S4808-118

1. Short title This Act may be cited as the Virtual Currency Tax Fairness Act.

2. Virtual currency Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 139I the following new section: Subject to subsection (b), gross income shall not include gain or loss from the sale or exchange of virtual currency, unless the sale or exchange is for— cash or cash equivalents, any property used by the taxpayer in the active conduct of a trade or business, or any property held by the taxpayer for the production of income (as described in section 212(2)). Subsection (a) shall not apply in the case of any sale or exchange for which— the total value of such sale or exchange exceeds $200, or the total gain or loss which would otherwise be recognized with respect to such sale or exchange exceeds $200. For purposes of this subsection, all sales or exchanges which are part of the same transaction (or a series of related transactions) shall be treated as one sale or exchange. For purposes of this section, the term virtual currency means a digital representation of value which— functions as a unit of account, a store of value, or a medium of exchange, and is not a representation of the United States dollar or any foreign currency. In the case of any taxable year beginning in a calendar year after 2025, each dollar amount in subsection (b)(1) shall be increased by an amount equal to— such dollar amount, multiplied by the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2024 for calendar year 2016 in subparagraph (A)(ii) thereof. The table of sections for part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 139I the following new item: The amendments made by this section shall apply with respect to transactions entered into after December 31, 2024. 139J.De minimis gain or loss from sale or exchange of virtual currency(a)In generalSubject to subsection (b), gross income shall not include gain or loss from the sale or exchange of virtual currency, unless the sale or exchange is for—(1)cash or cash equivalents,(2)any property used by the taxpayer in the active conduct of a trade or business, or(3)any property held by the taxpayer for the production of income (as described in section 212(2)).(b)Limitation(1)In generalSubsection (a) shall not apply in the case of any sale or exchange for which—(A)the total value of such sale or exchange exceeds $200, or(B)the total gain or loss which would otherwise be recognized with respect to such sale or exchange exceeds $200.(2)Aggregation ruleFor purposes of this subsection, all sales or exchanges which are part of the same transaction (or a series of related transactions) shall be treated as one sale or exchange.(c)Virtual currencyFor purposes of this section, the term virtual currency means a digital representation of value which—(1)functions as a unit of account, a store of value, or a medium of exchange, and(2)is not a representation of the United States dollar or any foreign currency.(d)Inflation adjustmentIn the case of any taxable year beginning in a calendar year after 2025, each dollar amount in subsection (b)(1) shall be increased by an amount equal to—(1)such dollar amount, multiplied by(2)the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2024 for calendar year 2016 in subparagraph (A)(ii) thereof.Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $10.. Sec. 139J. De minimis gain or loss from sale or exchange of virtual currency..

139J. De minimis gain or loss from sale or exchange of virtual currency Subject to subsection (b), gross income shall not include gain or loss from the sale or exchange of virtual currency, unless the sale or exchange is for— cash or cash equivalents, any property used by the taxpayer in the active conduct of a trade or business, or any property held by the taxpayer for the production of income (as described in section 212(2)). Subsection (a) shall not apply in the case of any sale or exchange for which— the total value of such sale or exchange exceeds $200, or the total gain or loss which would otherwise be recognized with respect to such sale or exchange exceeds $200. For purposes of this subsection, all sales or exchanges which are part of the same transaction (or a series of related transactions) shall be treated as one sale or exchange. For purposes of this section, the term virtual currency means a digital representation of value which— functions as a unit of account, a store of value, or a medium of exchange, and is not a representation of the United States dollar or any foreign currency. In the case of any taxable year beginning in a calendar year after 2025, each dollar amount in subsection (b)(1) shall be increased by an amount equal to— such dollar amount, multiplied by the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2024 for calendar year 2016 in subparagraph (A)(ii) thereof.