I 

116TH CONGRESS 

1ST SESSION H. R. 3650 

To provide temporary safe harbor for the tax treatment of hard forks of 

convertible virtual currency in the absence of administrative guidance. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 9, 2019 

Mr. EMMER introduced the following bill; which was referred to the Committee 

on Ways and Means 

A BILL 

To provide temporary safe harbor for the tax treatment 

of hard forks of convertible virtual currency in the absence of administrative guidance. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Safe Harbor for Tax5 payers with Forked Assets Act of 2019’’. 


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1 SEC. 2. SAFE HARBOR PERIOD FOR PENALTIES RELATING 

2 TO TAX TREATMENT OF HARD-FORKED VIR3 TUAL CURRENCY. 

4 (a) IN GENERAL.—In the case of a taxpayer who dur5 ing the applicable period receives forked convertible virtual 

6 currency— 

7 (1) no penalties or additions to tax under part 

8 II of subchapter A of chapter 68 of the Internal 

9 Revenue Code of 1986 shall apply with respect to 

10 any portion of an underpayment or understatement 

11 of tax that is attributable to the taxpayer’s attempt 

12 during such period to comply with the tax treatment 

13 under such Code of the receipt of such virtual cur14 rency (or any disposition of such currency during 

15 such period); and 

16 (2) no penalties or additions to tax under sec17 tions 6651, 6654, 6655, 6656, 6698, and 6699 shall 

18 apply for any failure during the applicable period to 

19 file a return or report or make a payment of tax to 

20 the extent such failure is attributable to filing or 

21 payment requirements relating to the receipt of such 

22 virtual currency (or any disposition of such currency 

23 during such period). 

24 (b) DEFINITIONS AND SPECIAL RULES.—For pur25 poses of this section— 


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1 (1) APPLICABLE PERIOD.—The term ‘‘applica2 ble period’’ means any period beginning before the 

3 date of the enactment of this Act and ending on the 

4 date the Secretary issues regulations or guidance, or 

5 legislation is enacted, that prescribes each of the fol6 lowing: 

7 (A) The tax treatment of receiving forked 

8 convertible virtual currency. 

9 (B) Rules for calculating and allocating 

10 the basis of forked convertible virtual currency. 

11 (C) Rules for calculating the fair market 

12 value of forked convertible virtual currency at 

13 any given time. 

14 (D) Rules for determining the holding pe15 riod of forked convertible virtual currency. 

16 (2) FORKED CONVERTIBLE VIRTUAL CUR17 RENCY.— 

18 (A) IN GENERAL.—The term ‘‘forked con19 vertible virtual currency’’ means, with respect 

20 to any taxpayer, any convertible virtual cur21 rency to which the taxpayer becomes entitled by 

22 reason of a hard fork. 

23 (B) CONVERTIBLE VIRTUAL CURRENCY.— 

24 The term ‘‘convertible virtual currency’’ means 

25 any digital representation of value that— 


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1 (i) functions as a medium of ex2 change, a unit of account, or a store of 

3 value; 

4 (ii) does not have legal tender status; 

5 and 

6 (iii) has an ascertainable equivalent 

7 value in legal tender or is used as a sub8 stitute for legal tender. 

9 (C) HARD FORK.—The term ‘‘hard fork’’ 

10 means, with respect to any convertible virtual 

11 currency, any material change in the shared 

12 digital ledger which is used to verify by con13 sensus transactions in such currency if such 

14 change results in the maintenance of inde15 pendent shared digital ledgers with respect to 

16 such currency. 

17 (3) CONSTRUCTIVE RECEIPT.—Receiving forked 

18 virtual currency shall include any right to receive (or 

19 other constructive of) such virtual currency. 

Æ 


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