Treatment of de minimis digital asset network fees

(a) In general Part III of subchapter O of chapter 1 of the Internal Revenue Code of 1986, as amended by section 2, is amended by inserting after section 1043 the following new section: 1044. De minimis network fee exception (a) In general No gain or loss shall be recognized with respect to any qualified transaction cost disposition. (b) Qualified transaction cost disposition For purposes of this section, the term qualified transaction cost disposition means the disposition of a digital asset by a taxpayer— (1) in satisfaction of a digital asset transaction cost paid or incurred by the taxpayer, including a disposition resulting from the withholding of a digital asset from an amount transferred or received by the taxpayer, and (2) with respect to which the aggregate fair market value of all digital assets disposed of by the taxpayer in satisfaction of digital asset transaction costs relating to such transaction does not exceed $10. (c) Digital asset transaction cost (1) In general For purposes of this section, the term digital asset transaction cost means any amount paid in cash or property (including a digital asset) to effect the sale, disposition, or acquisition of a digital asset, including transaction fees, transfer taxes, commissions, and network fees paid or incurred with respect to any digital asset transaction initiated by the taxpayer and recorded on a cryptographically secured distributed ledger. (2) Network fee For purposes of paragraph (1), the term network fee means any amount paid or incurred to cause, facilitate, expedite, or prioritize the execution, validation, settlement, or recording of a digital asset transaction on a cryptographically secured distributed ledger or similar technology, including any base fee, gas fee, priority fee, tip, or similar amount, without regard to— (A) whether payment of such amount is mandatory or elective, or (B) whether such amount is paid or transferred to a person, paid or transferred to a protocol, burned, destroyed, or otherwise removed from circulation. (d) Aggregation rule (1) In general For purposes of subsection (b)(2)— (A) all digital assets disposed of in satisfaction of digital asset transaction costs relating to the same economic transaction shall be aggregated, including a series of related economic transactions structured for the purpose of avoiding the limitation under such subsection, and (B) any digital asset transaction cost paid or incurred to effect the disposition of a digital asset used to pay another digital asset transaction cost shall be treated as relating to the transaction to which such other cost relates. (2) Limitation For purposes of paragraph (1), transactions shall not be aggregated solely because such transactions are executed through the same account, wallet, protocol, program, smart contract, or automated strategy. (e) Determination of fair market value For purposes of subsection (b)(2), the fair market value of a digital asset shall be determined as of the date and time of the disposition of such digital asset. (f) Coordination with treatment of transaction costs Nothing in this section shall be deemed to modify the capitalization, allocation, or other treatment of a digital asset transaction cost. (g) Treatment of unrecognized gain The amount of any digital asset transaction cost which would otherwise be 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 digital asset transaction cost. (h) Exclusions (1) Trade or business Subsection (a) shall not apply to the disposition of a digital asset by— (A) a trader, broker, or dealer in digital assets, (B) a person in the trade or business of batching or facilitating the validation of digital asset transactions on behalf of others, (C) 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 subparagraph (A) or (B), or (D) any person that initiated more than 5,000 digital asset transactions during the preceding taxable year. (2) Certain accounting methods Subsection (a) shall not apply to any digital asset— (A) to which section 475 or 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. (i) 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 transaction structuring for the purpose of qualifying for the exclusion provided in subsection (a).. (b) Exemption from information reporting Section 6045(i) of such Code, as added by section 2 of this Act, is amended— (1) by redesignating paragraph (2) as paragraph (3), and (2) by inserting after paragraph (1) the following new paragraph: (2) De minimis network fee exception (A) In general Except as otherwise provided by the Secretary or under subparagraph (B), in the case of the disposition of a digital asset to which section 1044(a) applies, subsection (a) shall not apply with respect to such disposition. (B) Aggregate information With respect to any dispositions described in subparagraph (A), a broker shall include in the return under subsection (a) such aggregate information relating to such dispositions as the Secretary determines necessary or appropriate, including for purposes of verifying the taxpayer's basis in digital assets held by the taxpayer.. (c) Exception from wash sale rules Section 1091 of the Internal Revenue Code of 1986, as amended by this Act, is further amended by adding at the end the following new subsection: (j) Exception for qualified transaction cost dispositions This section shall not apply with respect to any qualified transaction cost disposition (as defined in section 1044(b)).. (d) Clerical amendment The table of sections for part III of subchapter O of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 1043 the following new item: Sec. 1044. De minimis network fee exception.. (e) Effective date The amendments made by this section shall apply to the disposition of assets after December 31, 2026.