01Puerto Rico residence is a federal facts test: presence, tax home and closer connection. A decree does not replace the federal residence test.02For certain investment property owned before bona fide territory residence, Publication 570 applies special source rules. Its stock example shows that without the special election, none of a post-move sale gain may be Puerto Rico-source.03A special election can change the allocation: marketable securities use holding-period fair values; other personal property uses a time-based formula. Applying those categories to a particular digital asset requires review.
There is no universal “move-date split”
The simple story — “value the asset on the day you move, and everything after that date becomes Puerto Rico gain” — is not a safe federal rule. IRS Publication 570 says special rules apply to certain investment property owned before becoming a bona fide resident. In its marketable-stock example, a taxpayer moves to Puerto Rico, the stock appreciates after the move, and yet none of the total gain is Puerto Rico-source without the special election.
The same publication then describes an election that can attribute part of the gain to the territory holding period. For marketable securities the method uses fair value at the boundaries of the territory holding period; for other personal property the publication describes a time-based allocation. A digital asset may raise classification questions that the stock example does not answer by itself.
Do not start with “what was the token worth on moving day?” Start with “which federal source rule applies to this asset, and is an election available and appropriate?”
Act 60 is a separate Puerto Rico layer
Puerto Rico’s Incentives Code, Act 60-2019 as amended, is a local incentive regime administered through decrees. Federal sourcing determines what is Puerto Rico-source for federal purposes; it does not by itself grant an Act 60 benefit. Eligibility, the current local treatment, the relevant asset category, decree terms and later amendments must be checked against the operative Code and the taxpayer’s actual decree.
The residency test still controls every year
Bona fide residence is tested through presence, tax home and closer connection. A move that exists only on paper can fail before the sourcing analysis even begins. This is why the evidence file should start with the residence facts and asset history, not with a promised tax rate.
The decision sequence
- Map every material asset. Acquisition date, cost, custody, legal character and whether it existed before Puerto Rico residence.
- Test bona fide residence. Presence, tax home and closer connection must be supportable for the year at issue.
- Determine the federal source rule. Do not assume the marketable-stock example or the special election maps automatically to a token.
- Then analyse the Puerto Rico decree. Confirm the current Act 60 provision, eligibility and the taxpayer-specific decree before quoting a local rate.
- Review prior years first. If earlier reporting is incomplete, resolve the disclosure sequence before a high-visibility move.
Puerto Rico residence, federal sourcing and Act 60 decree treatment are fact-specific. This page frames the questions; it does not determine eligibility or a tax rate.