Digital asset mining and staking

(a) In general Section 451 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: (l) Deferral of income recognition for digital asset activities (1) In general In the case of a taxpayer who engages in validation of digital asset transactions (including digital asset mining and staking), any income relating to such activities— (A) shall not be included in the gross income of the taxpayer until the taxable year of the sale or other disposition of the assets produced or received in connection with the mining or staking activities, and (B) shall be treated as ordinary income. (2) Regulations and guidance The Secretary may prescribe such regulations or other guidance as may be necessary to carry out the purposes of this subsection, including relating to the residence of a recipient of a digital asset fork or digital asset airdrop. (3) Termination This subsection shall not apply to taxable years beginning after December 31, 2035.. (b) Source of income related to consideration received Section 863 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: (f) Source of income related to consideration received (1) In general The source of any income related to validation of digital asset transactions shall be determined by reference to the residence of the recipient at the time of receipt. (2) Regulations and guidance The Secretary may prescribe such regulations or other guidance as may be necessary to carry out the purposes of this subsection. (3) Termination This subsection shall not apply to taxable years beginning after December 31, 2035.. (c) Effective date The amendments made by this section shall apply to taxable years beginning after the date of enactment of this Act.