Application of wash sale rules to digital assets

(a) In general Section 1091 of the Internal Revenue Code of 1986 is amended— (1) by striking stock or securities each place it appears and inserting specified assets, and (2) by striking shares of each place it appears. (b) Specified asset Section 1091 of such Code is amended by adding at the end the following new subsection: (g) Specified asset For purposes of this section— (1) In general The term specified asset means— (A) any stock or security, and (B) any traded digital asset (other than a qualified U.S. dollar stablecoin). (2) Treatment of tokenized digital assets as substantially identical to an economically equivalent stock or security A tokenized digital asset (or a bridged digital asset with respect to which the reference digital asset is a traded digital asset) shall be treated as substantially identical to any stock, security, or traded digital asset if such tokenized digital asset (or such bridged digital asset) is economically equivalent to such stock, security, or traded digital asset.. (c) Exception for certain acquisitions of digital assets Section 1091 of such Code, as amended by subsection (b), is further amended by adding at the end the following new subsection: (h) Exception for certain acquisitions of digital assets This section shall not apply with respect to the acquisition of a digital asset if such digital asset is acquired— (1) in connection with the validation of digital asset transactions (including digital asset validation supporting activities), or (2) in a transaction which is part of a regular or periodic series of acquisitions of digital assets which are included by the taxpayer as ordinary income.. (d) Exception for certain mark-to-Market positions Section 1091 of such Code, as amended by subsections (b) and (c), is further amended by adding at the end the following new subsection: (i) Exception for certain mark-to-Market positions This section shall not apply with respect to any specified asset to which subsection (a) of section 475 applies (including by reason of an election under subsection (e), (f), or (g) of such section).. (e) Conforming amendments (1) Sections 312(f)(1) and 1256(f)(5) of the Internal Revenue Code of 1986 are each amended by striking stock or securities and inserting specified assets. (2) Clause (ii) of section 6045(g)(2)(B) of such Code is amended to read as follows: (ii) Exception for wash sales (I) In general Except as otherwise provided by the Secretary, the customer’s adjusted basis shall be determined without regard to section 1091 (relating to loss from wash sales of specified assets) unless the transactions occur in the same account with respect to identical specified assets. (II) Tokenized digital assets For purposes of subclause (I), a tokenized digital asset and a specified asset that is not a tokenized digital asset shall be treated as identical specified assets only if such tokenized digital asset is a direct digital representation of such other specified asset. (3) Section 1091(e) of such Code (as amended by subsection (a)) is amended to read as follows: (e) Certain short sales of specified assets and specified asset futures contracts To sell Rules similar to the rules of subsection (a) shall apply to any loss realized on the closing of a short sale of (or the sale, exchange, or termination of a specified asset futures contract to sell) specified assets if, within a period beginning 30 days before the date of such closing and ending 30 days after such date— (1) substantially identical specified assets were sold, or (2) another short sale of (or specified asset futures contracts to sell) substantially identical specified assets was entered into. For purposes of this subsection, the term specified asset futures contract has the same meaning given the term securities futures contract under section 1234B(c), except that such term shall include a contract for the future delivery of a digital asset.. (4) The heading of section 1091 of such Code is amended by striking stock or securities and inserting specified assets. (5) The headings of subsections (b), (c), and (d) of section 1091 of such Code are each amended by striking Stock each place it appears and inserting Specified Assets. (6) The item relating to section 1091 in the table of sections for part VII of subchapter O of chapter 1 of such Code is amended by striking stock or securities and inserting specified assets. (f) Effective dates (1) In general Except as provided under paragraphs (2) and (3), the amendments made by this section shall apply to sales, dispositions, and terminations after the date of enactment of this Act. (2) Exception for certain acquisitions For purposes of the application of section 1091 of the Internal Revenue Code of 1986 with respect to any digital asset acquired before the date of enactment of this Act, the amendments made by this section shall be deemed to not apply. (3) Transition rule for broker reporting For purposes of the application of section 6045(g) of the Internal Revenue Code of 1986 with respect to any sales, dispositions, and terminations of any digital assets that are not securities before January 1, 2028, the amendments made by this section shall be deemed to not apply.