Sec. 805. Loss from wash sales of crypto assets
1,231 words·~6 min read·
/bill/118/s/2281/is/section-805·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
Section 1091 of the Internal Revenue Code of 1986 is amended to read as follows: No deduction shall be allowed with respect to any loss claimed to have been sustained from any sale or other disposition (including any termination) of specified assets where it appears that, within a period beginning 30 days before the date of such sale or other disposition and ending 30 days after such date, the taxpayer has— acquired (by purchase, by an exchange on which the entire amount of gain or loss was recognized by law, or by entering into) substantially identical specified assets, or entered into a contract or option to acquire, or long notional principal contract in respect of, substantially identical specified assets.
Paragraph
(1)shall not apply if— the taxpayer is a dealer in specified assets, the loss is sustained in a transaction made in the ordinary course of its business as a dealer, and the acquisition (or the entering into of the contract or option to acquire or long notional principal contract) which (without regard to this paragraph) would have resulted in the non-deductibility of the loss was similarly made in the ordinary course of such business. If the amount of specified assets acquired (or covered by the contract or option to acquire or long notional principal contract) is less than the amount of specified assets sold or otherwise disposed of, then the particular specified assets the loss from the sale or other disposition of which is not deductible shall be determined under regulations prescribed by the Secretary. If the amount of specified assets acquired (or covered by the contract or option to acquire or long notional principal contract) is not less than the amount of specified assets sold or otherwise disposed of, then the particular specified assets the acquisition of which (or the entering into of the contract or option to acquire or long notional principal contract of which) resulted in the non-deductibility of the loss shall be determined under regulations prescribed by the Secretary. The basis of the specified asset acquired (or the contract, option, or long notional principal contract entered into) shall be increased by the amount of the deduction disallowed under subsection
(a)(reduced by any amount of such deduction taken into account under this subsection to increase the basis of any specified asset previously acquired or any contract, option, or long notional principal contract previously entered into). In any case in which— the taxpayer enters into a contract or option to acquire, or long notional principal contract in respect of, substantially identical specified assets (within the period specified in subsection (a)), and the taxpayer also acquires (within the period specified in subsection (a)) substantially identical specified assets and such acquisition would, but for the entering into of the contract, option, or long notional principal contract described in clause (i), have triggered a disallowance under subsection (a), then, subject to such exceptions as the Secretary may prescribe, paragraph
(1)shall apply to the substantially identical specified assets described in clause
(ii)and not to the contract, option, or long term principal contract described in clause (i). Subject to such exceptions as the Secretary may prescribe, if the acquisition of any substantially identical specified asset is pursuant to a contract or option described in subparagraph (A)(i), then, notwithstanding whether such asset was acquired within the period specified in subsection (a), paragraph
(1)shall apply to the substantially identical specified asset acquired pursuant to the contract or option and not to the contract or option. 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, disposition, or termination of a contract or option to sell or a short notional principal contract in respect of) specified assets if, within a period beginning 30 days before the date of such closing and ending 30 days after such date, another such short sale of (or contract or option to sell or short notional principal contract in respect of) substantially identical specified assets was entered into by the taxpayer. This section shall not fail to apply to a contract or option to acquire or sell specified assets solely by reason of the fact that the contract or option settles in (or could be settled in) cash or property other than such specified assets. For purposes of this section, the term specified asset means any of the following: Any security (as defined in section 475(c)(2)). Except as otherwise provided by the Secretary— any crypto asset (as defined in section 9801 of title 31, United States Code) which is actively traded (within the meaning of section 1092(d)(1)), any notional principal contract with respect to any crypto asset described in subparagraph (A), and any evidence of an interest in, or a derivative instrument in, any crypto asset described in subparagraph
(A)or (B), including any option, forward contract, futures contract, short position, and any similar instrument in such a crypto asset. Such term shall, except as provided in regulations, include contracts or options to acquire or sell, or notional principal contracts in respect of, any specified assets. Except as provided in regulations prescribed by the Secretary, in the case of a specified asset to which this subsection applies, subsection
(a)shall not apply to the extent that both the sale or other disposition of such asset and the acquisition of (or the entering into of the contract or option to acquire or long notional principal contract in respect of) are— directly related to the business needs of a trade or business of the taxpayer (other than the trade or business of trading specified assets described in subsection (g)(2)), or part of a hedging transaction (as defined in section 1221(b)(2) or 988(d)(2)). To the extent provided by the Secretary, this subsection applies to assets described in subsection (g)(2). The Secretary shall prescribe such regulations or other guidance as may be necessary to carry out the purposes of this section, including regulations or other guidance for determining whether specified assets are substantially identical. . Section 1223(3) of the Internal Revenue Code of 1986 is amended— by striking stock or securities the first place it appears and inserting specified assets (as defined in section 1091(g)) , by striking stock or securities the second and third place it appears and inserting specified assets (as so defined) , and by striking (or the contract or option to acquire which) and inserting (or the entering into of a contract or option to acquire or long notional principal contract in respect of which) . Section 6045(g)(2)(B) of such Code is amended— in clause (i)(I)— by striking security (other than stock and inserting covered security (other than stock , and by striking stock sold or transferred and inserting covered security sold or transferred , and in clause (ii)— by striking stock or securities and inserting specified assets , and by striking identical securities and inserting identical specified assets (as defined in section 1091(g)) . The table of sections for part VII of subchapter O of chapter 1 of such Code is amended by striking the item relating to section 1091 and inserting the following new item: Sec. 1091. Loss from wash sales of specified assets. . The amendments made by this section shall apply to sales, dispositions, and terminations in taxable years beginning after the date of enactment of this Act.