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An article published on December 21 by The Wall Street Journal (WSJ) suggested that investors sell and then buy back their Bitcoin (BTC) as a tax-saving strategy.
In the context of the crypto bear market in 2018, the WSJ suggests that "the only good thing to invest in cryptocurrencies [this year] it was the tax break ".
Given that the US Tax Authority, the Internal Revenue Service (IRS), has treated the crypt as a real estate investment since 2014 – similar to securities and bonds, not currency – crypto users can draw benefit from the "special and often favorable" fiscal policy the country gives to investments.
For all investments in the United States – in both stocks and short-term funds, gains and losses are applied to holdings held in a year or less, and any gain is taxable at a rate of 40.8%. Long-term gains and losses meanwhile reach the upper limit of 23.8%.
While losses can be used to offset earnings taxes for all investments, the potential tax relief could be even higher than that of traditional resources in the case of crypts, because a "strangeness" in US tax rules allows traders to sell and reinvest their crypt immediately, in full compliance with the law.
This is due to the fact that cryptocurrencies are exempt from the so-called "sale of washing" rules, which "prohibit capital deductions when investors buy a stock, such as a stock within 30 days from the sale of a loser".
Jim Calvin, a CPA and encryption specialist at Deloitte Tax, told the WSJ that with a minimum of "an hour" and certainly one day, after booking a loss, just wait for traders to stay on the right side. of the law if they choose to buy back their crypts.
More generally, the WSJ notes, timing is crucial, as tax losses can be carried forward but not back – so if you've sold at a profit during the scrambled run of winter 2017, your losses in this year Tax (after April) may offset the tax due on previous profits.
Robert Gordon, a fiscal strategist of Twenty-First Securities, has informed the WSJ that regardless of whether they intend to buy back the crypto, traders can take advantage of both losses, or even up to the sum of their earnings taxable, encryption or other.
As previously reported, data published prior to the closing of the previous fiscal year indicated that only 0.04% of the fiscal filers reported capital gains from cryptographic investments to the IRS.
In July 2017, IRS had requested that the US main Coinbase Encryptor provide detailed information on each of its over 500,000 users in an effort to prevent tax evasion. However, a court order in November 2017 reduced this number to around 14,000 "high-traffic" users, who later reported the platform as 13,000.
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