Crypto taxation is one of the most confusing aspects of trading and spending crypto, with many nations having no clear or defined laws whatsoever. Currently, in the United States Bitcoin is considered as an asset or property – similar to your house or car – meaning general tax principles apply. However, in a bid to make crypto adoption more widespread throughout the United States, the Internal Revenue Service (IRS) is working on a reform of its 2014 guidance – something that could boost crypto adoption significantly.
Updating Tax Calculations
Currently, when a person receives Bitcoin – or any other cryptocurrency for that matter – they are liable to include it in their gross income, whereas people who buy Bitcoin from an exchange then regular property purchasing rules apply. When it comes to selling capital loss and gains rules apply, meaning you will have to pay tax on the gains made through the trade, or can claim back tax on the losses incurred. When purchasing something with crypto that has a value of more than $600, people will need to declare it to the IRS. In a bid to make this entire process less complicated and messy, the IRS is planning to address the methods for calculating taxes as well as a host of other issues.
Calls for Crypto Tax Policies Being Listened To
Earlier this year, Ted Budd – a member of the United States House of Representatives for North Carolina – called crypto taxation policies a national security issue. Budd pointed out that a lack of regulations was stifling the American crypto economy and was forcing businesses to go elsewhere – leaving America a long way behind in the industry. In a bid to be at the forefront of the technology, Budd claims that the IRS needs to implement fresh and simple crypto taxation laws.
Passing the Token Taxonomy Bill
The Token Taxonomy Bill is a rather controversial bill that will shakeup a lot of ancient laws in the US, but most importantly would help cryptocurrencies and crypto related businesses thrive in the US. If passed, the bill will create a bit of a grey area and potentially a rather lucrative tax loophole. However, the bill will officially amend the Securities Act of 1933 and the Securities Exchange Act of 1940 to add a much deeper definition of cryptocurrencies and create a new tax regime just for cryptos.
The IRS is looking to make using crypto simpler and easier for everyone, while retaining a decent level of taxation income from its regulations. We’re expecting new regulations to come from the IRS in the next couple of weeks – just in time for moon season.