H.R. 9175

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 9175 Introduced in House (IH)]

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119th CONGRESS
2d Session
H. R. 9175

To amend the Internal Revenue Code of 1986 to provide rules for 
taxation of income relating to the mining and staking of digital 
assets, and for other purposes.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

June 8, 2026

Mr. Carey introduced the following bill; which was referred to the 
Committee on Ways and Means

_______________________________________________________________________

A BILL

To amend the Internal Revenue Code of 1986 to provide rules for 
taxation of income relating to the mining and staking of digital 
assets, and for other purposes.

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

SECTION 1. SHORT TITLE; ETC.

(a) Short Title.--This Act may be cited as the ``Tax Clarity for 
Mining and Staking Act''.
(b) References.--Except as otherwise expressly provided, whenever 
in this Act an amendment or repeal is expressed in terms of an 
amendment to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provision of the 
Internal Revenue Code of 1986.
(c) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; etc.
Sec. 2. Treatment of certain digital assets received in connection with 
the validation of digital asset 
transactions.
Sec. 3. Investment trusts engaged in digital asset staking.
Sec. 4. Definitions.

SEC. 2. TREATMENT OF CERTAIN DIGITAL ASSETS RECEIVED IN CONNECTION WITH 
THE VALIDATION OF DIGITAL ASSET TRANSACTIONS.

(a) In General.--Chapter 1 is amended by inserting after subchapter 
V the following new subchapter:

``Subchapter W--Newly Minted Digital Assets Received in Connection With 
the Validation of Digital Asset Transactions

``Sec. 1400W-1. Current inclusions in gross income; costs not 
capitalized.
``Sec. 1400W-2. Election to defer inclusion of income and capitalize 
costs of qualified newly minted digital 
assets.
``Sec. 1400W-3. Definitions; regulations.

``SEC. 1400W-1. CURRENT INCLUSIONS IN GROSS INCOME; COSTS NOT 
CAPITALIZED.

``(a) In General.--In the case of the acquisition of any newly 
minted digital asset--
``(1) the fair market value of such asset shall be included 
in the taxpayer's gross income as ordinary income as of the 
time of such acquisition, and
``(2) the amount included in gross income under paragraph 
(1) shall be properly taken into account in determining the 
taxpayer's basis in such asset.
``(b) Acquisition Costs Not Capitalized.--
``(1) In general.--Notwithstanding any provision of this 
title (other than paragraph (2) and section 1400W-2), specified 
acquisition costs shall be treated as an expense which is not 
chargeable to capital account.
``(2) Authority for exception to conform with taxpayer's 
applicable financial statement.--The Secretary may issue 
regulations or other guidance which allow specified acquisition 
costs to be chargeable to capital account if such treatment 
would be consistent with the treatment of such costs for 
purposes of the applicable financial statement (as defined in 
section 451(b)(3)) of the taxpayer.

``SEC. 1400W-2. ELECTION TO DEFER INCLUSION OF INCOME AND CAPITALIZE 
COSTS OF QUALIFIED NEWLY MINTED DIGITAL ASSETS.

``(a) In General.--Notwithstanding section 1400W-1, in the case of 
any taxpayer for any taxable year to which an election under subsection 
(e) applies--
``(1) all qualified newly minted digital assets acquired by 
such taxpayer during such taxable year shall not be included in 
the taxpayer's gross income by reason of such acquisition, and
``(2) specified acquisition costs paid or incurred during 
such taxable year shall be chargeable to capital account with 
respect to qualified newly minted digital assets in accordance 
with the rules provided in subsection (c) (and no deduction 
shall otherwise be allowed under this subtitle with respect to 
such costs).
``(b) Recognition and Character of Gain or Loss on Disposition.--
``(1) In general.--In the case of a disposition of any 
qualified newly minted digital asset--
``(A) any gain on such disposition shall be--
``(i) recognized notwithstanding any other 
provision of this subtitle, and
``(ii) treated as gain from the disposition 
of property which is not a capital asset, and
``(B) any loss on such disposition shall be treated 
as loss from the disposition of property which is not a 
capital asset to the extent that such loss exceeds the 
portion of the basis of such property that is not 
attributable to specified acquisition costs.
``(2) Exception for certain nonrecognition transactions.--
Paragraph (1) shall not apply to--
``(A) any disposition to which section 1058 
applies, and
``(B) to the extent provided by the Secretary, any 
disposition which is a nonrecognition transaction 
described in subchapter C or K.
``(3) Special rule for determining carryover basis.--In the 
case of any disposition of a qualified newly minted digital 
asset with respect to which gain is recognized by the 
transferor under paragraph (1), if the basis of such asset in 
the hands of the transferee is determined by reference to the 
basis of such asset in the hands of the transferor, proper 
adjustments shall be made in the determination of basis to take 
into account such gain.
``(c) Capitalization of Specified Acquisition Costs.--
``(1) In general.--For purposes of this section, the 
Secretary shall provide rules for the proper allocation of 
specified acquisition costs among qualified newly minted 
digital assets.
``(2) Cessation of activities.--The rules provided under 
paragraph (1) shall include rules that provide for the proper 
deduction of specified acquisition costs which are not 
otherwise allocated to qualified newly minted digital assets 
pursuant to such rules because the taxpayer indefinitely ceases 
all activities related to the validation of digital assets 
(including staking and mining).
``(d) Qualified Newly Minted Digital Asset.--For purposes of this 
section--
``(1) In general.--The term `qualified newly minted digital 
assets' means, with respect to any taxpayer for any taxable 
year, any newly minted digital asset (determined without regard 
to subparagraph (B) of section 1400W-3(a)(1)) acquired by such 
taxpayer during such taxable year if--
``(A) the election under subsection (e) applies to 
such taxpayer for such taxable year, and
``(B) the taxpayer--
``(i) in the case of any such newly minted 
digital asset issued in connection with a 
validation of digital asset transactions which 
was not supported by the staking of digital 
assets--
``(I) is the person who validated 
such digital asset transactions, and
``(II) is the first owner of such 
newly minted digital asset, or
``(ii) in the case of any such newly minted 
digital asset issued in connection with a 
validation of digital asset transactions which 
was supported by the staking of digital 
assets--
``(I) is the person who holds the 
digital assets that were so staked, and
``(II) either is the first owner of 
such newly minted digital asset or 
acquired such newly minted digital 
asset promptly after such newly minted 
digital asset was issued.
``(2) Lessee treated as holder.--For purposes of paragraph 
(1)(B)(ii)(I), if a digital asset is lent to any person, such 
person (and not the person lending such asset) shall be treated 
as holding such asset.
``(e) Election.--
``(1) In general.--An election under this section shall 
apply for the taxable year for which it is made and for each 
taxable year thereafter unless revoked with the consent of the 
Secretary. Such election shall be made at such time and in such 
manner as the Secretary may provide.
``(2) Application to partnerships and s corporations.--In 
the case of any partnership or S corporation, the election 
under this section shall be made at the partnership or S 
corporation level.
``(3) Treatment as change in method of accounting.--A 
taxpayer making an election under this section shall be treated 
for purposes of section 481 as making a change in method of 
accounting which is initiated by the taxpayer and made with the 
consent of the Secretary. Such change shall be applied only on 
a cut-off basis, and no adjustments shall be made under section 
481(a).
``(f) Controlled Foreign Corporations and Passive Foreign 
Investment Corporations Ineligible.--This section shall not apply to--
``(1) any controlled foreign corporation or any passive 
foreign investment company (as defined in section 1297),
``(2) except as otherwise provided by the Secretary--
``(A) any foreign trust, and
``(B) any partnership in which one or more 
controlled foreign corporations, passive foreign 
investment companies (as so defined), or foreign trusts 
are partners in such partnership, and
``(3) to the extent provided by the Secretary, any 
partnership or trust if one or more entities described in 
paragraph (2)(B) are indirectly partners in such partnership or 
direct or indirect beneficiaries of such trust.
``(g) Treatment of Certain Grantor Trusts.--The regulations or 
other guidance issued by the Secretary under section 1400W-3(c) may 
include regulations or other guidance providing rules for the 
application of this section with respect to digital assets owned 
through a widely traded fixed investment trust, including regulations 
or other guidance--
``(1) modifying information reporting requirements or 
requiring additional information reporting with respect to 
newly minted digital assets acquired through such a trust,
``(2) providing reasonable methods for brokers (or any 
other person required to report information with respect to 
such a trust) to determine and report the portion of the 
interest in such a trust that results from the acquisition of 
newly minted digital assets during a taxpayer's holding period,
``(3) requiring owners of interests in such a trust to 
notify the broker (or any other person required to report 
information with respect to such a trust) whether an election 
has been made under subsection (e),
``(4) providing rules for the appropriate allocation of 
basis to the portion of the interest in such a trust that is 
attributable to the acquisition of newly minted digital assets, 
including by requiring the allocation of any basis (other than 
specified acquisition costs required to be capitalized under 
this section) to a taxpayer's other interests in such a trust,
``(5) providing rules to reduce administrative and 
compliance burdens by providing for aggregation, approximation, 
or other reasonable methods to compute and report gain 
attributable to newly minted digital assets acquired through 
such a trust, and
``(6) defining the widely traded fixed investment trusts to 
which the regulations or other guidance under this subsection 
applies.

``SEC. 1400W-3. DEFINITIONS; SPECIAL RULES; REGULATIONS.

``(a) Definitions.--For purposes of this subchapter--
``(1) Newly minted digital asset.--
``(A) In general.--The term `newly minted digital 
asset' means any digital asset that is issued in 
connection with the validation of digital asset 
transactions (including digital asset validation 
supporting activities) and that (prior to such 
issuance) was not owned by any person.
``(B) Termination of treatment as newly minted.--A 
digital asset shall not be treated as a newly minted 
digital asset at any time after the disposition of such 
asset by the first owner of such asset.
``(C) Authorization of reasonable methods of 
determination.--
``(i) In general.--Except as otherwise 
provided pursuant to clause (ii), a taxpayer 
may use any reasonable method to determine 
whether a digital asset acquired by the 
taxpayer is a newly minted digital asset.
``(ii) Authority of secretary to identify 
methods.-- The Secretary may issue such 
regulations or other guidance as the Secretary 
determines necessary or appropriate specifying 
methods that are, or are not, reasonable for 
purposes of clause (i).
``(2) Specified acquisition costs.--
``(A) In general.--The term `specified acquisition 
costs' means any amount paid or incurred in connection 
with validating any digital asset transaction if, at 
the time such amount is paid or incurred there is a 
reasonable possibility that the taxpayer will acquire a 
newly minted digital asset in connection with such 
validation. Such term shall not include any amount 
unless such amount would (without regard to this 
subchapter) be either allowable as a deduction or 
chargeable to capital account.
``(B) Inclusion of certain costs.--For purposes of 
subparagraph (A), the term `amount paid or incurred in 
connection with validating any digital asset 
transaction' includes any amount paid or incurred in 
connection with the activity of validating, or 
attempting to validate, any digital asset transaction, 
including--
``(i) the direct costs of such activity,
``(ii) indirect costs allocable to such 
activity,
``(iii) fees paid or incurred to another 
party to carry out such activity, and
``(iv) interest costs allocable to such 
activity.
``(b) Special Rules.--For purposes of this subchapter--
``(1) Acquire.--A person shall be treated as acquiring a 
newly minted digital asset in any case where such person comes 
to possess such asset and without regard to the manner in which 
such person comes to possess such asset.
``(2) Clarification that certain transfers are treated as 
dispositions.--The following shall not fail to be treated as a 
disposition for purposes of this subchapter:
``(A) The distribution of any digital asset from a 
trust to a beneficiary.
``(B) The transfer of any digital asset from a 
decedent (whether or not incident to the decedent's 
death).
``(c) Regulations.--The Secretary shall issue such regulations or 
other guidance as may be necessary or appropriate to carry out the 
purposes of this subchapter, including to prevent the abuse of the 
provisions of this subchapter.''.
(b) Clarification of Sourcing Rules for Digital Assets Acquired in 
Connection With Validating Digital Asset Transactions.--Section 863 is 
amended by adding at the end the following new subsection:
``(f) Treatment of Digital Assets Acquired in Connection With 
Validating Digital Asset Transactions.--
``(1) Income on acquisition.--Income from the acquisition 
of any digital asset received in connection with the validation 
of digital asset transactions (including digital asset 
validation supporting activities) shall be sourced--
``(A) in the United States if the taxpayer is a 
United States resident at the time of acquisition, and
``(B) outside the United States if the taxpayer is 
a nonresident at the time of acquisition.
``(2) Certain deferred income recognized on disposition.--
Income described in section 1400W-2(b) shall be sourced--
``(A) in the United States if the taxpayer is a 
United States resident at the time of disposition, and
``(B) outside the United States if the taxpayer is 
a nonresident at the time of disposition.
``(3) Treatment of branches.--
``(A) Foreign branches.--In the case of a United 
States person with a qualified business unit (as 
defined in section 989(a)) in a foreign country, income 
described in paragraph (1) or (2) that constitute 
business profits attributable to such unit shall be 
sourced outside the United States.
``(B) U.S. branches.--In the case of a person that 
is not a United States person and that maintains an 
office or other fixed place of business in the United 
States, income described in paragraph (1) or (2) 
attributable to such office or other fixed place of 
business shall be sourced in the United States.
``(C) Attribution.--For purposes of subparagraphs 
(A) and (B), the Secretary may issue such regulations 
or other guidance as the Secretary determines necessary 
or appropriate for purposes of determining the amount 
of business profits attributable to a qualified 
business unit or office or other fixed place of 
business.
``(4) Treatment of partnerships.--In the case of a 
partnership, except as otherwise provided by the Secretary in 
regulations or other guidance, this subsection shall be applied 
at the partner level.
``(5) United states resident; nonresident.--For purposes of 
this subsection, the terms `United States resident' and 
`nonresident' have the meaning given such terms, respectively, 
in section 865(g)(1), determined after application of section 
865(g)(2).''.
(c) Rules Relating to Partnerships That Hold Newly Minted Digital 
Assets.--Section 751(c) is amended in the flush language at the end--
(1) by striking ``and an oil, gas, or geothermal property 
(described in section 1254)'' and inserting ``an oil, gas or 
geothermal property (described in section 1254), and qualified 
newly minted digital assets (as defined in section 1400W-
2(d))'', and
(2) by striking ``or 1254(a)'' and inserting ``1254(a), or 
1400W-2(b)(1)(A)''.
(d) Coordination With Deduction for Qualified Business Income.--
Section 199A(c)(3)(B) is amended by redesignating clause (vii) as 
clause (x) and inserting after clause (vi) the following new clauses:
``(vii) Any item of gain or loss on the 
disposition of any newly minted digital asset 
(as defined in section 1400W-3(a)(1)).
``(viii) Any item of income includible in 
gross income under section 1400W-1(a)(1).
``(ix) Any item of gain realized under 
subsection (a) or (b) of section 751 by reason 
of the references in section 751(c) to 
`qualified newly minted digital assets (as 
defined in section 1400W-2(d)' and to `1400W-
2(b)(1)(A)'.''.
(e) Clerical Amendment.--The table of subchapters for chapter 1 is 
amended by inserting after the item relating to subchapter V the 
following new item:

``subchapter w--newly minted digital assets received in connection with 
validating digital asset transactions''.

(f) Effective Date.--The amendments made by this section shall 
apply to assets acquired in taxable years beginning after the date of 
the enactment of this Act.
(g) No Inference With Respect to Proper Treatment of Newly Minted 
Digital Assets to Which the Amendments Made by This Section Do Not 
Apply.--Nothing in this section (or any amendment made by this section) 
shall be construed to create any inference with respect to the proper 
application of any provision of the Internal Revenue Code of 1986 with 
respect to any newly minted digital asset (as defined 1400W-3 of such 
Code, as added by this section) acquired in any taxable year beginning 
on or before the date of the enactment of this Act.

SEC. 3. INVESTMENT TRUSTS ENGAGED IN DIGITAL ASSET STAKING.

(a) In General.--Section 7701(p), as added by section 4 of this 
Act, is amended by adding at the end the following new paragraph:
``(7) Status of trusts engaged in digital asset staking.--
``(A) In general.--An entity or arrangement shall 
not fail to be treated as a trust for purposes of this 
title solely by reason of the power of the trustee of 
such entity or under such arrangement to--
``(i) engage in staking digital assets held 
by the trust,
``(ii) retain or distribute digital assets 
received in connection with such staking,
``(iii) determine which digital assets held 
by the trust to use in staking,
``(iv) to the extent that any digital 
assets held by the trust are committed to 
staking, take measures necessary or appropriate 
to ensure that the trust has sufficient 
liquidity to make distributions in redemption 
of interests in the trust, including by 
purchasing the right to borrow money or digital 
assets to make such distributions, and
``(v) perform acts related to the exercise 
of the powers described in the preceding 
clauses of this subparagraph.
``(B) Not to apply to validating trade or 
business.--Subparagraph (A) shall not apply in the case 
of an entity or arrangement engaged in the active 
conduct of a trade or business of validating digital 
asset transactions.
``(C) Regulations.--The Secretary may prescribe 
such regulations or other guidance as may be necessary 
or appropriate to carry out the purposes of this 
paragraph.''.
(b) Clerical Amendment.--The heading for section 7701(p), as added 
by section 4 of this Act, is amended by inserting ``and Special Rules'' 
after ``Definitions''.
(c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act.

SEC. 4. DEFINITIONS.

Section 7701 is amended--
(1) by redesignating subsection (p) as subsection (q), and
(2) by inserting after subsection (o) the following new 
subsection:
``(p) Definitions Related to Digital Assets.--For purposes of this 
title--
``(1) Digital asset.--The term `digital asset' means, 
except as otherwise provided by the Secretary, any digital 
representation of value which is recorded on a 
cryptographically secured distributed ledger or any similar 
technology as specified by the Secretary.
``(2) Digital asset transaction.--The term `digital asset 
transaction' means any transfer of a digital asset recorded on 
the cryptographically secured distributed ledger (or similar 
technology) referred to in paragraph (1).
``(3) Digital asset validation supporting activities.--The 
term `digital asset validation supporting activities' means 
staking, mining, or similar activities in support of the 
validation of digital asset transactions.
``(4) Validation.--The term `validate', and any derivative 
of such term (including `validation'), when used in connection 
with a digital asset transaction, includes the processes of 
proposing transactions for validation and verifying the 
validation of transactions.
``(5) Staking.--The term `staking', when used in connection 
with a digital asset, means--
``(A) making such asset available in support of the 
validation of digital asset transactions, and
``(B) except as otherwise provided by the 
Secretary, any substantially similar activity.
``(6) Mining.--The term `mining', when used in connection 
with a digital asset, means--
``(A) performing computations, or making available 
computing power, in support of the validation of 
digital asset transactions, and
``(B) except as otherwise provided by the 
Secretary, any substantially similar activity.''.
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