Wash sale rules make it so investors cannot reap tax benefits from a losing investment and then buy back the same asset right after. The report says the bill would put forward a “wash sale” rule for commodities, currencies and digital assets, per an outline from the House Ways and Means Committee.
Because of that, the asset class is largely able to escape the rule.
The IRS currently looks at crypto as a property rather than a security.
Thus, crypto investors can sell crypto for a loss, then claim a tax benefit — with the loss making it so capital gains tax on winning investments is cut down. And then after that, they can buy back the crypto quickly, which they’d sold to capture at any rebound in price. The volatility of much cryptocurrency makes this a likely prospect.
The report finds that subjecting crypto and other such assets to wash sale rules would raise an estimated $16.8 billion in funds in the next decade.
The proposal from the Democrats would take effect on sales after Dec. 31 this year. This measure is also among a number of tax reforms from the Democrats designed to raise money for climate investments. That comes after a wide expansion of the U.S. social safety net which is expected to cost up to $3.5 trillion.
As global governments and agencies reckon with the possibilities and risks in crypto, the U.S. Treasury has been looking into both the risks and benefits of stablecoins. The agency is looking at whether stablecoins could be regulated as well as if they could be backed by traditional assets and how they could be structured and used.
Read more: US Treasury Eyes Probe of Stablecoins’ Financial Risk
NEW PYMNTS DATA: TODAY’S SELF-SERVICE SHOPPING JOURNEY – SEPTEMBER 2021
About: Eighty percent of consumers are interested in using nontraditional checkout options like self-service, yet only 35 percent were able to use them for their most recent purchases. Today’s Self-Service Shopping Journey, a PYMNTS and Toshiba collaboration, analyzes over 2,500 responses to learn how merchants can address availability and perception issues to meet demand for self-service kiosks.
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