Less Tax Paperwork for Digital Asset Owners Act

Exemption for Small Network Fees: Section 2 adds Section 1044 to the Internal Revenue Code, which states that no gain or loss is recognized on the disposition of a digital asset used to pay a network fee if the aggregate amount does not exceed $10. This relieves individual taxpayers from tracking and reporting tiny capital gains or losses on everyday network transaction fees.

Simplified Tax Accounting: Section 3 adds Section 1051, allowing taxpayers to elect a simplified accounting method for widely traded digital assets. This provision reduces the paperwork burden of tracking individual cost bases for every single trade by treating gains or losses in aggregate as short-term capital items.

Stablecoin Clarity: Section 4 adds Section 1063, which provides clear rules for acquiring and selling qualified U.S. dollar stablecoins at their redemption value. This helps everyday users avoid complex valuation burdens for stablecoins meant to hold a steady one-to-one value with the U.S. dollar.

Exclusions for Active Traders and Businesses: Section 2 excludes traders, brokers, dealers, persons facilitating validation for others, and taxpayers engaging in more than 5,000 digital asset transactions in a preceding taxable year from the de minimis network fee exception. This means high-volume participants do not receive this administrative relief and must continue complex tracking.

Lock-In and Revocation Restrictions on Accounting Elections: Section 3 dictates that once a taxpayer elects simplified accounting for widely traded digital assets, the election applies to all subsequent years and generally cannot be revoked until after the first five taxable years. Taxpayers who regret the election face rigid waiting periods and automatic revocation rules if assets stop being widely traded.

Exclusion of Non-Dollar Currencies and Related Parties: Section 4 specifies that the stablecoin tax relief does not apply to taxpayers using a functional currency other than the dollar, or to certain related-party transactions where stricter percentage thresholds are enforced.