Safe Harbor for Taxpayers with Forked Assets Act of 2019

To provide temporary safe harbor for the tax treatment of hard forks of convertible virtual currency in the absence of administrative guidance. 1. Short title This Act may be cited as the Safe Harbor for Taxpayers with Forked Assets Act of 2019 2. Safe harbor period for penalties relating to tax treatment of hard-forked virtual currency (a) In general In the case of a taxpayer who during the applicable period receives forked convertible virtual currency— (1) no penalties or additions to tax under part II of subchapter A of chapter 68 (2) no penalties or additions to tax under sections 6651, 6654, 6655, 6656, 6698, and 6699 shall apply for any failure during the applicable period to file a return or report or make a payment of tax to the extent such failure is attributable to filing or payment requirements relating to the receipt of such virtual currency (or any disposition of such currency during such period). (b) Definitions and special rules For purposes of this section— (1) Applicable period The term applicable period (A) The tax treatment of receiving forked convertible virtual currency. (B) Rules for calculating and allocating the basis of forked convertible virtual currency. (C) Rules for calculating the fair market value of forked convertible virtual currency at any given time. (D) Rules for determining the holding period of forked convertible virtual currency. (2) Forked convertible virtual currency (A) In general The term forked convertible virtual currency (B) Convertible virtual currency The term convertible virtual currency (i) functions as a medium of exchange, a unit of account, or a store of value; (ii) does not have legal tender status; and (iii) has an ascertainable equivalent value in legal tender or is used as a substitute for legal tender. (C) Hard fork The term hard fork (3) Constructive receipt Receiving forked virtual currency shall include any right to receive (or other constructive of) such virtual currency.

Summary: Safe Harbor for Taxpayers with Forked Assets Act of 2019 This bill establishes a safe harbor period that prohibits certain penalties and additional taxes from applying to a taxpayer who receives a forked convertible virtual currency until the Internal Revenue Service issues regulations or guidance, or legislation is enacted, that addresses specified issues related to the tax treatment of forked convertible virtual currency. A "forked convertible virtual currency" is any convertible virtual currency to which the taxpayer becomes entitled by reason of a hard fork. A "hard fork" is any material change in the shared digital ledger which is used to verify by consensus transactions in the currency if the change results in the maintenance of independent shared digital ledgers with respect to the currency. The legislation, regulations, or guidance must prescribe the tax treatment of receiving forked convertible virtual currency, rules for calculating and allocating the basis of forked convertible virtual currency, rules for calculating the fair market value of forked convertible virtual currency at any given time, and rules for determining the holding period of forked convertible virtual currency.