Digital Asset Tax Certainty Act

1044. De minimis digital asset fee exception

(a) In general. No gain or loss shall be recognized on the disposition of a digital asset in payment of—

(1) a de minimis network fee, or

(2) a de minimis transaction fee.

(b) De minimis network fee. For purposes of this section—

(1) In general. The term de minimis network fee means an amount paid or incurred in a digital asset transaction to validate another digital asset transaction if the aggregate amount so paid or incurred with respect to the validation of such other digital asset transaction does not exceed $10.

(2) Network fee. The term network fee means any amount which would be a de minimis network fee if paragraph (1) were applied without regard to the dollar limitation specified therein.

(c) De minimis transaction fee. For purposes of this section—

(1) In general. The term de minimis transaction fee means an amount (other than a network fee) paid or incurred as a brokerage fee, trading fee, liquidity fee, or similar fee, to facilitate a transfer of a digital asset (hereafter referred to as the underlying digital asset transfer) if—

(A) the digital asset disposed of in payment of such fee is a digital asset of the same type as the type of digital asset disposed of or acquired by the taxpayer in the underlying digital asset transfer, and

(B) the aggregate of such amounts with respect to such underlying digital asset transfer does not exceed $10.

(2) Transaction fee. The term transaction fee means any amount which would be a de minimis transaction fee if paragraph (1) were applied without regard to the dollar limitation specified therein.

(3) Type of digital asset. A type of digital asset shall be determined under rules similar to the rules of section 1051(b)(2).

(d) Disposition of digital asset used to pay network or transaction fee. For purposes of this title, any payment of a network fee or transaction fee using a digital asset shall be treated as a disposition of such asset in exchange for consideration equal to the fair market value of such asset (and, in the case of a network fee, shall not fail to be treated as such a payment merely because such asset is not acquired by another person).

(e) Treatment of unrecognized gain or loss. The amount of any network fee or transaction fee that is taken into account in determining the amount of gain or loss on the disposition of any asset, in determining the amount of any deduction, or in determining the basis of any asset acquired, shall be reduced by the amount of any gain, or increased by the amount of any loss, not recognized by reason of subsection (a) with respect to the disposition of the digital asset used to pay such network fee or transaction fee.

(f) Exclusions

(1) Trade or business

(A) In general. Subsection (a) shall not apply to the disposition of a digital asset by—

(i) a trader, broker, or dealer in digital assets,

(ii) a person in the trade or business of batching or facilitating the validation of digital asset transactions on behalf of others,

(iii) to the extent provided by the Secretary, any person in a trade or business which is substantially similar to a trade or business described in clause (i) or (ii), or

(iv) any person that engaged in more than 5,000 transfers of digital assets during the preceding taxable year (determined without regard to any transfer made in payment of a de minimis network fee or a de minimis transaction fee).

(B) Administrative convenience exception

(i) In general. Subparagraph (A) shall not apply to any taxpayer that demonstrates to the Secretary that such taxpayer is of a type with respect to which not applying subparagraph (A) will not result in a substantial Federal revenue loss.

(ii) Guidance. The Secretary shall issue regulations or other guidance that—

(I) identifies different types of taxpayers with respect to which not applying subparagraph (A) will not result in substantial Federal revenue loss, and

(II) specifies with respect to each such type of taxpayer the information that such taxpayer must provide to make the demonstration described in clause (i).

(iii) Certain factors required to be taken into account. The regulations or other guidance issued by the Secretary under clause (ii) shall—

(I) for purposes of determining the classification of types of taxpayers, and whether any Federal revenue loss from not applying subparagraph (A) with respect to any such type of taxpayer would be substantial, take into account the method or methods used by such type of taxpayer for selecting the digital assets used to pay network and transaction fees and the average holding period of such digital assets by such type of taxpayer, and

(II) determine Federal revenue loss by reducing such loss by a reasonable approximation of the additional administrative costs of the Department of the Treasury, and the additional compliance costs of such type of taxpayer (and any person who would be required to make additional information return reporting with respect to such type of taxpayer), which would be imposed if subparagraph (A) were to apply to such type of taxpayer.

(2) Certain accounting methods. Subsection (a) shall not apply to any digital asset—

(A) to which subsection (a), (e), (f), or (g) of section 475, section 1051(a), or section 1256(a) applies, or

(B) except as otherwise provided by the Secretary, to which a mark-to-market method applies under any other provision of this subtitle.

(g) Regulations. The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including regulations or guidance to prevent the abuse of this section through—

(1) transaction structuring for the purpose of qualifying for the exclusion provided in subsection (a), and

(2) the receipt of any value in exchange for a network fee or transaction fee other than—

(A) in the case of a network fee, the validation of a digital asset transaction, or

(B) in the case of a transaction fee, the brokerage, trading, liquidity, or similar digital asset transfer service.

Sec. 1044. De minimis digital asset fee exception.