H.R. 9178 — Less Tax Paperwork for Digital Asset Owners Act

This section provides the short title of the Act as the “Less Tax Paperwork for Digital Asset Owners Act,” specifies that references are to the Internal Revenue Code of 1986, and sets out the table of contents for the bill’s six sections.

This section provides that no gain or loss is recognized on the disposition of a digital asset to pay a de minimis network fee of $10 or less. The exception does not apply to traders, brokers, dealers, persons in the business of validating digital asset transactions, or any person who engaged in more than 5,000 digital asset transactions in the prior year, and applies to dispositions after December 31, 2027.

This section establishes an optional simplified annual accounting method for gains and losses on designated types of widely traded digital assets. Taxpayers may elect the method for any fungible or value-linked type of such asset; net short-term capital gain or loss is then computed each year by comparing aggregate amounts realized (including fair market value on non-sale dispositions and year-end holdings) against acquisition costs, carryover bases, and prior year-end values, with lending transactions disregarded and the election applying to all future years unless revoked after the first five.

This section establishes tax rules for qualified U.S. dollar stablecoin transactions by setting the basis of acquired stablecoins and the value of noncash consideration exchanged at redemption value, provided the transaction occurs within 99.5 to 100.5 percent of that value. It excludes traders, brokers, dealers, and taxpayers conducting more than 5,000 such transactions annually, and applies to taxable years beginning after December 31, 2026.

This section narrows broker information reporting on digital assets by redefining specified digital assets to exclude qualified U.S. dollar stablecoins acquired at 99.5 percent or more of redemption value. It exempts brokers from transaction-level reporting on dispositions of digital assets used to pay de minimis validation fees (with aggregate information required instead) and on widely traded digital assets subject to a simplified accounting election (with aggregate sales, fair market value, and net gain or loss data required instead). These rules apply to returns and statements required after December 31, 2027.

This section establishes definitions for digital assets and related terms for purposes of the Internal Revenue Code. It defines a digital asset as any digital representation of value recorded on a cryptographically secured distributed ledger (or similar technology), a traded digital asset as a fungible asset with readily available exchange quotations, and a widely traded digital asset as a traded digital asset meeting a $500 million market capitalization threshold (adjusted for inflation after 2027) for an entire preceding calendar year with limited taxpayer ownership. It further defines tokenized digital assets, wrapped digital assets, reference digital assets, qualified U.S. dollar stablecoins, and U.S. dollar stablecoins.