PAR Act

This Act may be cited as the Providing Analogous Rules for Digital Assets Act or the PAR Act.

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.

The table of contents for this Act is as follows:

Subsections (a) and (b) of section 1058 are each amended by striking securities each place it appears and inserting specified assets.

Section 1058 is amended by adding at the end the following new subsection:

For purposes of this section, the term specified assets means—

(1) securities (as defined in section 1236(c)), and

(2) traded digital assets.

Section 1058(b)(2) is amended to read as follows:

(2) require that—

(A) payments shall be made to the transferor of amounts equivalent to, except as otherwise provided by the Secretary, all interest, dividends, property, legal entitlements, and other distributions which the owner of the specified assets is entitled to receive during the period beginning with the transfer of the specified assets by the transferor and ending with the transfer of identical specified assets back to the transferor, and

(B) in the case of any transfer of traded digital assets, the transferor shall assume all obligations imposed on the owner of such traded digital assets during the period described in subparagraph (A),.

(1) Section 1058(a) is amended by striking (as defined in section 1236(c)).

(2) The heading of section 1058, and the item relating to section 1058 in the table of sections for part IV of subchapter O of chapter 1, are each amended by striking securities and inserting specified assets.

The amendments made by this section shall apply to transfers made after the date of the enactment of this Act.

Section 475 is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection:

In the case of a dealer in covered digital assets who elects the application of this subsection, this section shall apply to covered digital assets held by such dealer in the same manner as this section applies to securities held by a dealer in securities.

For purposes of this section, the term covered digital asset means—

(A) any widely traded digital asset,

(B) any notional principal contract with respect to any widely traded digital asset,

(C) any evidence of an interest in, or a derivative instrument in, any widely traded digital asset described in subparagraph (A) or (B), including any option, forward contract, futures contract, short position, and any similar instrument in such widely traded digital asset, and

(D) any position which—

(i) is not a covered digital asset described in subparagraph (A), (B), or (C),

(ii) is a hedge with respect to such a covered digital asset, and

(iii) is clearly identified in the taxpayer's records as being described in this subparagraph before the close of the day on which it was acquired or entered into (or such other time as the Secretary may by regulations prescribe).

An election under this subsection may be made without the consent of the Secretary. Such an election, once made, shall apply to the taxable year for which made and all subsequent taxable years unless revoked with the consent of the Secretary.

Section 475(f) is amended—

(1) in the heading, by striking or commodities and inserting, commodities, or covered digital assets,

(2) by redesignating paragraph (3) as paragraph (4) and by inserting after paragraph (2) the following new paragraph:

In the case of a person who is engaged in a trade or business as a trader in covered digital assets and who elects to have this paragraph apply to such trade or business, paragraph (1) shall apply to covered digital assets held by such trader in connection with such trade or business in the same manner as paragraph (1) applies to securities held by a trader in securities., and

(3) in paragraph (4), as so redesignated, by striking paragraphs (1) and (2) and inserting paragraphs (1), (2), and (3).

Section 475(d) is amended by adding at the end the following new paragraph:

In the case of any covered digital asset which is a security or commodity (determined without regard to this paragraph), such covered digital asset shall not be treated as a security or commodity for purposes of subsections (b) through (g).

Section 475(d), as amended by subsection (c), is amended by adding at the end the following new paragraph:

In the case of an adjustment described in section 481(a) by reason of the application of subsection (a), (e), (f), or (g) of this section, the character of any income or loss with respect to any property as a result of such adjustment shall be the same as the character of the gain or loss which would have resulted from the sale of such property as of the close of the taxable year preceding the year of the change (within the meaning of section 481) under the method of accounting used for such preceding taxable year.

(1) Section 475(e)(2) is amended by striking this subsection and subsection (f) and inserting this section.

(2) The heading of section 475 is amended by striking dealers in securities and inserting certain dealers and traders.

(3) The table of sections for subpart D of part II of subchapter E of chapter 1 is amended by striking the item relating to section 475 and inserting the following:

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

In the case of a taxpayer that elects under subsection (f)(3) or (g) of section 475 of the Internal Revenue Code of 1986 (as added by this section) to change such taxpayer’s method of accounting for the taxpayer’s first taxable year beginning after the date of the enactment of this Act—

(1) any identification required with respect to such subsection with respect to covered digital assets held on the first day of such taxable year shall be treated as timely made if made on or before the 30th day of such taxable year, and

(2) the net amount of the adjustments required to be taken into account by the taxpayer under section 481 of such Code by reason of such subsection shall be taken into account ratably over the 4-taxable year period beginning with such taxable year.

Section 864(b)(2) is amended—

(1) in the heading, by striking or commodities and inserting commodities, or traded digital assets,

(2) by redesignating subparagraph (C) as subparagraph (D) and by inserting the following new subparagraph after subparagraph (B):

Trading in traded digital assets through a resident broker, commission agent, custodian, or other independent agent.

Trading in traded digital assets for the taxpayer's own account, whether by the taxpayer or his employees or through a resident broker, commission agent, custodian, or other agent, and whether or not any such employee or agent has discretionary authority to make decisions in effecting the transactions. This clause shall not apply in the case of a dealer in digital assets., and

(3) in subparagraph (D), as so redesignated, by striking and (B)(i) and inserting, (B)(i), and (C)(i).

The amendments made by this section shall apply to taxable years beginning after December 31, 2025.