found full paper
https://home.treasury.gov/system/files/131/General-Explanations-FY2024.pdfIMPOSE DIGITAL ASSET MINING ENERGY EXISE TAX Current Law
Current law does not provide tax rules specifically addressing digital assets, with the exception of certain rules relating to broker reporting and reporting of cash transactions.
Reasons for Change
Digital asset mining is a process for validating transactions among holders of digital assets to record and transfer cryptographically secured assets on a distributed ledger by, for example, using high-powered computers to perform calculations to select the validator.
The computational effort involved in mining can be substantial and can therefore require a correspondingly large amount of energy. The increase in energy consumption attributable to the growth of digital asset mining has negative environmental effects and can have environmental justice implications as well as increase energy prices for those that share an electricity grid with digital asset miners. Digital asset mining also creates uncertainty and risks to local utilities and communities, as mining activity is highly variable and highly mobile.
An excise tax on electricity usage by digital asset miners could reduce mining activity along with its associated environmental impacts and other harms.
Proposal
Any firm using computing resources, whether owned by the firm or leased from others, to mine digital assets would be subject to an excise tax equal to 30 percent of the costs of electricity used in digital asset mining.
Firms engaged in digital asset mining would be required to report the amount and type of electricity used as well as the value of that electricity, if purchased externally. Firms that lease computational capacity would be required to report the value of the electricity used by the lessor firm attributable to the leased capacity, which would serve as the tax base. Firms that produce or acquire power off-grid, for example by using the output of a particular electricity generating plant, would be subject to an excise tax equal to 30 percent of estimated electricity costs.
Except as otherwise provided by the Secretary, the term “digital asset” means any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the Secretary.
The proposal would be effective for taxable years beginning after December 31, 2023. The excise tax would be phased in over three years at a rate of 10 percent in the first year, 20 percent in the second, and 30 percent thereafter.
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General Explanations of the Administration’s Fiscal Year 2024 Revenue Proposals
and
MODERNIZE RULES, INCLUDING THOSE FOR DIGITAL ASSETS
APPLY THE WASH SALE RULES TO DIGITAL ASSETS AND ADDRESS RELATED PARTY TRANSACTIONS
Current Law
Section 1091 of the Internal Revenue Code disallows a loss from a sale of stock or securities if the same or substantially identical stock or securities are purchased within 30 days before or after the sale (a “wash sale”) unless the taxpayer is a dealer in stock or securities and the loss is sustained in the ordinary course of its dealer business. If the stock or securities are purchased at a price that differs from the sale price of the stock or securities sold, appropriate adjustments are made to the basis of the purchased stock or securities. The holding period for the purchased stock or securities takes into account the holding period for the sold stock or securities. As a result, the effect of the wash sale rules ordinarily is to defer the recognition of a loss until the taxpayer finally disposes of the stock or securities. The wash sale rules also apply to sales of stock or securities where the taxpayer enters into a contract or option to buy the same or substantially identical stock or securities within the 30-day window, and to certain short sales of stock or securities. The wash sales are intended to ensure that taxpayers cannot recognize losses without exiting their position in a loss asset for a meaningful period of time.
The Internal Revenue Service treats a loss from a sale of stock or securities by a taxpayer that causes its individual retirement account or Roth IRA to purchase substantially identical stock or securities within 30 days of the sale as subject to the wash sale rule.52
Except as otherwise provided by the Secretary or her delegates (Secretary), brokers who report gross proceeds and basis from the sale of stock or securities determine a customer’s adjusted basis without regard to the wash sale rules, unless the transaction occurs in the same account with respect to identical securities.
Reasons for Change
Taxpayers with loss positions in digital assets are engaging in transactions that would be subject to the wash sale rules if the digital assets were subject to section 1091. For example, a taxpayer may sell a digital asset that is not considered a stock or security for wash sale purposes at a loss on one day and repurchase the same digital asset the next day. The same loss recognition rules should apply to digital assets held as investments or for trading as would apply for stocks and securities.
The wash sale rules should also be updated to provide statutory rules addressing related party transactions, and to reflect new types of financial instruments that have developed since the last amendments made to those rules.
52 Revenue Ruling 2008-5, 2008-1 C.B. 271.
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General Explanations of the Administration’s Fiscal Year 2024 Revenue Proposals
Broker reporting rules should be amended to reflect these changes to the wash sale rules.
Proposal
The wash sales rules would be amended to add digital assets to the list of assets subject to the wash sale rules. Except as otherwise provided by the Secretary, the term “digital asset” means any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the Secretary.53 Regulatory authority would be granted to the Secretary to treat any security as defined by section 475(c)(2), or any commodity as defined by section 475(e)(2), or other assets traded on an established market as subject to the wash sale rules as necessary to prevent abuse. The basis and holding period rules applicable to purchased assets would be revised to reflect the expanded scope of the wash sale rules. These expanded rules are not intended to apply to ordinary course business transactions. The Secretary would have authority to prescribe regulations defining the term ‘substantially identical” and to provide an exception to the application of the wash sale rules for ordinary course business transactions (not including trading) involving digital assets.
The wash sale rules, as they apply to all assets and not only digital assets, would be modified with respect to transactions involving related persons, except as otherwise provided in regulations prescribed by the Secretary. In the case of any loss from a sale of assets subject to the wash sale rules and a purchase by a related party of the same or substantially identical assets within 30 days of the sale, the loss would be deferred until the related party sells or otherwise disposes of the asset or such other time as specified by the Secretary, provided that the taxpayer and a related party do not reacquire the asset within 30 days before or after that sale or disposition, or the parties cease to be related. A related party would include members of a taxpayer’s family and tax-favored accounts such as individual retirement accounts controlled by the taxpayer or the taxpayer’s spouse. Two entities would be related to each other if one controlled the other, directly or indirectly, or both were under the common control of either a third entity or the taxpayer and one or more family members. An individual would be related to an entity if the entity is controlled, directly or indirectly, by the individual and the individual’s family members. The Secretary would have authority to issue regulations expanding this definition as necessary to prevent abuse, to provide rules for transactions where a taxpayer sold assets at a loss and both the taxpayer and a related party acquired the same or substantially similar assets, and to coordinate the operation of the wash sale rules with other rules dealing with sales of loss property between related parties (sections 267 and 707).
The wash sale rules also would be amended to address derivative financial instruments more comprehensively, including modifications to the basis rules to prevent abuse.
The Secretary would have authority to require brokers to report such information as may be necessary or appropriate to implement the wash sale rules. Except as otherwise provided by the
53 This definition is the same as that provided in section 6045(g)(3)(D). It is intended that the Secretary may exercise her authority to provide that the term “digital asset” has a meaning for wash sale purposes that is not identical to its meaning for purposes of regulations issued under section 6045.
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General Explanations of the Administration’s Fiscal Year 2024 Revenue Proposals
Secretary, brokers reporting a customer’s adjusted basis on a disposition of a digital asset or other asset subject to the wash sale rules would report the basis of the asset without regard to the wash sale rules unless the sale of the loss asset and the transaction causing the wash sale rules to apply occur in the same account with respect to identical assets.
No inference is intended as to whether the losses claimed by taxpayers from wash sales of digital assets may be deducted under current law, or as to the proper treatment of transactions involving related parties under the wash sale rules under current law.
The proposal would be effective for taxable years beginning after December 31, 2023.
I think the wash rule is more likely to be adapted than the power rule.
Also I read the power tax rule I think my 125 kwatt per hour of which 60 kwatts is my solar nets to 65 kwatts as I am net meter.
Thus if I pay 10 cents for 1 kwatt
first year I go to 11 cents
second year I go to 12 cents
third year I go to 13 cents.
13 x 65 = $8.45 an hour 202.80 a day by year three.
10 cents is not my price.
I am closer to 5 cents so 101.80 a day by 2026 in power vs 78 a day for my company in 2023 if I understand the net metering correctly.
so 23 a day is 690 a month best case
worst case 1200-1300 a month
I can survive that
but i guess that answers my question.
