Company: TOXR
Filing Date: 2025-08-22
Form Type: S-1/A
Source: 0001213900-25-079981
Chunk: 212

Company: 21Shares XRP ETF
Filing Date: 2025-08-22
Form: S-1/A
Chunk 212
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all situations in which airdrops occur, it is clear from the reasoning of current IRS guidance that it generally would treat an airdrop
as a taxable event giving rise to ordinary income. If the Trust were to receive the economic benefit of an airdrop, therefore, it would
have similar tax consequences to those described above for a hard fork. The Trust intends to disclaim any digital assets received in
an airdrop offered to holders of XRP. Therefore, if an airdrop results in holders of XRP receiving a new digital asset of value, the
Trust and the Shareholders will not participate in that value. If the Trust were to claim or receive the economic benefit of an airdrop,
it may give rise to additional tax liabilities for Shareholders.

3.8% Medicare Tax on Net Investment Income

Certain U.S. Shareholders
who are individuals are required to pay a 3.8% Medicare tax on the lesser of the excess of their modified adjusted gross income over a
threshold amount ($250,000 for married persons filing jointly and $200,000 for single taxpayers) or their “net investment income,”
which generally includes capital gains from the disposition of property. This tax is in addition to any capital gains taxes due on such
investment income. A similar tax applies to estates and trusts. U.S. Shareholders should consult their own tax advisers regarding
the effect, if any, this tax may have on their investment in the Shares.

Brokerage Fees and Trust Expenses

Any brokerage or other transaction
fee incurred by a Shareholder in purchasing Shares will be treated as part of the Shareholder’s tax basis in the underlying assets
of the Trust. Similarly, any brokerage fee incurred by a Shareholder in selling Shares will reduce the amount realized by the Shareholder
with respect to the sale.

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Shareholders will be required
to recognize the full amount of gain or loss upon a sale or deemed sale of XRP by the Trust (as discussed above), even though some or
all of the proceeds of such sale are used by the Trustee to pay Trust expenses. Shareholders may deduct their respective pro rata shares
of each expense incurred by the Trust to the same extent as if they directly incurred the expense. However, most trust expenses are expected
to result in miscellaneous itemized deductions, and noncorporate taxpayers generally are not allowed any deduction with respect to miscellaneous
itemized deductions.

Investment by Certain Retirement Plans

Individual