Company: HBAR
Filing Date: 2025-09-09
Form Type: S-1
Source: 0000950170-25-113803
Chunk: 228

Company: Grayscale Hedera Trust ETF
Filing Date: 2025-09-09
Form: S-1
Chunk 228
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 or losses from the sale of HBAR to fund cash redemptions are expected to be treated as incurred only by the shareholder that is being redeemed. However, when the Trust transfers HBAR to the Sponsor as payment of the Sponsor’s Fee (or, to the extent that the Staking Condition is satisfied, the Sponsor’s Staking Portion), or sells HBAR to fund payment of any Additional Trust Expenses, each U.S. Holder will be treated as having sold its pro rata share of that HBAR for their fair market value at that time (which, in the case of HBAR sold by the Trust, generally will be equal to the cash proceeds received by the Trust in respect thereof). As a result, each U.S. Holder will recognize gain or loss in an amount equal to the difference between (i) the fair market value of the U.S. Holder’s pro rata share of the HBAR transferred and (ii) the U.S. Holder’s tax basis for its pro rata share of the HBAR transferred. Any such gain or loss will be short-term capital gain or loss if the U.S. Holder’s holding period for its pro rata share of the HBAR is one year or less and long-term capital gain or loss if the U.S. Holder’s holding

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period for its pro rata share of the HBAR is more than one year. A U.S. Holder’s tax basis in its pro rata share of any HBAR transferred by the Trust generally will be determined by multiplying the tax basis of the U.S. Holder’s pro rata share of all of the HBAR held in the Trust immediately prior to the transfer by a fraction the numerator of which is the amount of HBAR transferred and the denominator of which is the total amount of HBAR held in the Trust immediately prior to the transfer. Immediately after the transfer, the U.S. Holder’s tax basis in its pro rata share of the HBAR remaining in the Trust will be equal to the tax basis of its pro rata share of the HBAR held in the Trust immediately prior to the transfer, less the portion of that tax basis allocable to its pro rata share of the HBAR transferred.

As noted above, the IRS has taken the position in the Ruling & FAQs that, under certain circumstances, a hard fork of a digital asset constitutes a taxable event giving rise to ordinary income, and it is clear from the reasoning of the Ruling & FAQs that the IRS