HB 2204 — technical correction; wage board; powers

HouseConference Engrossed technical correction;

virtualvirtural currency) State(now: of Arizona House of Representatives Fifty-fifth Legislature Second Regular Session HOUSE BILL 2204 AN ACT AMENDING SECTION 43-1022, ARIZONA REVISED STATUTES;

taxation;

virtual currency;

non-fungible tokens) State of Arizona House of Representatives Fifty-fifth Legislature Second Regular Session CHAPTER 369 HOUSE BILL 2204 AN ACT AMENDING SECTION 43-1022, ARIZONA REVISED STATUTES;

AMENDING SECTION 43-1042, ARIZONA REVISED STATUTES;

TO THE EXTENT NOT ALREADY EXCLUDED FROM ARIZONA GROSS INCOME UNDER THE INTERNAL REVENUE CODE, THE VALUE OF VIRTUAL CURRENCY AND NONFUNGIBLENON-FUNGIBLE TOKENS THE TAXPAYER RECEIVED PURSUANT TO AN AIRDROP AT THE TIME OF THE AIRDROP.

FOR THE PURPOSES OF THIS PARAGRAPH,PARAGRAPH: "AIRDROP" MEANS THE RECEIPT OF VIRTUAL CURRENCY THROUGH A MEANS OF DISTRIBUTION OF VIRTUAL CURRENCY TO THE DISTRIBUTED LEDGER ADDRESSES OF MULTIPLE TAXPAYERS.

30.(a) "AIRDROP" MEANS THE RECEIPT OF VIRTUAL CURRENCY THROUGH A MEANS OF DISTRIBUTION OF VIRTUAL CURRENCY TO THE DISTRIBUTED LEDGER ADDRESSES OF MULTIPLE TAXPAYERS.

THE AMOUNT ALLOWED AS A SUBTRACTION BY SECTION 43-1028 FOR GAS FEES NOT ALREADY INCLUDED IN THE TAXPAYER'S VIRTUAL CURRENCY BASIS.

2204 Sec.(b) "NON-FUNGIBLE TOKEN" HAS THE SAME MEANING PRESCRIBED IN SECTION 43-1028.

(c) "VIRTUAL CURRENCY" HAS THE SAME MEANING PRESCRIBED IN SECTION 43-1028.

30.

THE AMOUNT ALLOWED AS A SUBTRACTION BY SECTION 43-1028 FOR GAS FEES NOT ALREADY INCLUDED IN THE TAXPAYER'S VIRTUAL CURRENCY OR NON-FUNGIBLE TOKEN BASIS.

Sec.

Sale of virtual currency;currency or non-fungible tokens;

IF A TAXPAYER HAS INCLUDED IN ARIZONA GROSS INCOME A GAIN OR LOSS ON THE SALE OF VIRTUAL CURRENCY OR A NON-FUNGIBLE TOKEN AND IN CALCULATING THE GAIN OR LOSS THE TAXPAYER DID NOT INCLUDE IN THE BASIS OF THE VIRTUAL CURRENCY OR NON-FUNGIBLE TOKEN ANY GAS FEES PAID ON THE PURCHASE OF THE VIRTUAL CURRENCY OR NON-FUNGIBLE TOKEN OR DID NOT OTHERWISE DEDUCT THESE GAS FEES IN DETERMINING ARIZONA GROSS INCOME, THE TAXPAYER MAY SUBTRACT THE AMOUNT OF THE GAS FEES FROM ARIZONA GROSS INCOME.

"GAS FEE" MEANS A FEE PAID TO THE OPERATOR OF A VIRTUAL NETWORK FOR THE USE OF THE NETWORK TO FACILITATE THE PURCHASEPURCHASE, SALE OR SALEEXCHANGE OF VIRTUAL CURRENCY.CURRENCY OR A NON-FUNGIBLE TOKEN.

"NON-FUNGIBLE TOKEN" MEANS A NON-FUNGIBLE CRYPTOGRAPHIC ASSET ON A BLOCKCHAIN THAT POSSESSES UNIQUE IDENTIFIERS OR OTHER METADATA THAT DISTINGUISHES THE ASSET FROM ANOTHER TOKEN OR ASSET IN A MANNER THAT MAKES THE ASSET IRREPLACEABLE AND NON-EXCHANGEABLE FOR A SIMILAR TOKEN OR ASSET.

4.

Section 43-1042, Arizona Revised Statutes, is amended to read:

43-1042.

Itemized deductions A.

Except as provided by subsections B, and C AND E of this section, at the election of the taxpayer, and in lieu of the standard deduction allowed by section 43-1041, in computing taxable income the taxpayer may take the amount of itemized deductions allowable for the taxable year pursuant to subtitle A, chapter 1, subchapter B, parts VI and VII, but subject to the limitations prescribed by sections 67, 68 and 274 of the internal revenue code.

B.

In lieu of the amount of the federal itemized deduction for expenses paid for medical care allowed under section 213 of the internal revenue code, the taxpayer may deduct the full amount of such expenses.

C.

A taxpayer shall not claim both a deduction provided by this section and a credit allowed by this title with respect to the same charitable contributions.

This subsection applies to any contribution for which a credit is allowed by this title even if the contribution is treated as a payment of state income tax.

D.

The taxpayer may add any interest expense paid by the taxpayer for the taxable year that is equal to the amount of federal credit for interest on certain home mortgages allowed by section 25 of the internal revenue code.

- 6 - H.B.

2204 E.

IN LIEU OF THE AMOUNT OF THE FEDERAL ITEMIZED DEDUCTION FOR PERSONAL CASUALTY LOSSES ALLOWED UNDER SECTION 165 OF THE INTERNAL REVENUE CODE, THE TAXPAYER MAY:

1.

DEDUCT THE AMOUNT ALLOWED BY SECTION 165 OF THE INTERNAL REVENUE CODE FOR PERSONAL CASUALTY LOSSES WITHOUT CONSIDERATION OF THE LIMITATIONS PRESCRIBED IN SECTION 165(h)(5) OF THE INTERNAL REVENUE CODE.

2.

DEDUCT THE AMOUNT OF PERSONAL CASUALTY LOSSES RELATED TO VIRTUAL CURRENCY AND NON-FUNGIBLE TOKENS TO THE EXTENT THEY ARE NOT DEDUCTED PURSUANT TO PARAGRAPH 1 OF THIS SUBSECTION.

Sec.

4.