U.S. House Democrats Aim to Close a Tax Loophole for Crypto
A group of democrats in the U.S. House of Representatives are proposing to treat digital assets like stocks rather than property to close an existing tax loophole for cryptocurrency investors.
Crypto transactions that are not profitable and lose money are allowed to be considered capital losses, which can then alleviate fiscal charges.
Since the Internal Revenue Service (IRS) views digital assets as property, crypto investors can get a tax benefit from a capital loss and at the same time buy back the digital asset to take advantage on any price upswings.
On the other end, stocks and securities, are subject to a “wash sale” rule which does not allow taxpayers from claiming tax losses while still retaining an interest in the asset that contributed to the losses. It is not possible for investors to buy identical securities within 30 days and still deduct the losses from in their tax returns.
In a tax reform outline issued by the House Ways and Means Committee, Democrat lawmakers now propose treating digital assets, commodities, and currencies as equal under the “wash sale” provision. The Committee is the chief tax-writing committee of the United States House of Representatives.
The Joint Committee on Taxation estimates that this change could bring in an additional $16.78 billion in tax revenue over the next 10 years.
According to Forbes, the proposed change would not keep crypto investors from adding “disallowed losses” of a wash sale to the cost basis of the digital asset they invested in.
The post U.S. House Democrats Aim to Close a Tax Loophole for Crypto appeared first on iGaming.
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Author: Peter Siu