Digital Asset Tax Certainty Act

(20) Contributions of conversion eligible digital assets

(A) In general. No deduction shall be allowed under subsection (a) for any contribution of a conversion eligible digital asset (as defined in section 1046(d)).

(B) Cross reference. For nonrecognition of gain on certain sales and exchanges of conversion eligible digital assets the proceeds of which are used to make charitable contributions, see section 1046.

1046. Certain dispositions of conversion eligible digital assets used to fund charitable contributions

(a) In general. No gain shall be recognized on the sale of conversion eligible digital assets (or the exchange of conversion eligible digital assets for qualified U.S. dollar stablecoins) if all of the gross receipts of such sale (or all of the qualified U.S. dollar stablecoins received in such exchange) are contributed by the taxpayer as a charitable contribution (as defined in section 170(c)) not later than the earlier of—

(1) the date that is 7 days after the date of such sale or exchange, or

(2) the close of the taxpayer’s taxable year which includes the date of such sale or exchange.

(b) Contributions of less than entire proceeds. Except as otherwise provided by the Secretary, if less than all of the gross receipts of a sale described in subsection (a) (or less than all the qualified U.S. dollar stablecoins received in an exchange so described) are contributed as described in subsection (a), so much of the gain on such sale (or exchange) as bears the same ratio to such entire gain as the amount so contributed bears to all of such gross receipts (or all such U.S. dollar stablecoins) shall not be recognized.

(c) Application of certain limitations on deduction for charitable contributions. In the case of any charitable contribution described in subsection (a) or (b)—

(1) In general. For purposes of subsections (b)(1)(G), (b)(1)(I), and (p) of section 170, such contribution shall not be treated as a contribution of cash.

(2) Capital gain property. For purposes of subsections (b)(1)(C), (b)(1)(D), (b)(1)(I), and (e) of section 170, such contribution shall be treated as a contribution made directly by the taxpayer on the date of the sale or exchange referred to in subsection (a) or (b) (as the case may be) of—

(A) in the case of a sale or exchange referred to in subsection (a), the conversion eligible digital assets so sold or exchanged, and

(B) in the case of a sale or exchange referred to in subsection (b), the portion of the conversion eligible digital assets so sold or exchanged that bears the same ratio to such assets as the gain not recognized under subsection (b) bears to the entire gain referred to in such subsection.

(d) Conversion eligible digital assets. For purposes of this section, the term conversion eligible digital asset means any digital asset other than—

(1) a qualified U.S. dollar stablecoin,

(2) a widely traded digital asset to which section 170(f)(11)(A)(ii)(I) applies, and

(3) a tokenized digital asset.

(e) Related party transactions. This section shall not apply to any sale or exchange between persons described in section 267(b) (applied without regard to section 267(c)(3)) or section 707(b)(1).

Sec. 1046. Certain dispositions of conversion eligible digital assets used to fund charitable contributions.