How the Tax Reform Act Affects Cryptocurrencies Investors

nRunaway Comment: The U.S. tax code is about to undergo a full-scale revision in the largest scale in three decades. The House and Senate each have proposed two versions of the tax reform, but neither of them addressed the issue of cryptocurrency. However, the changes of a few rules still bring little impact to the holders of bitcoin. In this paper, we simply analyze the provisions in the two draft versions that may affect the cryptocurrency and give some solution. The House of Representatives and the Senate are currently coordinating their respective drafts, the final bill yet to be further integrated.n
nTranslation: Clovern
The U.S. tax code is currently facing the largest comprehensive revision in three decades.n
Although none of the House or Senate tax bills, which have been passed by the respective parliaments and are being reconciled into a definitive bill, do not specifically address cryptocurrencies, changes in the minority rules may make it possible for those who earn decent incomes in 2017 Bitcoin owners feel a little surprised.n
So far, both versions have abolished the “same class” trading mechanism used by many cryptocurrency holders in the past, and the Senate version has put forward a “first-in, first-out” (FIFO) accounting framework that could make encryption Currency tokens reporting is more complicated.n
However, tax-backers’ backers, including President Donald Trump and the majority Republican in the parliament, think the tax reform is aimed at removing the tax burden on Uncle Sam (US nickname) citizens.n
David Schweikert, an Arizona Republican who co-chairs the congressional blockchain caucuses and the Ways and Means Committee, told CoinDesk:n
n”With a streamlined tax code, individuals can easily handle the challenges of Bitcoin and cryptocurrency.”n
nUnfortunately, however, the Cryptocurrency Tax Fairness Act is missing from both versions of the tax reform bill for cryptographic holders (Republican Schweikert is co-founder of the bill). Neither of these two versions of the bill will modify the current capital gains tax rate, and according to guidance issued by the IRS in 2014, cryptocurrencies should be taxed at this rate.n
Encrypted currency transactionsn
However, the final act will almost certainly eliminate currency-friendly operations on cryptocurrencies – defer property capital gains tax by trading similar assets on an asset through the so-called 1031 same type of transaction.n
Over the past few years, this type of transaction has been a common tactic in the cryptocurrency world, but both the House and Senate bills limit this rule to real estate transactions.n
Washington, DC Steptoe

Leave a Reply

Your email address will not be published. Required fields are marked *