H.R. 9176
PAR Act
Sponsor: David Kustoff · 0 cosponsors
Official summary
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Text of the bill
(a) In general. Section 475 is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection:
(g) Election of mark to market for dealers in covered digital assets
(1) In general. In the case of a dealer in covered digital assets who elects the application of this subsection, this section shall apply to covered digital assets held by such dealer in the same manner as this section applies to securities held by a dealer in securities.
(2) Covered digital asset. For purposes of this section, the term covered digital asset means—
(A) any widely traded digital asset,
(B) any notional principal contract with respect to any widely traded digital asset,
(C) any evidence of an interest in, or a derivative instrument in, any widely traded digital asset described in subparagraph (A) or (B), including any option, forward contract, futures contract, short position, and any similar instrument in such widely traded digital asset, and
(D) any position which—
(i) is not a covered digital asset described in subparagraph (A), (B), or (C),
(ii) is a hedge with respect to such a covered digital asset, and
(iii) is clearly identified in the taxpayer's records as being described in this subparagraph before the close of the day on which it was acquired or entered into (or such other time as the Secretary may by regulations prescribe).
(3) Election. An election under this subsection may be made without the consent of the Secretary. Such an election, once made, shall apply to the taxable year for which made and all subsequent taxable years unless revoked with the consent of the Secretary.
(b) Application of mark to market rules to covered digital assets. Section 475(f) is amended—
(1) in the heading, by striking or commodities and inserting , commodities, or covered digital assets,
(2) by redesignating paragraph (3) as paragraph (4) and by inserting after paragraph (2) the following new paragraph:
(3) Traders in covered digital assets. In the case of a person who is engaged in a trade or business as a trader in covered digital assets and who elects to have this paragraph apply to such trade or business, paragraph (1) shall apply to covered digital assets held by such trader in connection with such trade or business in the same manner as paragraph (1) applies to securities held by a trader in securities.
, and
(3) in paragraph (4), as so redesignated, by striking paragraphs (1) and (2) and inserting paragraphs (1), (2), and (3).
(c) Treatment of covered digital assets which are securities or commodities. Section 475(d) is amended by adding at the end the following new paragraph:
(4) Treatment of covered digital assets which are securities or commodities. In the case of any covered digital asset which is a security or commodity (determined without regard to this paragraph), such covered digital asset shall not be treated as a security or commodity for purposes of subsections (b) through (g).
(d) Treatment of adjustments attributable to election of mark to market. Section 475(d), as amended by subsection (c), is amended by adding at the end the following new paragraph:
(5) Adjustments attributable to mark to market treatment of securities, commodities, or covered digital assets. In the case of an adjustment described in section 481(a) by reason of the application of subsection (a), (e), (f), or (g) of this section, the character of any income or loss with respect to any property as a result of such adjustment shall be the same as the character of the gain or loss which would have resulted from the sale of such property as of the close of the taxable year preceding the year of the change (within the meaning of section 481) under the method of accounting used for such preceding taxable year.
(e) Conforming amendments
(1) Section 475(e)(2) is amended by striking this subsection and subsection (f) and inserting this section.
(2) The heading of section 475 is amended by striking dealers in securities and inserting certain dealers and traders.
(3) The table of sections for subpart D of part II of subchapter E of chapter 1 is amended by striking the item relating to section 475 and inserting the following:
Sec. 475. Mark to market accounting method for certain dealers and traders.
(f) Effective date. The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
(g) 4-year spread of adjustments. In the case of a taxpayer that elects under subsection (f)(3) or (g) of section 475 of the Internal Revenue Code of 1986 (as added by this section) to change such taxpayer’s method of accounting for the taxpayer’s first taxable year beginning after the date of the enactment of this Act—
(1) any identification required with respect to such subsection with respect to covered digital assets held on the first day of such taxable year shall be treated as timely made if made on or before the 30th day of such taxable year, and
(2) the net amount of the adjustments required to be taken into account by the taxpayer under section 481 of such Code by reason of such subsection shall be taken into account ratably over the 4-taxable year period beginning with such taxable year.