Tax treatment of digital asset lending agreements and related matters

(a) In general Section 1058 of the Internal Revenue Code of 1986 is amended by— (1) in the heading, by striking securities and inserting specified assets, (2) in subsection (a), by striking securities (as defined in section 1236(c)) and inserting specified assets, and (3) striking securities each place it appears and inserting specified assets.. (b) Fixed term Section 1058(b)(3) of the Internal Revenue Code of 1986 is amended by inserting other than as a result of such agreement being fixed-term, except as otherwise provided by the Secretary after transferred. (c) Basis Section 1058(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following: All appropriate basis adjustments to specified assets subject to an agreement under subsection (b) shall be made, as determined by the Secretary, including upon the return of the lent specified assets to the taxpayer.. (d) Specified assets Section 1058 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsections: (d) Specified assets For purposes of this section, the term specified asset means— (1) a security (as defined in section 1236(c)), or (2) an actively traded digital asset. (e) Income An amount equal to the income which would otherwise accrue to the lender but for a lending transaction under this section shall be included in the gross income of the lender and the character of such income shall remain unchanged. (f) Regulations and guidance The Secretary may prescribe such regulations or other guidance as may be necessary to carry out the purposes of this section, including the application of the provisions of this section to digital asset forks, digital asset airdrops, and fees associated with digital asset lending. (g) Termination This section shall not apply to taxable years beginning after December 31, 2035.. (e) Conforming amendment The table of sections for part IV of subchapter O of chapter 1 of the Internal Revenue Code of 1986 is amended by striking the item relating to section 1058 and inserting the following new item: Sec. 1058. Transfers of specified securities under certain agreements.. (f) Effective date The amendments made by this section shall apply to taxable years beginning after the date of enactment of this Act.