,b77i71 & 7,c77i71 & 7,b7 by /rik+ or 9 commodities & ins]t+ 9 commodities1 or 9 trad$ digital assets4 7b7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjbe4 #bjd4 ,*>itable contributions ( c]ta9 digital assets 7a7 ,exception f appraisal requirem5t = qualifi$ ,u4,s4 doll> /ableco9s & widely trad$ digital assets ,section #agj7;f77#aa77;,a77ii77,i7 is am5d$ by ins]t+ qualifi$ ,u4,s4 doll> /ableco9s1 widely trad$ digital assets 7except z ! ,secret>y det]m9es appropriate to prev5t abuse ( ?is section71 aft] publicly trad$ securities 7z def9$ 9 section #fjej,l7a77#b77;,b7714 7b7 ,*>itable contributions ( digital assets o!r ?an qualifi$ ,u4,s4 doll> /ableco9s1 widely trad$ digital assets1 & tok5iz$ digital assets 7#a7 ,9 g5]al ,section #agj7;f7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#bj7 ,contributions ( conv]sion eligible digital assets 7,a7 ,9 g5]al ,no d$uction %all be all[$ "u subsection 7a7 = any contribution ( a conv]sion eligible digital asset 7z def9$ 9 section #ajdf7;d774 7,b7 ,cross ref]5ce ,= nonrecognition ( ga9 on c]ta9 sales & ex*anges ( conv]sion eligible digital assets ! proce$s ( :i* are us$ to make *>itable contributions1 see section #ajdf4 4 7#b7 ,nonrecognition ( ga9 on dispositions ( conv]sion eligible digital assets us$ to fund *>itable contributions ,"p ,,iii ( sub*apt] ,o ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new section3 #ajdf4 ,c]ta9 dispositions ( conv]sion eligible digital assets us$ to fund *>itable contributions 7a7 ,9 g5]al ,no ga9 %all be recogniz$ on ! sale ( conv]sion eligible digital assets 7or ! ex*ange ( conv]sion eligible digital assets = qualifi$ ,u4,s4 doll> /ableco9s7 if all ( ! gross receipts ( su* sale 7or all ( ! qualifi$ ,u4,s4 doll> /ableco9s receiv$ 9 su* ex*ange7 are contribut$ by ! taxpay] z a *>itable contribution 7z def9$ 9 section #agj7;c77 n lat] ?an ! e>li] (-- 7#a7 ! date t is #g days aft] ! date ( su* sale or ex*ange1 or 7#b7 ! close ( ! taxpay]'s taxable ye> :i* includes ! date ( su* sale or ex*ange4 7b7 ,contributions ( less ?an entire proce$s ,except z o!rwise provid$ by ! ,secret>y1 if less ?an all ( ! gross receipts ( a sale describ$ 9 subsection 7a7 7or less ?an all ! qualifi$ ,u4,s4 doll> /ableco9s receiv$ 9 an ex*ange s describ$7 are contribut$ z describ$ 9 subsection 7a71 s mu* ( ! ga9 on su* sale 7or ex*ange7 z be>s ! same ratio to su* entire ga9 z ! am\nt s contribut$ be>s to all ( su* gross receipts 7or all su* ,u4,s4 doll> /ableco9s7 %all n be recogniz$4 7c7 ,application ( c]ta9 limitations on d$uction = *>itable contributions ,9 ! case ( any *>itable contribution describ$ 9 subsection 7a7 or 7b7-- 7#a7 ,9 g5]al ,= purposes ( subsections 7b77#a77;,g71 7b77#a77;,i71 & 7p7 ( section #agj1 su* contribution %all n be treat$ z a contribution ( ca%4 7#b7 ,capital ga9 prop]ty ,= purposes ( subsections 7b77#a77;,c71 7b77#a77;,d71 7b77#a77;,i71 & 7e7 ( section #agj1 su* contribution %all be treat$ z a contribution made directly by ! taxpay] on ! date ( ! sale or ex*ange ref]r$ to 9 subsection 7a7 or 7b7 7z ! case may be7 (-- 7,a7 9 ! case ( a sale or ex*ange ref]r$ to 9 subsection 7a71 ! conv]sion eligible digital assets s sold or ex*ang$1 & 7,b7 9 ! case ( a sale or ex*ange ref]r$ to 9 subsection 7b71 ! portion ( ! conv]sion eligible digital assets s sold or ex*ang$ t be>s ! same ratio to su* assets z ! ga9 n recogniz$ "u subsection 7b7 be>s to ! entire ga9 ref]r$ to 9 su* subsection4 7d7 ,conv]sion eligible digital assets ,= purposes ( ?is section1 ! t]m conv]sion eligible digital asset means any digital asset o!r ?an-- 7#a7 a qualifi$ ,u4,s4 doll> /ableco91 7#b7 a widely trad$ digital asset to :i* section #agj7;f77#aa77;,a77ii77,i7 applies1 & 7#c7 a tok5iz$ digital asset4 7e7 ,relat$ p>ty transactions ,?is section %all n apply to any sale or ex*ange betwe5 p]sons describ$ 9 section #bfg7;b7 7appli$ )\t reg>d to section #bfg7;c77#c77 or section #gjg7;b77#a74 4 7#c7 ,cl]ical am5dm5t ,! table ( sections = "p ,,iii ( sub*apt] ,o ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #ajdf4 ,c]ta9 dispositions ( conv]sion eligible digital assets us$ to fund *>itable contributions4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjbf4 ,,iii ,apply+ exi/+ tax anti-abuse rules to digital assets #cja4 ,application ( wa% sale rules to trad$ digital assets 7a7 ,9 g5]al ,section #ajia is am5d$-- 7#a7 by /rik+ /ock or securities ea* place x appe>s & ins]t+ specifi$ assets1 & 7#b7 by /rik+ %>es ( ea* place x appe>s4 7b7 ,specifi$ asset ,section #ajia is am5d$ by add+ at ! end ! foll[+ new subsection3 7g7 ,specifi$ asset ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m specifi$ asset means-- 7,a7 any /ock or security1 & 7,b7 any trad$ digital asset o!r ?an a qualifi$ ,u4,s4 doll> /ableco94 7#b7 ,contracts & options ,except z o!rwise provid$ 9 regulations1 ! t]m specifi$ asset includes any contract or option to acquire or sell any specifi$ asset describ$ 9 p>agraph 7#a74 7#c7 ,treatm5t ( tok5iz$ digital assets z sub/antially id5tical to an economically equival5t /ock or security ,a tok5iz$ digital asset 7& a wrapp$ digital asset ) respect to :i* ! ref]5ce digital asset is a trad$ digital asset7 %all be treat$ z sub/antially id5tical to any /ock1 security1 or trad$ digital asset if su* tok5iz$ digital asset 7or su* wrapp$ digital asset7 is economically equival5t to su* /ock1 security1 or trad$ digital asset4 7#d7 ,functional curr5cy o!r ?an ! doll> ,9 ! case ( any taxpay] or qualifi$ bus9ess unit 7z def9$ 9 section #ihi7;a771 a qualifi$ ,u4,s4 doll> /ableco9 %all n be treat$ z a qualifi$ ,u4,s4 doll> /ableco9 = purposes ( p>agraph 7#a77;,b7 if su* taxpay] or qualifi$ bus9ess unit uses a functional curr5cy o!r ?an ! doll>4 4 7c7 ,exception = c]ta9 acquisitions ( digital assets ,section #ajia1 z am5d$ by subsection 7b71 is am5d$ by add+ at ! end ! foll[+ new subsection3 7h7 ,exception = c]ta9 acquisitions ( trad$ digital assets ,! acquisition ( a trad$ digital asset %all n be tak5 into acc\nt "u ?is section if su* trad$ digital asset is acquir$-- 7#a7 9 connection ) ! validation ( digital asset transactions 7includ+ digital asset validation support+ activities71 or 7#b7 9 a transaction :i* is "p ( a regul> or p]iodic s]ies ( acquisitions ( trad$ digital assets :i* are includ$ by ! taxpay] z ord9>y income4 4 7d7 ,con=m+ am5dm5ts 7#a7 ,section #ajia7;a7 is am5d$ by /rik+ ! la/ s5t5ce4 7#b7 ,section #ajia7;e7 7z am5d$ by subsection 7a77 is am5d$ to read z foll[s3 7e7 ,c]ta9 %ort sales ( specifi$ assets & specifi$ asset futures contracts to sell ,rules simil> to ! rules ( subsection 7a7 %all apply to any loss realiz$ on ! clos+ ( a %ort sale ( 7or ! sale1 ex*ange1 or t]m9ation ( a specifi$ asset futures contract to sell7 specifi$ assets if1 )9 a p]iod beg9n+ #cj days be=e ! date ( su* clos+ & end+ #cj days aft] su* date-- 7#a7 sub/antially id5tical specifi$ assets 7 sold1 or 7#b7 ano!r %ort sale ( 7or specifi$ asset futures contracts to sell7 sub/antially id5tical specifi$ assets 0 ent]$ into4 ,= purposes ( ?is subsection1 ! t]m 8specifi$ asset futures contract0 has ! mean+ provid$ by section #abcd;,b7c74 4 7#c7 ,! head+ ( section #ajia is am5d$ by /rik+ /ock or securities & ins]t+ specifi$ assets4 7#d7 ,! head+s ( subsections 7b71 7c71 & 7d7 ( section #ajia are ea* am5d$ by /rik+ ,/ock ea* place x appe>s & ins]t+ ,specifi$ ,assets4 7#e7 ,! item relat+ to section #ajia 9 ! table ( sections = "p ,,vii ( sub*apt] ,o ( *apt] #a is am5d$ by /rik+ /ock or securities & ins]t+ specifi$ assets4 7#f7 ,section #cab7;f77#a7 is am5d$ by /rik+ /ock or securities & ins]t+ specifi$ assets4 7#g7 ,section #abef7;f77#e7 is am5d$ by /rik+ /ock or securities & ins]t+ specifi$ assets4 7#h7 ,section #fjde7;g77#b77;,b77ii7 is am5d$-- 7,a7 by /rik+ /ock or securities & ins]t+ specifi$ assets1 & 7,b7 by /rik+ id5tical securities & ins]t+ id5tical specifi$ assets4 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to dispositions aft] ! date ( ! introduction ( ?is ,act4 7f7 ,transition rule relat+ to brok] report+ ,= purposes ( section #fjde ( ! ,int]nal ,rev5ue ,code ( #aihf1 9 ! case ( ! sale or o!r disposition be=e ,janu>y #a1 #bjbh1 ( a trad$ digital asset to :i* section #ajia w\ld n h appli$ b = ! am5dm5ts made by ?is section1 ! cu/om]'s adju/$ basis may be det]m9$ )\t reg>d to section #ajia ( su* ,code4 #cjb4 ,application ( con/ructive sale rules to digital assets 7a7 ,9 g5]al ,section #abei7;b77#a7 is am5d$ by ins]t+ 1 digital asset 7o!r ?an a qualifi$ ,u4,s4 doll> /ableco97 aft] debt in/rum5t4 7b7 ,application ( exception = sales ( nonpublicly trad$ prop]ty ,section #abei7;c77#b7 is am5d$ by ins]t+ or widely trad$ digital asset aft] m>ketable security 7z def9$ 9 section #dec7;f774 7c7 ,treatm5t ( tok5iz$ digital assets z sub/antially id5tical to economically equival5t f9ancial prop]ty ,section #abei7;c7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#e7 ,treatm5t ( tok5iz$ digital assets z sub/antially id5tical to economically equival5t f9ancial prop]ty ,a tok5iz$ digital asset %all be treat$ z sub/antially id5tical to any /ock1 debt in/rum5t1 or p>tn]%ip int]e/ if su* tok5iz$ digital asset is economically equival5t to su* /ock1 debt in/rum5t1 or p>tn]%ip int]e/4 4 7d7 ,functional curr5cy o!r ?an ! doll> ,section #abei7;e7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#d7 ,qualifi$ ,u4,s4 doll> /ableco9s & functional curr5cy o!r ?an ! doll> ,9 ! case ( any taxpay] or qualifi$ bus9ess unit 7z def9$ 9 section #ihi7;a771 a qualifi$ ,u4,s4 doll> /ableco9 7det]m9$ )\t reg>d to ?is p>agraph7 %all n be treat$ z a qualifi$ ,u4,s4 doll> /ableco9 = purposes ( ?is section if su* taxpay] or qualifi$ bus9ess unit uses a functional curr5cy o!r ?an ! doll>4 4 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to con/ructive sales aft] ! date ( ! introduction ( ?is ,act4 #cjc4 ,application ( subp>t ,f & ,,pfic rules 7a7 ,9 g5]al ,section #ied7;c77#a77;,b7 is am5d$-- 7#a7 by /rik+ or at ! end ( clause 7ii71 7#b7 by r$esignat+ clause 7iii7 z clause 7iv71 & 7#c7 by ins]t+ aft] clause 7ii7 ! foll[+ new clause3 7iii7 :i* is a digital asset1 or 4 7b7 ,c]ta9 passive digital asset validation support+ income ,section #ied7;c77#a7 is am5d$ by add+ at ! end ! foll[+ new subp>agraphs3 7,i7 ,c]ta9 passive digital asset validation support+ income ,income d]iv$ f /ak+1 m9+1 or simil> activities 9 support ( ! validation ( digital asset transactions1 unless-- 7i7 su* income is d]iv$ 9 ! active conduct ( a trade or bus9ess ( validat+ su* transactions1 7ii7 sub/antially all ( ! controll$ =eign corporation's digital assets are relat$ to su* trade or bus9ess1 & 7iii7 sub/antially all ( ! activities ( su* trade or bus9ess occur 9 ! same c\ntry z ! c\ntry 9 :i* su* corporation is creat$ or organiz$ 7or 9 ! case ( a qualifi$ bus9ess unit describ$ 9 section #ihi7;a71 is attributable to activities ( ! unit 9 ! c\ntry 9 :i* ! unit bo? ma9ta9s its pr9cipal (fice & conducts sub/antial bus9ess activity74 7,j7 ,c]ta9 paym5ts pursuant to digital asset l5d+ agreem5ts ,9 ! case ( an agreem5t describ$ 9 section #ajeh7;a7 pursuant to :i* trad$ digital assets are transf]r$1 any paym5t made pursuant to su* agreem5t o!r ?an any paym5t describ$ 9 section #ajeh7;b77#a74 4 7c7 ,exception = deal]s ,section #ied7;c77#b77;,c7 is am5d$-- 7#a7 9 clause 7i7-- 7,a7 by /rik+ or 7,g7 & ins]t+ 7,g71 or 7,i71 & 7,b7 by /rik+ & at ! end1 7#b7 by /rik+ ! p]iod at ! end ( clause 7ii7 & ins]t+ 1 &1 & 7#c7 by add+ at ! end ! foll[+ new clause3 7iii7 if su* deal] is a deal] 9 cov]$ digital assets 7)9 ! mean+ ( section #dge71 any int]e/ or divid5d 7or equival5t am\nt describ$ 9 subp>agraph 7,e7 or 7,g7 ( p>agraph 7#a77 or income describ$ 9 p>agraph 7#a77;,i71 f any transaction 7includ+ any h$g+ transaction7 ent]$ into 9 ! ord9>y c\rse ( su* deal]'s trade or bus9ess z su* a deal] 9 cov]$ digital assets1 b only if ! income f ! transaction is attributable to activities ( ! deal] 9 ! c\ntry "u ! laws ( :i* ! deal] is creat$ or organiz$ 7or 9 ! case ( a qualifi$ bus9ess unit describ$ 9 section #ihi7;a71 is attributable to activities ( ! unit 9 ! c\ntry 9 :i* ! unit bo? ma9ta9s its pr9cipal (fice & conducts sub/antial bus9ess activity74 4 7d7 ,regulations ,! ,secret>y ( ! ,treasury %all1 n lat] ?an #ab mon?s aft] ! date ( ! enactm5t ( ?is ,act1 issue su* regulations or o!r guidance 7"u ! au?ority grant$ to su* ,secret>y "u section #ghje ( ! ,int]nal ,rev5ue ,code ( #aihf7 to cl>ify ! appropriate tax treatm5t ( c]ta9 =eign entities 7& ,unit$ ,/ates p]sons relat$ to su* entities or involv$ 9 ! gov]nance ( su* entities7 e/abli%$ 9 connection ) organizations commonly ref]r$ to z dec5traliz$ autonom\s organizations1 :i* are e/abli%$ 9 a =eign c\ntry z a f\ndation "u =eign law 7or o!r simil> /ructure ) a purport$ purpose o!r ?an pr(it71 includ+-- 7#a7 cl>ify+ ! me?ods by :i* su* =eign entities may reorganize z dome/ic corporations "u sub*apt] ,c ( *apt] #a ( su* ,code1 & 7#b7 provid+1 9 appropriate circum/ances1 tempor>y safe h>bors to enc\rage su* =eign entities 7:i* 7 organiz$ be=e ! date ( ! introduction ( ?is ,act7 to complete su* reorganizations promptly aft] ! enactm5t ( ?is ,act4 7e7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s ( =eign corporations end+ aft] ! date ( ! enactm5t ( ?is ,act4 #cjd4 ,rules relat$ to possessions = det]m9+ s\rce ( ga9 or loss on disposition ( trad$ digital assets 7a7 ,report+ requirem5t ,section #icg7;c7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#c7 ,special rules = trad$ digital assets 7,a7 ,9 g5]al ,if an individual requir$ to file a specifi$ notice "u p>agraph 7#a7 is a specifi$ possession resid5t individual 7z def9$ 9 subsection 7d77#c77 = ! taxable ye> to :i* su* notice relates1 su* notice %all include ! fair m>ket value & basis ( ea* trad$ digital asset prop]ty held by ! taxpay] z ( ! close ( ! prec$+ taxable ye>4 7,b7 ,de m9imis exception ,subp>agraphs 7,a7 & 7,e7 %all n apply if ! aggregate fair m>ket value ( trad$ digital asset prop]ty :i* w\ld 7b = ?is subp>agraph7 be requir$ to be includ$ 9 a notice "u su* subp>agraph 7,a7 or 7,e71 z ! case may be1 does n exce$ #aj1jjj4 7,c7 ,specifi$ notice ,= purposes ( ?is p>agraph1 ! t]m specifi$ notice means a notice requir$ "u p>agraph 7#a7 by reason ( ! individual tak+ ! position = ,unit$ ,/ates income tax report+ purposes t ! individual became a bona fide resid5t ( a possession specifi$ 9 subsection 7a77#a74 7,d7 ,trad$ digital asset prop]ty ,= purposes ( ?is p>agraph1 ! t]m trad$ digital asset prop]ty has ! mean+ giv5 su* t]m 9 subsection 7d77#e74 7,e7 ,transition rule ,9 ! case ( an individual :o 0 requir$ to file a specifi$ notice "u p>agraph 7#a7 ) respect to "o ( ! #i taxable ye>s imm$iately prec$+ ! fir/ taxable ye> ( ! taxpay] beg9n+ aft] ,decemb] #ca1 #bjbf1 & :o 0 a specifi$ possession resid5t individual 7z def9$ 9 subsection 7d77#c77 = su* taxable ye>1 su* individual %all file a notice ) ! ,secret>y /at+ ! fair m>ket value & basis 7det]m9$ z ( ! la/ day ( ! taxable ye> prec$+ ! taxable ye> to :i* su* notice relates7 ( ea* trad$ digital asset prop]ty 7z def9$ 9 subsection 7d77#e77 t 0 held by ! taxpay] bo? on su* la/ day & on ,janu>y #a1 #bjbg4 ,! notice requir$ "u ! prec$+ s5t5ce %all be fil$ ) ! ,secret>y n lat] ?an ! e>li] (-- 7i7 ! due date ( ! taxpay]'s return ( tax = ! taxpay]'s fir/ taxable ye> beg9n+ aft] ,decemb] #ca1 #bjbf1 dur+ :i* ! taxpay] disposes ( any trad$ digital asset prop]ty ) respect to :i* in=mation is requir$ to be includ$ 9 su* notice1 & 7ii7 su* date z ! ,secret>y may specify "u subsection 7d77#f77;,b77i74 4 7b7 ,special rules = det]m9+ s\rce ,section #icg is am5d$ by add+ at ! end ! foll[+ new subsection3 7d7 ,special rules = trad$ digital assets 7#a7 ,9 g5]al ,not)/&+ subsection 7b77#a7 7& except z provid$ 9 subsection 7b77#b771 9 ! case ( any specifi$ possession resid5t individual = any taxable ye>1 any ga9 recogniz$ 7directly or indirectly7 on ! disposition ( trad$ digital asset prop]ty dur+ su* taxable ye>-- 7,a7 %all1 except z provid$ 9 subp>agraph 7,b71 be treat$ z ga9 f s\rces )9 ! ,unit$ ,/ates1 & 7,b7 %all be treat$ z ga9 f s\rces )9 ! relevant possession 7& n f s\rces )9 ! ,unit$ ,/ates7 to ! ext5t t ! taxpay]-- 7i7 timely provid$ ! in=mation specifi$ 9 subsection 7c77#c7 to ! ,secret>y ) respect to su* prop]ty1 & 7ii7 demon/rates to ! satisfaction ( ! ,secret>y t su* ga9 is prop]ly attributable to ! increase 9 ! value ( su* prop]ty dur+ p]iods t su* individual 0 a bona fide resid5t ( su* possession4 7#b7 ,election = widely trad$ digital assets 7,a7 ,9 g5]al ,9 ! case ( any elect+ individual-- 7i7 su* individual %all recognize ga9 on any widely trad$ digital assets held by su* individual z ( ! close ( ! taxable ye> prec$+ ! taxable ye> describ$ 9 subp>agraph 7,b7 z if su* assets 7 sold = _! fair m>ket value z ( su* "t1 7ii7 prop] adju/m5t %all be made 9 ! am\nt ( any ga9 or loss subsequ5tly realiz$ = ga9 tak5 into acc\nt "u clause 7i71 & 7iii7 p>agraph 7#a7 %all n apply to any disposition ( a widely trad$ digital asset by su* taxpay] 7)\t reg>d to :e!r clause 7i7 appli$ to su* asset74 7,b7 ,elect+ individual ,= purposes ( ?is p>agraph1 ! t]m elect+ individual means any specifi$ possession resid5t individual :o elects 79 su* mann] z ! ,secret>y may provide7 ! application ( ?is p>agraph n lat] ?an ! due date = ! return ( tax = ! taxable ye> = :i* su* individual fir/ becomes a bona fide resid5t ( ! relevant possession4 7#c7 ,specifi$ possession resid5t individual ,= purposes ( ?is subsection1 ! t]m specifi$ possession resid5t individual means1 ) respect to any taxable ye>1 any citiz5 ( ! ,unit$ ,/ates :o-- 7,a7 is a bona fide resid5t ( ,guam1 ,am]ican ,samoa1 ! ,nor!rn ,m>iana ,isl&s1 ,pu]to ,rico1 or ! ,virg9 ,isl&s = su* taxable ye>1 & 7,b7 0 a resid5t ( ! ,unit$ ,/ates at any "t dur+ ! prec$+ #aj taxable ye>s4 7#d7 ,relevant possession ,= purposes ( ?is subsection1 ! t]m relevant possession means1 ) respect to any specifi$ possession resid5t individual = any taxable ye>1 ! possession ref]r$ to 9 p>agraph 7#c77;,a7 ) respect to :i* su* individual is a bona fide resid5t = su* taxable ye>4 7#e7 ,trad$ digital asset prop]ty ,= purposes ( ?is subsection1 ! t]m trad$ digital asset prop]ty means-- 7,a7 any trad$ digital asset1 7,b7 any notional pr9cipal contract ) respect to a trad$ digital asset1 7,c7 any evid5ce ( an int]e/ 91 or a d]ivative in/rum5t 91 any trad$ digital asset describ$ 9 subp>agraph 7,a7 or 7,b71 includ+ any option1 =w>d contract1 futures contract1 %ort position1 & any simil> in/rum5t 9 su* trad$ digital asset1 7,d7 to ! ext5t provid$ by ! ,secret>y1 any position :i*-- 7i7 is n a trad$ digital asset prop]ty describ$ 9 subp>agraph 7,a71 7,b71 or 7,c71 & 7ii7 is a h$ge ) respect to su* a trad$ digital asset prop]ty1 or 7,e7 any int]e/ 9 any entity if-- 7i7 ! taxpay] contribut$ any trad$ digital asset to su* entity 7directly or indirectly71 or 7ii7 m ?an #be p]c5t ( ! value ( su* entity is d]iv$ 7directly or indirectly7 f trad$ digital assets 7o!r ?an qualifi$ ,u4,s4 doll> /ableco9s71 det]m9$ )\t reg>d to any assets acquir$ by su* entity z "p ( a plan a pr9cipal purpose ( :i* is to prev5t int]e/s 9 su* entity f be+ treat$ z trad$ digital assets = purposes ( ?is section4 7#f7 ,regulations ,! ,secret>y %all issue regulations or o!r guidance z may be necess>y or appropriate to c>ry out ! purposes ( ?is subsection1 includ+ regulations or o!r guidance-- 7,a7 treat+ ga9 on dispositions ( trad$ digital asset prop]ty by a p>tn]%ip z describ$ 9 section #gjb7;a77#g7 to ! ext5t su* ga9 is tak5 into acc\nt 7directly or indirectly7 9 ! di/ributive %>e ( any specifi$ possession resid5t individual1 7,b7 provid+ = ! appropriate allocation ( losses on ! disposition ( trad$ digital asset prop]ty ) respect to specifi$ possession resid5t individuals1 & 7,c7 provid+ appropriate transition rules = individuals :o fir/ became a bona fide resid5t ( ! relevant possession dur+ "o ( ! #i taxable ye>s prec$+ ! fir/ taxable ye> ( ! taxpay] beg9n+ aft] ,decemb] #ca1 #bjbf1 includ+ alt]native rules-- 7i7 = timely provid+ ! in=mation describ$ 9 subsection 7c77#c71 7ii7 = timely mak+ ! election describ$ 9 p>agraph 7#b77;,b71 & 7iii7 = apply+ p>agraph 7#b77;,a7-- 7,i7 ) respect to ! taxable ye> = :i* ! election is timely made "u clause 7ii7 ( ?is subp>agraph1 & 7,,ii7 only to widely trad$ digital assets acquir$ be=e becom+ a bona fide resid5t ( ! relevant possession & n dispos$ ( be=e ,janu>y #a1 #bjbg4 4 7c7 ,limitation on assessm5t & collection ,section #feja7;c77#h77;,a7 is am5d$ by ins]t+ #icg7;c77#c71 be=e #abih7;f714 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjbf4 #cje4 ,application ( regi/ration-requir$ obligation rules 7a7 ,exception = qualifi$ ,u4,s4 doll> /ableco9s ,section #afc7;f77#b77;,a7 is am5d$-- 7#a7 by /rik+ or at ! end ( clause 7ii71 7#b7 by /rik+ ! p]iod at ! end ( clause 7iii7 & ins]t+ 1 or1 & 7#c7 by add+ at ! end ! foll[+ new clause3 7iv7 is a qualifi$ ,u4,s4 doll> /ableco94 4 7b7 ,cl>ification ( treatm5t ( digital assets ,section #dgja is am5d$ by add+ at ! end ! foll[+ new subsection3 7c7 ,digital assets 7#a7 ,location ( disclosure /atem5t ,9 ! case ( any digital asset1 ! requirem5t ( clause 7iii7 ( subsection 7b77#a77;,b7 %all be treat$ z satisfi$ if ! /atem5t describ$ !re9 is includ$ 9 all writt5 t]ms or m>ket+ mat]ials ) respect to su* digital asset & 9 su* o!r locations or docum5ts z ! ,secret>y may prescribe 9 regulations4 7#b7 ,treatm5t ( digital assets )\t a fix$ maturity date ,9 ! case ( any digital asset t does n h a fix$ maturity date at issue1 ! date ( maturity ( su* asset = purposes ( subsection 7a77#b7 %all be treat$ z ! date t is #be ye>s aft] ! date ( issuance ( su* digital asset4 4 7c7 ,effective date 7#a7 ,9 g5]al ,except z o!rwise provid$ 9 ?is subsection1 ! am5dm5ts made by ?is section %all apply to taxable ye>s end+ aft] ! date ( ! introduction ( ?is ,act4 7#b7 ,cl>ification ( treatm5t ( digital assets )\t a fix$ maturity date ,! am5dm5t made by subsection 7b7 %all apply to digital assets issu$ aft] ! date ( ! introduction ( ?is ,act4 #cjf4 ,c]ta9 rules relat$ to "* ( ga9s & losses relat+ to digital assets 7a7 ,application ( wor?less asset rules 7#a7 ,9 g5]al ,section #afe is am5d$ by r$esignat+ subsection 7m7 z subsection 7n7 & by ins]t+ aft] subsection 7l7 ! foll[+ new subsection3 7m7 ,wor?less digital assets ,if any digital asset 7o!r ?an a tok5iz$ digital asset describ$ 9 subsection 7g77#b77;,d77 becomes wor?less dur+ ! taxable ye>1 ! loss result+ !refrom %all1 = purposes ( ?is subtitle1 be treat$ z a loss f ! sale or ex*ange1 on ! la/ day ( ! taxable ye>1 ( su* digital asset4 4 7#b7 ,c]ta9 tok5iz$ securities ,section #afe7;g77#b7 is am5d$-- 7,a7 by /rik+ ! semicolon at ! end ( subp>agraph 7,a7 & ins]t+ a comma1 7,b7 by /rik+ 2 or at ! end ( subp>agraph 7,b7 & ins]t+ a comma1 7,c7 by /rik+ ! p]iod at ! end ( subp>agraph 7,c7 & ins]t+ 1 or1 & 7,d7 by add+ at ! end ! foll[+ new subp>agraph3 7,d7 a tok5iz$ digital asset t is economically equival5t to a security describ$ 9 subp>agraph 7,a71 7,b71 or 7,c74 4 7b7 ,application ( rules = futures contracts 7#a7 ,9 g5]al ,section #abcd;,b7c7 is am5d$ by /rik+ all t prec$es any security future 7z def9$ & ins]t+ ! foll[+3 7c7 ,specifi$ asset futures contract ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m specifi$ asset futures contract means-- 7,a7 any securities futures contract1 & 7,b7 any futures contract 9 a digital asset4 7#b7 ,securities futures contract ,! t]m securities futures contract means 4 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #abcd;,a7#a7 is am5d$ by /rik+ securities futures contract & ins]t+ specifi$ asset futures contract4 7,b7 ,subsections 7a77#a71 7b71 & 7d7 ( section #abcd;,b are ea* am5d$ by /rik+ securities futures contract & ins]t+ specifi$ asset futures contract4 7,c7 ,section #abcd;,b7e7 is am5d$ by /rik+ securities futures contracts & ins]t+ specifi$ asset futures contracts4 7,d7 ,! head+ ( section #abcd;,b is am5d$ by /rik+ securities futures contracts & ins]t+ specifi$ asset futures contracts4 7,e7 ,! item relat+ to section #abcd;,b 9 ! table ( sections = "p ,,iv ( sub*apt] ,p ( *apt] #a is am5d$ by /rik+ securities futures contracts & ins]t+ specifi$ asset futures contracts4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s end+ aft] ! date ( ! enactm5t ( ?is ,act4 #cjg4 ,miscellane\s provisions 7a7 ,di/ributions ( trad$ digital assets f a p>tn]%ip to a p>tn] 7#a7 ,trad$ digital assets treat$ z m>ketable securities ,section #gca7;c77#b77;,a7 is am5d$-- 7,a7 by /rik+ means f9ancial in/rum5ts & ins]t+ means-- 7i7 f9ancial in/rum5ts 1 7,b7 by /rik+ ! p]iod at ! end & ins]t+ 1 &1 & 7,c7 by add+ at ! end ! foll[+ new clause3 7ii7 trad$ digital assets 7det]m9$ )\t reg>d to clause 7iii7 ( section #ggja7p77#b77;,a77 o!r ?an specifi$ /ableco9s 7z def9$ 9 subsection 7d77#d77;,a774 4 7#b7 ,treatm5t ( di/ributions ( specifi$ /ableco9s ,section #gca is am5d$-- 7,a7 by r$esignat+ subsection 7d7 z subsection 7e71 & 7,b7 by ins]t+ aft] subsection 7c7 ! foll[+ new subsection3 7d7 ,treatm5t ( specifi$ /ableco9s 7#a7 ,9 g5]al ,= purposes ( subsection 7a77#a7 & section #gcg-- 7,a7 ! t]m money includes specifi$ /ableco9s1 & 7,b7 su* specifi$ /ableco9s %all be tak5 into acc\nt at _! fair m>ket value z ( ! date ( ! di/ribution4 7#b7 ,basis ( securities di/ribut$ ,except z o!rwise provid$ by ! ,secret>y-- 7,a7 ,9 g5]al ,= purposes ( subsection 7c77#d71 ! t]m m>ketable securities includes specifi$ /ableco9s 7o!r ?an exempt ,u4,s4 doll> /ableco9s74 7,b7 ,exempt ,u4,s4 doll> /ableco9s ,9 ! case ( any exempt ,u4,s4 doll> /ableco91 p>agraph 7#a7 %all be appli$ by sub/itut+ sections #gcb1 #gcc1 & #gcg = section #gcg4 7#c7 ,application ( c]ta9 o!r rules ,except z o!rwise provid$ by ! ,secret>y1 = purposes ( p>agraphs 7#e7 & 7#f7 ( subsection 7c71 ! t]m m>ketable securities includes specifi$ /ableco9s4 7#d7 ,def9itions ,= purposes ( ?is subsection-- 7,a7 ,specifi$ /ableco9 ,! t]m specifi$ /ableco9 means any digital asset :i* is design$ to track ! value ( ! functional curr5cy ( ! p>tn] to :i* su* digital asset is di/ribut$4 7,b7 ,exempt ,u4,s4 doll> /ableco9 ,! t]m exempt ,u4,s4 doll> /ableco9 means any specifi$ /ableco9 if-- 7i7 ! functional curr5cy ref]r$ to 9 subp>agraph 7,a7 ) respect to su* /ableco9 is ! doll>1 & 7ii7 no ga9 or loss w\ld h be5 recogniz$ by reason ( section #ajfc if ! p>tn]%ip _h sold su* /ableco9 = its r$emption value 7z def9$ 9 section #ajfc7;d77 imm$iately be=e di/ribution4 7#e7 ,regulations ,! ,secret>y %all prescribe su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ! purposes ( ?is subsection1 includ+ regulations or o!r guidance to prev5t ! avoidance ( su* purposes4 4 7#c7 ,con=m+ am5dm5ts ,section #gcg7;e7 is am5d$-- 7,a7 by ins]t+ & specifi$ /ableco9s aft] m>ketable securities1 7,b7 by /rik+ section #gca7;c7 & ins]t+ section #gca1 & 7,c7 by ins]t+ & specifi$ /ableco9s aft] m>ketable securities 9 ! head+ !re(4 7#d7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to di/ributions made aft] ,decemb] #ca1 #bjbf4 7b7 ,trad$ digital assets tak5 into acc\nt 9 det]m9+ inve/m5t company /atus 7#a7 ,9 g5]al ,section #cea7;e77#a77;,b7 is am5d$-- 7,a7 by r$esignat+ clauses 7iv7 ?r\gh 7viii7 z clauses 7v7 ?r\gh 7ix71 respectively1 & 7,b7 by ins]t+ aft] clause 7iii7 ! foll[+ new clause3 7iv7 any trad$ digital asset 7det]m9$ )\t reg>d to clause 7iii7 ( section #ggja7p77#b77;,a771 4 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #cea7;e77#a77;,b77v7 7z r$esignat$ by p>agraph 7#a77 is am5d$ by /rik+ clause 7v7 or 7viii7 & ins]t+ clause 7vi7 or 7ix74 7,b7 ,section #cea7;e77#a77;,b77vii7 7z r$esignat$ by p>agraph 7#a77 is am5d$ by /rik+ clause 7viii7 & ins]t+ clause 7ix74 7,c7 ,section #cea7;e77#a77;,b77viii7 7z r$esignat$ by p>agraph 7#a77 is am5d$ by /rik+ clauses 7i7 ?r\gh 7v7 or clause 7viii7 & ins]t+ clauses 7i7 ?r\gh 7vi7 or clause 7ix74 7,d7 ,section #cea7;e77#a77;,b7 is am5d$ 9 ! matt] foll[+ clause 7ix7 7z r$esignat$ by p>agraph 7#a77 by /rik+ clauses 7i7 ?r\gh 7v7 & ins]t+ clauses 7i7 ?r\gh 7vi74 7#c7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to transf]s made aft] ,decemb] #ca1 #bjbf4 7c7 ,c]ta9 /ableco9 l5d+ treat$ z indebt$ness 7#a7 ,9 g5]al ,subp>t ,d ( "p ,v ( sub*apt] ,p ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new section3 #abhi4 ,/ableco9 l5d+ 7a7 ,9 g5]al ,except z o!rwise provid$ by ! ,secret>y1 = purposes ( ?is title1 ! l5d+1 r5tal1 sale & repur*ase1 or o!r transf] ( specifi$ /ableco9s %all be treat$ z indebt$ness 7& transf]s made pursuant to su* l5d+1 r5tal1 sale & repur*ase1 or o!r transf] %all be treat$ z int]e/7 9 ! same mann]1 & to ! same ext5t1 z ! equival5t transf] ( money4 7b7 ,specifi$ /ableco9 ,except z o!rwise provid$ by ! ,secret>y1 = purposes ( ?is section1 ! t]m specifi$ /ableco9 means any digital asset :i* is design$ to track ! value ( any curr5cy or curr5cies4 7c7 ,special rule = sale & repur*ases involv+ curr5cy or diff]5t types ( specifi$ /ableco9 ,except z o!rwise provid$ by ! ,secret>y1 = purposes ( ?is section1 a sale 7or repur*ase7 ( a specifi$ /ableco9 9 connection ) a repur*ase 7or sale7 ( curr5cy or a diff]5t type 7det]m9$ "u rules simil> to ! rules ( section #ajea7;b77#b77 ( specifi$ /ableco9 %all be treat$ z a sale & repur*ase ( a specifi$ /ableco94 7d7 ,regulations ,! ,secret>y may issue su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ! purposes ( ?is section1 includ+ regulations or o!r guidance provid+ rules = det]m9+ ! s\rce ( int]e/ income if ! payor is unkn[n & backup )hold+ & report+ rules if ! recipi5t ( an int]e/ paym5t is unkn[n4 7e7 ,cross ref]5ce ,= special rules applicable to transf]s ( specifi$ /ableco9s t are indebt$ness "u ?is section1 see sections #abga ?r\gh #abhh4 4 7#b7 ,cl]ical am5dm5t ,! table ( sections = subp>t ,d ( "p ,v ( sub*apt] ,p ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #abhi4 ,/ableco9 l5d+4 4 7#c7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjbf4 7d7 ,digital assets n treat$ z section #aig intangibles 7#a7 ,9 g5]al ,section #aig7;e7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#h7 ,digital assets ,except z o!rwise provid$ by ! ,secret>y to prev5t abuse1 any digital asset4 4 7#b7 ,effective date ,! am5dm5t made by ?is subsection %all apply to digital assets acquir$ aft] ! date ( ! introduction ( ?is ,act4 7e7 ,application ( /raddle rules to trad$ digital assets1 etc 7#a7 ,9 g5]al ,section #ajib7;d77#a7 is am5d$-- 7,a7 by /rik+ means any & ins]t+ means-- 7,a7 any 1 7,b7 by /rik+ ! p]iod at ! end & ins]t+ 1 &1 & 7,c7 by add+ at ! end ! foll[+ new subp>agraph3 7,b7 any trad$ digital asset 7det]m9$ )\t reg>d to clause 7iii7 ( section #ggja7p77#b77;,a774 4 7#b7 ,effective date ,! am5dm5ts made by ?is subsection %all apply to positions e/abli%$ aft] ! date ( ! enactm5t ( ?is ,act4 7f7 ,backup )hold+ on illiquid digital assets paid = digital asset validation support+ activities 7#a7 ,9 g5]al ,section #cdjf7;h7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#aa7 ,c]ta9 illiquid digital assets paid = digital asset validation support+ activities 7,a7 ,9 g5]al ,9 ! case ( an o!r reportable paym5t t consi/s ( specifi$ illiquid digital assets1 except to ! ext5t provid$ by ! ,secret>y 9 regulations or o!r guidance1 ! payor %all be treat$ z hav+ d$uct$ & )held f su* paym5t ! am\nt specifi$ 9 subsection 7a77#a7 7& ! proce$s ( ! liquidation ref]r$ to 9 clause 7ii7 %all be treat$ z ! am\nt d$uct$ & )held "u subsection 7a77#a77 if su* payor-- 7i7 holds ! applicable p]c5tage ( su* specifi$ illiquid digital assets 7h]eaft] ref]r$ to z ! )held am\nt ( digital assets7 9 a mann] t prev5ts ! recipi5t f us+ or )draw+ ! )held am\nt ( digital assets1 7ii7 liquidates ! )held am\nt ( digital assets at fair m>ket value n lat] ?an ! close ( ! fir/ bus9ess day foll[+ ! close ( su* fix$ p]iod1 & 7iii7 deposits ! proce$s ( su* liquidation at ! "t & 9 ! same mann] z w\ld be requir$ ) respect to an am\nt )held on ! date ( su* liquidation4 7,b7 ,specifi$ illiquid digital asset ,= purposes ( ?is p>agraph1 ! t]m specifi$ illiquid digital assets means digital assets t are-- 7i7 transf]r$ to ! recipi5t 9 ex*ange = digital asset validation support+ activities1 & 7ii7 re/rict$ f be+ sold1 ex*ang$1 transf]r$1 or o!rwise dispos$ (1 = a fix$ p]iod t ends aft] ! date ( su* transf]4 7,c7 ,applicable p]c5tage ,= purposes ( ?is p>agraph1 ! t]m applicable p]c5tage means ! rate ( tax ref]r$ to 9 subsection 7a77#a71 express$ z a p]c5tage4 4 7#b7 ,effective date ,! am5dm5t made by ?is subsection %all apply to specifi$ illiquid digital assets receiv$ aft] ,decemb] #ca1 #bjbf4 ,,iv ,cl>ify+ ! tax treatm5t ( m9+ & /ak+ #dja4 ,s\rce & "* ( m9+ & /ak+ income 7a7 ,det]m9ation ( s\rce ,section #hfc is am5d$ by add+ at ! end ! foll[+ new subsection3 7f7 ,treatm5t ( income f digital asset validation support+ activities 7#a7 ,9 g5]al ,income f digital asset validation support+ activities %all be s\rc$-- 7,a7 9 ! ,unit$ ,/ates if ! taxpay] is a ,unit$ ,/ates resid5t1 & 7,b7 outside ! ,unit$ ,/ates if ! taxpay] is a nonresid5t4 7#b7 ,treatm5t ( bran*es 7,a7 ,=eign bran*es ,9 ! case ( a ,unit$ ,/ates p]son ) a qualifi$ bus9ess unit 7z def9$ 9 section #ihi7;a77 9 a =eign c\ntry1 income describ$ 9 p>agraph 7#a7 t con/itutes bus9ess pr(its attributable to su* unit %all be s\rc$ outside ! ,unit$ ,/ates4 7,b7 ,u4,s4 bran*es ,9 ! case ( a p]son t is n a ,unit$ ,/ates p]son & t ma9ta9s an (fice or o!r fix$ place ( bus9ess 9 ! ,unit$ ,/ates1 income describ$ 9 p>agraph 7#a7 attributable to su* (fice or o!r fix$ place ( bus9ess %all be s\rc$ 9 ! ,unit$ ,/ates4 7,c7 ,attribution ,= purposes ( subp>agraphs 7,a7 & 7,b71 ! ,secret>y may issue su* regulations or o!r guidance z ! ,secret>y det]m9es necess>y or appropriate = purposes ( det]m9+ ! am\nt ( bus9ess pr(its attributable to a qualifi$ bus9ess unit or (fice or o!r fix$ place ( bus9ess4 7#c7 ,treatm5t ( p>tn]%ips ,9 ! case ( a p>tn]%ip1 except z o!rwise provid$ by ! ,secret>y 9 regulations or o!r guidance1 ?is subsection %all be appli$ at ! p>tn] level4 7#d7 ,unit$ ,/ates resid5t2 nonresid5t ,= purposes ( ?is subsection1 ! t]ms ,unit$ ,/ates resid5t & nonresid5t h ! mean+ giv5 su* t]ms1 respectively1 9 section #hfe7;g77#a71 det]m9$ aft] application ( section #hfe7;g77#b74 4 7b7 ,det]m9ation ( "* 7#a7 ,9 g5]al ,"p ,,iv ( sub*apt] ,p ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new section3 #abfa4 ,income f digital asset validation support+ activities ,income f digital asset validation support+ activities %all be treat$ z ord9>y income4 4 7#b7 ,cl]ical am5dm5t ,! table ( sections = "p ,,iv ( sub*apt] ,p ( *apt] #a is am5d$ by add+ at ! end ! foll[+ new item3 ,sec4 #abfa4 ,income f digital asset validation support+ activities4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ! date ( ! enactm5t ( ?is ,act4 #djb4 ,inve/m5t tru/s engag$ 9 digital asset /ak+ 7a7 ,9 g5]al ,section #ggja7p71 z add$ by section #fja ( ?is ,act1 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#ac7 ,/atus ( tru/s engag$ 9 digital asset /ak+ 7,a7 ,9 g5]al ,an entity or arrangem5t %all n fail to be treat$ z a tru/ = purposes ( ?is title solely by reason ( ! p[] ( ! tru/ee ( su* entity or "u su* arrangem5t to-- 7i7 engage 9 /ak+ digital assets held by ! tru/1 7ii7 reta9 or di/ribute digital assets receiv$ 9 connection ) su* /ak+1 7iii7 det]m9e :i* digital assets held by ! tru/ to use 9 /ak+1 7iv7 to ! ext5t t any digital assets held by ! tru/ are committ$ to /ak+1 take measures necess>y or appropriate to ensure t ! tru/ has suffici5t liquidity to make di/ributions 9 r$emption ( int]e/s 9 ! tru/1 includ+ by borr[+ or ent]+ into an agreem5t to borr[ money or digital assets to make su* di/ributions1 & 7v7 p]=m acts relat$ to ! ex]cise ( ! p[]s describ$ 9 ! prec$+ clauses ( ?is subp>agraph4 7,b7 ,n to apply to validat+ trade or bus9ess ,subp>agraph 7,a7 %all n apply 9 ! case ( an entity or arrangem5t engag$ 9 ! active conduct ( a trade or bus9ess ( validat+ digital asset transactions4 7,c7 ,regulations ,! ,secret>y may prescribe su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ! purposes ( ?is p>agraph4 4 7b7 ,cl]ical am5dm5t ,! head+ = section #ggja7p71 z add$ by section #fja ( ?is ,act1 is am5d$ by ins]t+ & special rules aft] ,def9itions4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s end+ aft] ! date ( ! enactm5t ( ?is ,act4 ,v ,ensur+ t own]s & us]s ( digital assets face an appropriate tax compliance burd5 #eja4 ,brok] requirem5ts 7a7 ,9 g5]al 7#a7 ,exception = qualifi$ ,u4,s4 doll> /ableco9s acquir$ at r$emption value ,section #fjde7;g77#c77;,d7 is am5d$ to read z foll[s3 7,d7 ,specifi$ digital asset ,! t]m specifi$ digital asset means any digital asset o!r ?an a qualifi$ ,u4,s4 doll> /ableco9 ! cu/om]'s basis 9 :i* at ! "t ( acquisition is at lea/ #ii4e p]c5t ( su* /ableco9's r$emption value 7z def9$ 9 section #ajfc7;d774 4 7#b7 ,con=m+ am5dm5ts 7,a7 ,section #fjde7;c77#a77;,d7 is am5d$ by /rik+ digital assets & ins]t+ specifi$ digital assets4 7,b7 ,subp>agraph 7,b77iv7 & subp>agraph 7,c77iii7 ( section #fjde7;g77#c7 are ea* am5d$ by /rik+ digital asset & ins]t+ specifi$ digital asset4 7,c7 ,section #fjej;,i7d77#c7 is am5d$ by /rik+ 7z def9$ 9 section #fjde7;g77#c77;,d774 7#c7 ,transition rules ,! ,secret>y ( ! ,treasury1 or ! ,secret>y's delegate1 may1 consi/5t ) ! purposes ( section #fjde7;g7 ( ! ,int]nal ,rev5ue ,code ( #aihf-- 7,a7 provide tempor>y safe h>bor rules = brok]s t address p]iods be=e ! date t is #ah mon?s aft] ! issuance ( f9al regulations or o!r guidance "u section #ajfc7;e7 ( su* ,code1 & 7,b7 provide rules t all[ brok]s to treat1 = purposes ( section #fjde7;g77#c77;,d7 ( su* ,code 7z am5d$ by ?is section71 ! cu/om]'s basis 9 a qualifi$ ,u4,s4 doll> /ableco9 7z def9$ 9 section #ggja7p77#g7 ( su* ,code7 at "t ( acquisition z be+ equal to ! r$emption value 7z def9$ 9 section #ajfc7;d77 ( su* /ableco9 if-- 7i7 su* /ableco9 0 acquir$ be=e ! date t is #ah mon?s aft] ! issuance ( f9al regulations or o!r guidance "u section #ajfc7;e7 ( su* ,code1 & 7ii7 ! cu/om]'s adju/$ basis 7det]m9$ 9 accordance ) section #fjde7;g77#b77;,b7 ( su* ,code7 9 su* /ableco9 z ( ! lat] (-- 7,i7 ,decemb] #ca1 #bjbf1 or 7,,ii7 ! date t su* /ableco9 fir/ became a qualifi$ ,u4,s4 doll> /ableco9 7z s def9$71 is at lea/ #ii4e p]c5t ( su* r$emption value4 7b7 ,special rules = digital assets us$ to pay de m9imis digital asset fees ,section #fjde7;g7 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#g7 ,special rules = digital assets us$ to pay de m9imis digital asset fees 7,a7 ,9 g5]al ,except z o!rwise provid$ by ! ,secret>y1 9 ! case ( ! disposition ( a digital asset ) respect to :i* no ga9 or loss is recogniz$ by reason ( section #ajdd7;a7-- 7i7 except z provid$ 9 clause 7ii71 subsection 7a7 %all n apply to su* disposition1 & 7ii7 ! brok] %all include 9 a return "u subsection 7a7 su* aggregate in=mation relat+ to su* dispositions ( ! taxpay] z ! ,secret>y det]m9es necess>y or appropriate1 includ+ = purposes ( v]ify+ ! taxpay]'s basis 9 digital assets held by ! taxpay]4 7,b7 ,application ( de m9imis exception ,if ! brok] has be5 notifi$ by ! taxpay] or ! ,secret>y t ! exception describ$ 9 section #ajdd7;f77#a77;,b7 applies to su* taxpay]1 ! brok] may treat su* exception z cont9u+ to apply ) respect to su* taxpay] = any cal5d> ye> 7h]eaft] 9 ?is subp>agraph ref]r$ to z ! curr5t cal5d> ye>7 unless-- 7i7 su* taxpay] _h m ?an #e1jjj digital asset transactions ) su* brok] dur+ any ( ! #e prec$+ cal5d> ye>s & ! taxpay] has n notifi$ ! brok] t su* exception applies to su* taxpay] = ! curr5t cal5d> ye>1 7ii7 su* taxpay] or ! ,secret>y notifies su* brok] t su* exception does n apply to su* taxpay]1 or 7iii7 su* brok] o!rwise kn[s1 or has reason to "k1 t su* exception does n apply to su* taxpay]4 4 7c7 ,special rules = simplifi$ acc\nt+ = widely trad$ digital assets ,section #fjde7;g71 z am5d$ by subsection 7b71 is am5d$ by add+ at ! end ! foll[+ new p>agraph3 7#h7 ,special rules = simplifi$ acc\nt+ = widely trad$ digital assets 7,a7 ,9 g5]al ,except z o!rwise provid$ by ! ,secret>y1 9 ! case ( widely trad$ digital assets ) respect to :i* an election "u section #ajea applies-- 7i7 except z provid$ 9 clause 7ii71 subsection 7a7 %all n apply to dispositions ( su* assets1 & 7ii7 ! brok] %all include 9 a return "u subsection 7a7 su* in=mation ) respect to ea* designat$ type ( su* assets 7)9 ! mean+ ( section #ajea7 z ! ,secret>y may provide1 includ+-- 7,i7 aggregate report+ ) respect to sales1 ex*anges1 dispositions1 & acquisitions ( assets ( su* designat$ type 7includ+ net ga9 or loss !reon71 7,,ii7 ! fair m>ket value ( assets ( su* designat$ type held by ! taxpay] z ( ! beg9n+ & end ( ! cal5d> ye>1 & 7,,iii7 su* o!r in=mation z ! ,secret>y may require ) respect to assets ( su* designat$ type = purposes ( ! adm9i/ration ( section #ajea4 7,b7 ,det]m9ation ( election bas$ on brok] notification ,= purposes ( subp>agraph 7,a71 ! brok] %all take into acc\nt any election "u section #ajea 7& any revocation ( su* election7 if 7& only if7 ! taxpay] or ! ,secret>y notifies su* brok] ( su* election 7or revocation7 or su* brok] o!rwise kn[s1 or has reason to "k1 ( su* election 7or revocation74 4 7d7 ,effective date ,! am5dm5ts made by ?is section %all apply to returns requir$ to be fil$1 & /atem5ts requir$ to be furni%$1 aft] ,decemb] #ca1 #bjbg4 #ejb4 ,e/abli%m5t ( ,digital ,asset ,volunt>y ,disclosure ,program 7a7 ,9 g5]al ,n lat] ?an #ab mon?s aft] ! date ( ! enactm5t ( ?is ,act1 ! ,secret>y %all e/abli% ! ,digital ,asset ,volunt>y ,disclosure ,program 7h]e9aft] ref]r$ to z ! program7 to all[ eligible taxpay]s to rem$y digital asset violations by fulfill+ ! rem$ial requirem5ts describ$ 9 subsection 7b74 7b7 ,rem$ial requirem5ts ,! rem$ial requirem5ts ( ?is subsection are fulfill$ if1 at su* "t & 9 su* mann] z ! ,secret>y det]m9es appropriate1 ! eligible taxpay]-- 7#a7 files1 n lat] ?an #bd mon?s aft] ! date on :i* ! ,secret>y e/abli%es ! program1 an am5d$ return = ea* applicable taxable ye> ) respect to :i* ! prop] am\nt ( any tax item is affect$ by any digital asset violation1 7#b7 provides imm$iate paym5t1 or ! ,secret>y accepts f su* taxpay] 7& does n !reaft] t]m9ate7 an in/allm5t agreem5t "u section #faei to provide paym5t1 (-- 7,a7 ! aggregate am\nt ( ! defici5cy ( tax 7includ+ any int]e/ !reon7 attributable to all digital asset violations1 & 7,b7 ! digital asset violation p5alty1 & 7#c7 timely fulfills su* o!r requirem5ts1 & provides su* o!r in=mation1 z ! ,secret>y det]m9es appropriate4 7c7 ,b5efits ,if ! rem$ial requirem5ts describ$ 9 subsection 7b7 h be5 fulfill$ to ! satisfaction ( ! ,secret>y-- 7#a7 9 ! case ( an unc]tifi$ eligible taxpay]-- 7,a7 ! ,secret>y %all n ass]t any fur!r p5alties "u sections #fffb & #fffc ) respect to any defici5cy ( tax attributable to any digital asset violation prop]ly disclos$ by ! taxpay] "u ! program1 & 7,b7 ! ,secret>y %all n use any in=mation prop]ly disclos$ by ! taxpay] "u ! program = purposes ( ref]r+ su* taxpay] = crim9al inve/igation1 or prosecut+ su* taxpay]1 "u section #gbja1 #gbjc1 or #gbjf 7o!r ?an p>agraph 7#b7 !re(7 ) respect to any digital asset violation prop]ly disclos$ by ! taxpay] "u ! program1 & 7#b7 9 ! case ( a c]tifi$ eligible taxpay]1 ! ,secret>y %all n ass]t any fur!r p5alties "u section #fffb ) respect to any defici5cy ( tax attributable to any digital asset violation prop]ly disclos$ by ! taxpay] "u ! program4 7d7 ,def9itions ,= purposes ( ?is section-- 7#a7 ,eligible taxpay] 7,a7 ,9 g5]al ,! t]m eligible taxpay] means any unc]tifi$ eligible taxpay] or c]tifi$ eligible taxpay]4 7,b7 ,unc]tifi$ eligible taxpay] ,! t]m unc]tifi$ eligible taxpay] means any taxpay] :o-- 7i7 committ$ any digital asset violation dur+ ! applicable p]iod1 7ii7 submits 79 su* =m & mann] z ! ,secret>y may prescribe71 n lat] ?an #bd mon?s aft] ! date on :i* ! ,secret>y e/abli%es ! program1 an application :i* is approv$ by ! ,secret>y to p>ticipate !re91 7iii7 does n c]tify1 "u p5alty ( p]jury1 t no digital asset violation occurr+ dur+ ! applicable p]iod 0 committ$ fraudul5tly or willfully1 & 7iv7 if subject to-- 7,i7 any ongo+ crim9al inve/igation ) respect to any digital asset violation1 or 7,,ii7 any ongo+ audit or exam9ation by ! ,int]nal ,rev5ue ,s]vice ) respect to any applicable taxable ye>1 has reque/$ & be5 issu$ a waiv] by ! ,secret>y to none!less p>ticipate 9 ! program4 ,= purposes ( clause 7ii71 ! ,secret>y may impose a reasonable fee = submission ( an application to p>ticipate 9 ! program4 7,c7 ,c]tifi$ eligible taxpay] ,! t]m c]tifi$ eligible taxpay] means any taxpay] :o-- 7i7 committ$ any digital asset violation dur+ ! applicable p]iod1 7ii7 z an add5dum to ea* am5d$ return fil$ "u subsection 7b77#a7 7or at su* o!r "t & 9 su* o!r =m & mann] z ! ,secret>y may prescribe71 c]tifies1 "u p5alty ( p]jury1 t no digital asset violation occurr+ dur+ ! applicable p]iod 0 committ$ fraudul5tly or willfully1 & 7iii7 if subject to any ongo+ audit or exam9ation by ! ,int]nal ,rev5ue ,s]vice ) respect to any applicable taxable ye>1 has reque/$ & be5 issu$ a waiv] by ! ,secret>y to none!less p>ticipate 9 ! program4 7#b7 ,digital asset violation 7,a7 ,9 g5]al ,! t]m digital asset violation means1 ) respect to any eligible taxpay]1 any in/ance 9 :i* su* taxpay] fail$ to comply ) a requirem5t "u ! ,int]nal ,rev5ue ,code ( #aihf if-- 7i7 su* in/ance relates to ! own]%ip (1 or transactions 91 digital assets dur+ ! applicable p]iod1 & 7ii7 su* failure affects ! prop] am\nt ( any tax item ) respect to any applicable taxable ye>4 7,b7 ,digital asset ,= purposes ( subp>agraph 7,a71 ! t]m digital asset means1 except z o!rwise provid$ by ! ,secret>y1 any digital repres5tation ( value :i* is record$ on a cryptographically secur$ di/ribut$ l$g] or any simil> te*nology z specifi$ by ! ,secret>y4 7#c7 ,applicable p]iod ,! t]m applicable p]iod means1 ) respect to any eligible taxpay]1 ! p]iod-- 7,a7 beg9n+ ) ! lat] (-- 7i7 ! taxpay]'s fir/ taxable ye> ) respect to :i* ! prop] am\nt ( any tax item is affect$ by any digital asset violation1 or 7ii7 ! taxpay]'s fir/ taxable ye> ) respect to :i* a return ( tax 0 fil$ dur+ ! #f-ye> p]iod 7#c-ye> p]iod 9 ! case ( a c]tifi$ eligible taxpay]7 imm$iately prec$+ ! date ( ! enactm5t ( ?is ,act1 & 7,b7 end+ ) ! taxpay]'s la/ taxable ye> end+ be=e ! date ( ! enactm5t ( ?is ,act4 7#d7 ,applicable taxable ye> ,! t]m applicable taxable ye> means1 ) respect to any eligible taxpay]1 any taxable ye> dur+ ! applicable p]iod ) respect to su* taxpay]4 7#e7 ,digital asset violation p5alty 7,a7 ,9 g5]al ,! digital asset violation p5alty is an am\nt equal to ! sum (-- 7i7 #be p]c5t 7#j p]c5t 9 ! case ( a c]tifi$ eligible taxpay]7 ( ! aggregate am\nt ( s mu* ( ! defici5cy ( tax attributable to all digital asset violations z does n exce$ #be1jjj ) respect to ea* applicable taxable ye>1 plus 7ii7 #dj p]c5t 7#e p]c5t 9 ! case ( a c]tifi$ eligible taxpay]7 ( ! aggregate am\nt ( s mu* ( ! defici5cy ( tax attributable to all digital asset violations z exce$s #be1jjj ) respect to ea* applicable taxable ye>4 7,b7 ,special rules = am5d$ returns fil$ aft] c]ta9 date ,9 ! case ( an am5d$ return ) respect to any applicable taxable ye> fil$ "u subsection 7b77#a7 aft] ! date t is #ab mon?s aft] ! date on :i* ! ,secret>y e/abli%es ! program1 subp>agraph 7,a7 %all be appli$ ) respect to su* applicable taxable ye>-- 7i7 by sub/itut+ #dj p]c5t 9 lieu ( #be p]c5t 9 clause 7i7 !re(1 7ii7 by sub/itut+ #e p]c5t 9 lieu ( #j p]c5t 9 clause 7i7 !re(1 7iii7 by sub/itut+ #ej p]c5t 9 lieu ( #dj p]c5t 9 clause 7ii7 !re(1 7iv7 by sub/itut+ #aj p]c5t 9 lieu ( #e p]c5t 9 clause 7ii7 !re(1 & 7v7 9 ! case ( a c]tifi$ eligible taxpay]1 by sub/itut+ #ajj1jjj 9 lieu ( #be1jjj ea* place x appe>s4 7,c7 ,waiv] by ,secret>y ,! ,secret>y may waive "p or all ( ! digital asset violation p5alty to ! ext5t ! ,secret>y det]m9es t su* a waiv] w\ld be 9 ! int]e/s ( ju/ice & ! prop] adm9i/ration ( ! int]nal rev5ue laws1 includ+ 9 cases involv+ digital asset violations attributable to reasonable cause 7z det]m9$ by ! ,secret>y74 7#f7 ,secret>y ,! t]m ,secret>y means ! ,secret>y ( ! ,treasury or ! ,secret>y's delegate4 7e7 ,assessm5t au?ority2 waiv] ( re/rictions & limitations on assessm5t ,= purposes ( ?is section1 any defici5cy ( tax1 additional tax or am\nt1 or digital asset violation p5alty %all be assess$1 collect$1 & paid 9 ! same mann] z taxes1 z provid$ 9 section #fffe7;a7 7)\t reg>d to any re/rictions or limitations on assessm5t describ$ 9 section #fbac or #feja74 7f7 ,ref]5ces to ,int]nal ,rev5ue ,code ( #aihf ,except z o!rwise expressly provid$1 :5ev] 9 ?is section a ref]5ce is made to a section1 ! ref]5ce %all be consid]$ to be made to a section ( ! ,int]nal ,rev5ue ,code ( #aihf4 7g7 ,regulatory au?ority ,! ,secret>y %all prescribe su* regulations or o!r guidance z may be necess>y or appropriate to c>ry out ! purposes ( ?is section1 includ+ ) respect to ! provision ( reasonable assurances to taxpay]s t any in=mation prop]ly disclos$ "u ! program %all n be us$ 9 contrav5tion ( any b5efit describ$ 9 subsection 7c74 #ejc4 ,treasury /udy & report 7a7 ,9 g5]al ,! ,secret>y %all p]=m a /udy on ! feasibility ( us+ new digital te*nologies1 includ+ z]o-k pro(s1 sm>t contracts1 & o!r block*a9 te*nology = increas$ compliance1 effici5cy1 & data protection 9 connection ) in=mation report+1 )hold+1 & taxpay] compliance reg>d+ digital asset transactions4 7b7 ,/udy requirem5ts ,9 conduct+ ! /udy "u subsection 7a71 ! ,secret>y %all-- 7#a7 inve/igate ! ext5t to :i* su* new digital te*nology c-- 7,a7 r$uce compliance co/s & burd5 = )hold+ ag5ts on cross-bord] transactions involv+ digital assets1 7,b7 replace traditional in=mation report+1 )hold+1 transaction reports1 & o!r f9ancial in=mation report+ = digital asset transactions us+ sm>t contract bas$ )hold+1 in/antly v]ifi$ self-report+ ) z]o-k pro(s1 or o!r tru/wor?y alt]natives to exi/+ ?ird-p>ty in=mation collection1 )hold+1 & report+ = on-*a9 transactions 7or to provide an equival5t to su* collection & report+ 9 cases :]e no int]m$i>y curr5tly provides equival5t data71 & 7,c7 improve tax adm9i/ration1 r$uce compliance co/s1 & improve taxpay] data security1 7#b7 evaluate ! effectiv5ess ( curr5t )hold+ & backup )hold+ rules z appli$ to digital assets 7includ+ digital assets d]iv$ f /ak+ activities7 & assess :e!r exi/+ tim+1 liquidity1 valuation1 & remittance requirem5ts are workable :]e digital assets may be lock$ or o!rwise unavailable = imm$iate use1 7#c7 id5tify *all5ges = payors1 )hold+ ag5ts1 & ! ,int]nal ,rev5ue ,s]vice 9 apply+ exi/+ )hold+ & backup )hold+ rules & provide recomm5dations = legislative *anges t w\ld improve adm9i/ration ( )hold+ & backup )hold+ = digital assets1 7#d7 emphasize data security & individual privacy improvem5ts1 includ+ r$uc+ id5tity !ft risks f provid+ s5sitive in=mation to p>ties o!r ?an ! ,int]nal ,rev5ue ,s]vice = report+ purposes1 9 consid]+ ! efficacy ( su* new digital te*nologies1 & 7#e7 coord9ate ) /akehold]s1 su* z te*nology develop]s1 indu/ry lead]s1 & data privacy & consum] protection exp]ts1 to id5tify new digital te*nologies1 t are curr5tly feasible or may be feasible 9 ! ne> future1 to promote effici5t tax adm9i/ration & r$uc$ compliance burd5 = ! digital economy4 7c7 ,report to ,congress ,n lat] ?an ,septemb] #cj1 #bjbh1 ! ,secret>y %all submit a writt5 report to ! ,committee on ,ways & ,means ( ! ,h\se ( ,repres5tatives & ! ,committee on ,f9ance ( ! ,s5ate t includes all ( ! f9d+s ( ! ,secret>y ) respect to ! /udy conduct$ "u subsections 7a7 & 7b74 ,su* report %all include a description (-- 7#a7 ! recomm5dations ( ! ,secret>y reg>d+ ! adoption ( any new digital te*nologies = ! purposes describ$ 9 subsection 7a71 7#b7 any legislative *anges to ! tax laws necess>y to implem5t su* recomm5dations1 7#c7 any additional res\rces requir$ by ! ,secret>y = su* implem5tation1 & 7#d7 ! am\nt ( "t requir$ to complete su* implem5tation4 7d7 ,secret>y ,= purposes ( ?is section1 ! t]m ,secret>y means ! ,secret>y ( ! ,treasury or ! ,secret>y's delegate4 ,,vi ,def9itions2 regulations2 rules ( con/ruction #fja4 ,def9itions ,section #ggja is am5d$-- 7#a7 by r$esignat+ subsection 7p7 z subsection 7q71 & 7#b7 by ins]t+ aft] subsection 7o7 ! foll[+ new subsection3 7p7 ,def9itions relat$ to digital assets ,= purposes ( ?is title-- 7#a7 ,digital asset ,! t]m digital asset means1 except z o!rwise provid$ by ! ,secret>y1 any digital repres5tation ( value :i* is record$ on a cryptographically secur$ di/ribut$ l$g] or any simil> te*nology z specifi$ by ! ,secret>y4 7#b7 ,trad$ digital asset 7,a7 ,9 g5]al ,! t]m trad$ digital asset means1 except z o!rwise provid$ by ! ,secret>y to prev5t abuse1 any digital asset if-- 7i7 su* asset is fungible1 7ii7 quotations ( su* asset are readily available on an ex*ange 7or1 9 ! case ( an ex*ange t does n provide quotations1 su* quotations are readily asc]ta9able71 & 7iii7 su* asset is n a tok5iz$ digital asset4 7,b7 ,special rule = wrapp$ digital assets ,9 ! case ( any wrapp$ digital asset1 except z o!rwise provid$ by ! ,secret>y to prev5t abuse1 su* asset %all be treat$ z a trad$ digital asset if1 & only if1 ! ref]5ce digital asset ) respect to su* wrapp$ digital asset is a trad$ digital asset4 7#c7 ,widely trad$ digital asset 7,a7 ,9 g5]al ,! t]m widely trad$ digital asset means1 ) respect to any taxpay] = any taxable ye> & except z o!rwise provid$ by ! ,secret>y to prev5t abuse1 any trad$ digital asset if-- 7i7 quotations = su* asset 7 readily available on an ex*ange = ! entire cal5d> ye> :i* ends 9 or ) ! taxable ye> prec$+ su* taxable ye>1 7ii7 ! m>ket capitalization ( su* asset exce$$ #ejj1jjj1jjj at sub/antially all times dur+ su* cal5d> ye>1 & 7iii7 n m ?an #aj p]c5t ( ! units ( su* asset 7 own$1 directly or indirectly1 by ! taxpay] or any p]son describ$ ) respect to ! taxpay] "u section #bfg7;b7 7appli$ )\t reg>d to section #bfg7;c77#c77 or section #gjg7;b77#a7 at any "t dur+ su* taxable ye> or su* prec$+ taxable ye>4 7,b7 ,special rule = wrapp$ digital assets ,9 ! case ( any wrapp$ digital asset1 except z o!rwise provid$ by ! ,secret>y to prev5t abuse1 su* asset %all be treat$ z a widely trad$ digital asset ) respect to any taxpay] if1 & only if1 ! ref]5ce digital asset ) respect to su* wrapp$ digital asset is a widely trad$ digital asset ) respect to su* taxpay]4 7,c7 ,au?ority to ensure reliable price discov]y ,= purposes ( subp>agraphs 7,a7 & 7,b71 ! t]m prev5t abuse includes ! exclusion ( assets t lack reliable price discov]y or t ! ,secret>y det]m9es are at risk ( price manipulation4 7,d7 ,au?ority to adju/ requirem5ts ,! ,secret>y may1 by regulation1 provide requirem5ts t apply 9 lieu ( "o or m ( ! requirem5ts ( clauses 7i7 ?r\gh 7iii7 ( subp>agraph 7,a7 if ! ,secret>y det]m9es t due to *anges 9 m>ket conditions 7includ+ by reason ( ! enactm5t ( ,f$]al digital asset m>ket /ructure legislation7 t su* alt]native requirem5ts w\ld m effectively or effici5tly id5tify trad$ digital assets = :i* !re is consi/5t & reliable price discov]y4 7,e7 ,inflation adju/m5t ,9 ! case ( any cal5d> ye> aft] #bjbg1 ! #ejj1jjj1jjj am\nt 9 subp>agraph 7,a77ii7 %all be increas$ by an am\nt equal to-- 7i7 su* doll> am\nt1 multipli$ by 7ii7 ! co/-(-liv+ adju/m5t det]m9$ "u section #a7;f77#c7 = su* cal5d> ye>1 det]m9$ by sub/itut+ cal5d> ye> #bjbf = cal5d> ye> #bjaf 9 subp>agraph 7,a77ii7 !re(4 ,any increase det]m9$ "u ! prec$+ s5t5ce :i* is n a multiple ( #ajj1jjj %all be r\nd$ to ! ne>e/ multiple ( #ajj1jjj4 7#d7 ,tok5iz$ digital asset 7,a7 ,9 g5]al ,! t]m tok5iz$ digital asset means any digital asset 7o!r ?an any qualifi$ ,u4,s4 doll> /ableco97 if m ?an an insignificant portion ( ! value ( su* digital asset is d]iv$ f any?+ o!r ?an ! op]ation ( ! cryptographically secur$ di/ribut$ l$g] on :i* su* digital asset is record$ 7includ+ ! protocols applicable to ! op]ation ( su* l$g] ) respect to su* digital asset74 7,b7 ,special rule = wrapp$ digital assets ,9 ! case ( any wrapp$ digital asset1 except z o!rwise provid$ by ! ,secret>y to prev5t abuse1 su* asset %all be treat$ z a tok5iz$ digital asset if1 & only if1 ! ref]5ce digital asset ) respect to su* wrapp$ digital asset is a tok5iz$ digital asset4 7#e7 ,wrapp$ digital asset ,! t]m wrapp$ digital asset means1 except z o!rwise provid$ by ! ,secret>y to prev5t abuse1 any digital asset if su* asset-- 7,a7 is r$eemable on dem&1 on a "o-=-"o basis1 = ano!r digital asset1 & 7,b7 is record$ on a cryptographically secur$ di/ribut$ l$g] o!r ?an ! cryptographically secur$ di/ribut$ l$g] on :i* ! digital asset ref]r$ to 9 subp>agraph 7,a7 is record$4 7#f7 ,ref]5ce digital asset 7,a7 ,9 g5]al ,! t]m ref]5ce digital asset means1 ) respect to any wrapp$ digital asset1 ! digital asset ref]r$ to 9 p>agraph 7#e77;,a74 7,b7 ,special rule = rewrapp+s ,if1 b = ?is subp>agraph1 ! ref]5ce digital asset ) respect to any wrapp$ digital asset w\ld be a wrapp$ digital asset 7h]eaft] ref]r$ to 9 ?is p>agraph z ! l[]-ti] wrapp$ digital asset7-- 7i7 subp>agraph 7,a7 %all be appli$ ) respect to su* l[]-ti] wrapp$ digital asset1 & 7ii7 ! ref]5ce digital asset ) respect to su* l[]-ti] wrapp$ digital asset %all be treat$ z ! ref]5ce digital asset ( su* wrapp$ digital asset4 7,c7 ,multiple wrapp+s ,if1 aft] ! application ( subp>agraph 7,b71 ! ref]5ce digital asset ) respect to ! l[]-ti] wrapp$ digital asset is a wrapp$ digital asset1 su* subp>agraph %all be reappli$ by treat+ su* l[]-ti] wrapp$ digital asset z ! wrapp$ digital asset4 7#g7 ,/ableco9 7,a7 ,qualifi$ ,u4,s4 doll> /ableco9 ,! t]m qualifi$ ,u4,s4 doll> /ableco9 means any ,u4,s4 doll> /ableco9 ! issu] ( :i* is-- 7i7 a p]mitt$ paym5t /ableco9 issu] 7z def9$ 9 section #b7bc7 ( ! ,,g5ius ,act1 z 9 effect on ! date ( ! enactm5t ( ?is p>agraph71 or 7ii7 a =eign paym5t /ableco9 issu] 7z def9$ 9 section #b7ab7 ( ! ,,g5ius ,act1 z s 9 effect7 regi/]$ ) ! ,(fice ( ! ,comptroll] ( ! ,curr5cy "u ! ,,g5ius ,act 7z s 9 effect74 7,b7 ,u4,s4 doll> /ableco9 ,! t]m ,u4,s4 doll> /ableco9 means-- 7i7 a paym5t /ableco9 7z def9$ 9 section #b7bb7 ( ! ,,g5ius ,act 7z 9 effect on ! date ( ! enactm5t ( ?is p>agraph71 appli$ by sub/itut+ doll>s = monet>y value ea* place x appe>s 9 su* section71 & 7ii7 to ! ext5t provid$ by ! ,secret>y to prev5t abuse1 any /ableco9 simil> to a paym5t /ableco9 describ$ 9 clause 7i74 7,c7 ,publication ( li/ ,! ,secret>y %all1 to ! ext5t feasible1 regul>ly publi% a li/ ( qualifi$ ,u4,s4 doll> /ableco9s4 7,d7 ,limit$ au?ority to treat /ableco9s z money ,! ,secret>y may issue su* regulations or o!r guidance z may be necess>y or appropriate to 7except z o!rwise expressly provid$ 9 ?is title7-- 7i7 treat qualifi$ ,u4,s4 doll> /ableco9s z doll>s1 & 7ii7 treat paym5t /ableco9s 7z def9$ 9 section #b7bb7 ( ! ,,g5ius ,act1 z 9 effect on ! date ( ! enactm5t ( ?is p>agraph7 o!r ?an qualifi$ ,u4,s4 doll> /ableco9s z curr5cy if su* treatm5t is expect$ to increase net ,f$]al rev5ues4 7#h7 ,digital asset transaction ,! t]m digital asset transaction means any transf] ( a digital asset record$ on ! cryptographically secur$ di/ribut$ l$g] 7or simil> te*nology7 ref]r$ to 9 p>agraph 7#a74 7#i7 ,digital asset validation support+ activities ,! t]m digital asset validation support+ activities means /ak+1 m9+1 or1 except z o!rwise provid$ by ! ,secret>y1 simil> activities 9 support ( ! validation ( digital asset transactions4 7#aj7 ,validation ,! t]m validate1 & any d]ivative ( su* t]m 7includ+ validation71 :5 us$ 9 connection ) a digital asset transaction1 includes ! processes ( propos+ transactions = validation & v]ify+ ! validation ( transactions4 7#aa7 ,/ak+ ,! t]m /ak+1 :5 us$ 9 connection ) a digital asset1 means-- 7,a7 mak+ su* asset available 9 support ( ! validation ( digital asset transactions1 & 7,b7 except z o!rwise provid$ by ! ,secret>y1 any sub/antially simil> activity4 7#ab7 ,m9+ ,! t]m m9+1 :5 us$ 9 connection ) a digital asset1 means-- 7,a7 p]=m+ computations1 or mak+ available comput+ p[]1 9 support ( ! validation ( digital asset transactions1 & 7,b7 except z o!rwise provid$ by ! ,secret>y1 any sub/antially simil> activity4 4 #fjb4 ,regulations ,x is ! s5se ( ! ,congress t ! ,secret>y ( ! ,treasury %\ld /rongly consid] issu+ 7"u ! au?ority ( section #ghje ( ! ,int]nal ,rev5ue ,code ( #aihf1 or o!r applicable provisions ( su* ,code7 regulations or o!r guidance to-- 7#a7 provide simplifi$ me?ods = det]m9+ basis 9 digital assets1 7#b7 specify appropriate me?ods = det]m9+ ! fair m>ket value ( illiquid digital assets1 7#c7 provide = ! appropriate application ( section #ied ( su* ,code ) respect to digital assets1 includ+ digital assets :i* are also securities or commodities1 7#d7 provide = ! appropriate application ( subp>t ,j ( "p ,,iii ( sub*apt] ,n ( *apt] #a ( su* ,code 7relat+ to =eign curr5cy transactions7 to digital assets1 7#e7 cl>ify :at con/itutes ! active conduct ( a trade or bus9ess ( validat+ digital asset transactions 7or conduct+ /ak+1 m9+1 or simil> activities 9 support ( validat+ digital asset transactions71 7#f7 cl>ify ! application ( ! provisions ( su* ,code to a digital asset t is also a security or commodity1 7#g7 cl>ify ! treatm5t ( tok5iz$ digital assets1 & 7#h7 cl>ify ! circum/ances "u :i* any ( ! foll[+ transactions con/itute realization ev5ts3 tok5ization transactions1 wrapp+ transactions1 unwrapp+ transactions1 =ks1 airdrops1 & ex*anges involv+ liquidity pool tok5s or /ak+ pool tok5s4 #fjc4 ,rules ( con/ruction 7a7 ,no inf]5ce ) respect to application ( o!r provisions ( law ,except z o!rwise expressly provid$ by ?is ,act 7or an am5dm5t made by ?is ,act7 ) respect to ! application ( "o or m provisions ( ! ,int]nal ,rev5ue ,code ( #aihf1 no?+ 9 ?is ,act 7or any am5dm5t made by ?is ,act7 %all be con/ru$ to create an inf]5ce t a digital asset does or does n con/itute a security1 a commodity1 debt1 equity1 /ock1 a p>tn]%ip int]e/1 or an int]e/ 9 a tru/1 = purposes ( any provision ( law4 7b7 ,no inf]5ce ) respect to prior p]iods ,no provision ( ?is ,act 7or any am5dm5t made by ?is ,act7 %all be con/ru$ to create any inf]5ce ) respect to ! prop] application ( any provision ( ! ,int]nal ,rev5ue ,code ( #aihf ) respect to any p]iod be=e ! p]iod to :i* su* provision or am5dm5t applies4 ,,vii ,full ,h\se ,act #gja4 ,re9/atem5t ( rules = wag]+ losses 7a7 ,9 g5]al ,section #afe7;d7 is am5d$ to read z foll[s3 7d7 ,wag]+ losses ,losses f wag]+ transactions %all be all[$ only to ! ext5t ( ! ga9s f su* transactions4 ,= purposes ( ! prec$+ s5t5ce1 ! t]m losses f wag]+ transactions includes any d$uction o!rwise all[able "u ?is *apt] incurr$ 9 c>ry+ on any wag]+ transaction4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjbe4