Definitions

Digital assets that are securities and also debt instruments for federal income tax purposes

See digital asset that is also a stock or security below. In this case, the real-world asset is a debt instrument.

Digital asset that is also a stock or security

A digital asset that is also a stock or security is typically referred to as a security token.

In essence, a security token is a digital representation of ownership in a real-world asset or company. This could be a share of stock, a bond, real estate, or even fractional ownership in a piece of art or other commodity.

Tokenized security under Regulations section 1.6045-1(c)(8)(i)(D)(1)

A tokenized security, under Treasury Regulation 1.6045-1(c)(8)(i)(D)(1), is a dual-classification asset that is a digital asset representing either an interest in a traditional security or an asset registered with the SEC, excluding those treated as securities solely due to being investment contracts. These assets are treated differently for tax reporting purposes than other digital assets.

Tokenized security treated as stock or securities under section 1091

A "tokenized security treated as stock or securities under section 1091" refers to a digital asset that represents ownership in a traditional security (like stock or a bond) and is subject to the wash sale rules under Section 1091 of the US Internal Revenue Code.

Digital Asset Optional Reporting Method

A Digital Asset Optional Reporting Method refers to specific rules within the IRS regulations for reporting digital asset transactions that brokers (like cryptocurrency exchanges) can choose to follow. These optional methods allow brokers to report certain types of digital asset sales, specifically qualifying stablecoins and specified NFTs, in a different manner than the standard transaction-by-transaction reporting.

Instead of reporting each individual sale of qualifying stablecoins or specified NFTs, brokers may report them in an aggregate manner.

Qualified Opportunity Fund (QOF)

A Qualified Opportunity Fund (QOF) is an investment vehicle that is organized as a corporation or partnership specifically for the purpose of investing in Qualified Opportunity Zone property.

Tokenized Security

A digital representation of a traditional security using blockchain technology. This allows for fractionalization, easier transfer, and potentially wider access to these assets.