A Tax Break for Small Scale Bitcoin Transactions
If you are a small time Bitcoin investor in the USA, then you may be happy with the proposal that is being made by two members of the House of Representatives. They would like to create a tax exemption for purchases made with crypto currencies.
As a background to the proposal, it is worth noting that the IRS treats Bitcoin like a property. In other words, it should be subjected to the same capital gains tax that other properties fall under. However, the wording was not particularly clear. For example, they did not take into account the tax impact of purchases with an appreciated Bitcoin.
It was for this reason that Reps Jared Polis and David Schweikert are trying to alleviate some of the burden from this taxation. They are leaders of the Congressional Blockchain Caucus.
According to a post by Coincentre, the legislation would create a minimum exemption before the tax would actually be applied. The minimum that is being proposed by the lawmakers is currently $600 and will be applied from the 31 December this year.
Jerry Brito, executive director of the Coin Centre said that the legislation was comparable to those which apply to purchases with foreign currencies. In an interview with CoinDesk he mentioned that
What we have done with this bill is do something very similar, to create a de minimis exemption for small purchases
This comes at a time when House republicans are trying to get comprehensive tax reform through the congress so we should be cautiously optimistic. Yet he did make it clear that this piece of legislation should be unobjectionable to anybody. For those interested they can read about the actual bill here.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.