Democrats in the U.S. House of Representatives have proposed closing a tax loophole for cryptocurrency investors by treating digital assets like stocks rather than property.
Currently, crypto transactions that lose money are allowed to be counted as capital losses, which can then lower tax burdens.
Because the Internal Revenue Service (IRS) views digital assets as property, crypto investors can claim the tax benefit from a capital loss while also immediately buying back the digital asset to capitalize on any price upswings.
Stocks and securities, however, are subject to a “wash sale” rule which prevents taxpayers from claiming tax losses while still retaining an interest in the asset that caused the losses. Investors can’t buy identical securities within 30 days and still deduct the loss from their tax burden.
In a tax reforms outline issued by the House Ways and Means Committee, Democrat lawmakers now propose lumping digital assets, commodities, and currencies together in the “wash sale” provision.
The Joint Committee on Taxation estimates that the change would raise an additional $16.78 billion in tax revenue over the next 10 years.
Forbes notes that the proposed change wouldn’t prevent crypto investors from adding “disallowed losses” of a wash sale to the cost basis of the digital asset they invested in.
Don't Miss a Beat – Subscribe to get email alerts delivered directly to your inbox
Check Price Action
Follow us on Twitter, Facebook and Telegram
Surf The Daily Hodl Mix
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured Image: Shutterstock/Pozdeyev Vitaly
