US Lawmakers Propose to Subject Cryptocurrencies to Wash Sale Rule – Taxes Bitcoin News
A committee of the U.S. House of Representatives has proposed to subject cryptocurrencies to the “wash sale” rule. Since cryptocurrencies are treated as property by the Internal Revenue Service (IRS), they are currently not subject to the wash sale rule. This proposal attempts to close down a big crypto tax loophole.
Crypto Included in New Proposal
The Committee on Ways and Means, the chief tax-writing committee of the U.S. House of Representatives, proposed to subject cryptocurrencies to the wash sale rule Monday. If adopted, the rules will apply to crypto trades occurring after Dec. 31.
The “wash sales” provision in the bill states:
This section includes commodities, currencies, and digital assets in the wash sale rule, an anti-abuse rule previously applicable to stock and other securities. The wash sale rule in section 1091 prevents taxpayers from claiming tax losses while retaining an interest in the loss asset.
The wash-sale rule was designed to discourage people from selling securities at a loss simply to claim a tax benefit. A wash sale occurs when an individual sells a security at a loss and then purchases that same security or substantially identical securities within 30 days.
Shehan Chandrasekera, head of Tax Strategy at crypto tax software firm Cointracker, commented that with this wash sale proposal, the committee “is trying to close down a big crypto tax loophole.” He elaborated:
Since cryptocurrencies are treated as property (IRS 2014-21), they are not subject to the wash sale rule. This allows you to harvest losses more aggressively in crypto than in stocks. You don’t have to wait 30 days. Ways & Means Committee is trying to subject crypto to the wash sale rule.
According to Chandrasekera, “the new rules will not eliminate the tax benefit, it will defer the tax benefit.”
What do you think about this new proposal? Let us know in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
Source link
#Lawmakers #Propose #Subject #Cryptocurrencies #Wash #Sale #Rule #Taxes #Bitcoin #News
