Title: Safe Harbor for Taxpayers with Forked Assets Act of 2019
Policy area: Taxation

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

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3650 Introduced in House (IH)]

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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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Safe Harbor for Taxpayers with 
Forked Assets Act of 2019''.

SEC. 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 of the Internal Revenue Code of 1986 
        shall apply with respect to any portion of an underpayment or 
        understatement of tax that is attributable to the taxpayer's 
        attempt during such period to comply with the tax treatment 
        under such Code of the receipt of such virtual currency (or any 
        disposition of such currency during such period); and
            (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'' 
        means any period beginning before the date of the enactment of 
        this Act and ending on the date the Secretary issues 
        regulations or guidance, or legislation is enacted, that 
        prescribes each of the following:
                    (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'' means, with respect to any taxpayer, 
                any convertible virtual currency to which the taxpayer 
                becomes entitled by reason of a hard fork.
                    (B) Convertible virtual currency.--The term 
                ``convertible virtual currency'' means any digital 
                representation of value that--
                            (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'' means, with 
                respect to any convertible virtual currency, any 
                material change in the shared digital ledger which is 
                used to verify by consensus transactions in such 
                currency if such change results in the maintenance of 
                independent shared digital ledgers with respect to such 
                currency.
            (3) Constructive receipt.--Receiving forked virtual 
        currency shall include any right to receive (or other 
        constructive of) such virtual currency.
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