Digital Asset Tax Certainty Act

(3) Special rules for traded digital assets

(A) In general. If an individual required to file a specified notice under paragraph (1) is a specified possession resident individual (as defined in subsection (d)(3)) for the taxable year to which such notice relates, such notice shall include the fair market value and basis of each traded digital asset property held by the taxpayer as of the close of the preceding taxable year.

(B) De minimis exception. Subparagraphs (A) and (E) shall not apply if the aggregate fair market value of traded digital asset property which would (but for this subparagraph) be required to be included in a notice under such subparagraph (A) or (E), as the case may be, does not exceed $10,000.

(C) Specified notice. For purposes of this paragraph, the term specified notice means a notice required under paragraph (1) by reason of the individual taking the position for United States income tax reporting purposes that the individual became a bona fide resident of a possession specified in subsection (a)(1).

(D) Traded digital asset property. For purposes of this paragraph, the term traded digital asset property has the meaning given such term in subsection (d)(5).

(E) Transition rule. In the case of an individual who was required to file a specified notice under paragraph (1) with respect to one of the 9 taxable years immediately preceding the first taxable year of the taxpayer beginning after December 31, 2026, and who was a specified possession resident individual (as defined in subsection (d)(3)) for such taxable year, such individual shall file a notice with the Secretary stating the fair market value and basis (determined as of the last day of the taxable year preceding the taxable year to which such notice relates) of each traded digital asset property (as defined in subsection (d)(5)) that was held by the taxpayer both on such last day and on January 1, 2027. The notice required under the preceding sentence shall be filed with the Secretary not later than the earlier of—

(i) the due date of the taxpayer’s return of tax for the taxpayer’s first taxable year beginning after December 31, 2026, during which the taxpayer disposes of any traded digital asset property with respect to which information is required to be included in such notice, and

(ii) such date as the Secretary may specify under subsection (d)(6)(B)(i).

(d) Special rules for traded digital assets

(1) In general. Notwithstanding subsection (b)(1) (and except as provided in subsection (b)(2)), in the case of any specified possession resident individual for any taxable year, any gain recognized (directly or indirectly) on the disposition of traded digital asset property during such taxable year—

(A) shall, except as provided in subparagraph (B), be treated as gain from sources within the United States, and

(B) shall be treated as gain from sources within the relevant possession (and not from sources within the United States) to the extent that the taxpayer—

(i) timely provided the information specified in subsection (c)(3) to the Secretary with respect to such property, and

(ii) demonstrates to the satisfaction of the Secretary that such gain is properly attributable to the increase in the value of such property during periods that such individual was a bona fide resident of such possession.

(2) Election for widely traded digital assets

(A) In general. In the case of any electing individual—

(i) such individual shall recognize gain on any widely traded digital assets held by such individual as of the close of the taxable year preceding the taxable year described in subparagraph (B) as if such assets were sold for their fair market value as of such time,

(ii) proper adjustment shall be made in the amount of any gain or loss subsequently realized for gain taken into account under clause (i), and

(iii) paragraph (1) shall not apply to any disposition of a widely traded digital asset by such taxpayer (without regard to whether clause (i) applied to such asset).

(B) Electing individual. For purposes of this paragraph, the term electing individual means any specified possession resident individual who elects (in such manner as the Secretary may provide) the application of this paragraph not later than the due date for the return of tax for the taxable year for which such individual first becomes a bona fide resident of the relevant possession.

(3) Specified possession resident individual. For purposes of this subsection, the term specified possession resident individual means, with respect to any taxable year, any citizen of the United States who—

(A) is a bona fide resident of Guam, American Samoa, the Northern Mariana Islands, Puerto Rico, or the Virgin Islands for such taxable year, and

(B) was a resident of the United States at any time during the preceding 10 taxable years.

(4) Relevant possession. For purposes of this subsection, the term relevant possession means, with respect to any specified possession resident individual for any taxable year, the possession referred to in paragraph (3)(A) with respect to which such individual is a bona fide resident for such taxable year.

(5) Traded digital asset property. For purposes of this subsection, the term traded digital asset property means—

(A) any traded digital asset,

(B) any notional principal contract with respect to a traded digital asset,

(C) any evidence of an interest in, or a derivative instrument in, any traded digital asset described in subparagraph (A) or (B), including any option, forward contract, futures contract, short position, and any similar instrument in such traded digital asset,

(D) to the extent provided by the Secretary, any position which—

(i) is not a traded digital asset property described in subparagraph (A), (B), or (C), and

(ii) is a hedge with respect to such a traded digital asset property, or

(E) any interest in any entity if—

(i) the taxpayer contributed any traded digital asset to such entity (directly or indirectly), or

(ii) more than 25 percent of the value of such entity is derived (directly or indirectly) from traded digital assets (other than qualified U.S. dollar stablecoins), determined without regard to any assets acquired by such entity as part of a plan a principal purpose of which is to prevent interests in such entity from being treated as traded digital assets for purposes of this section.

(6) Regulations. The Secretary shall issue regulations or other guidance as may be necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance—

(A) treating gain on dispositions of traded digital asset property by a partnership as described in section 702(a)(7) to the extent such gain is taken into account (directly or indirectly) in the distributive share of any specified possession resident individual,

(B) providing for the appropriate allocation of losses on the disposition of traded digital asset property with respect to specified possession resident individuals, and

(C) providing appropriate transition rules for individuals who first became a bona fide resident of the relevant possession during one of the 9 taxable years preceding the first taxable year of the taxpayer beginning after December 31, 2026, including alternative rules—

(i) for timely providing the information described in subsection (c)(3),

(ii) for timely making the election described in paragraph (2)(B), and

(iii) for applying paragraph (2)(A)—

(I) with respect to the taxable year for which the election is timely made under clause (ii) of this subparagraph, and

(II) only to widely traded digital assets acquired before becoming a bona fide resident of the relevant possession and not disposed of before January 1, 2027.