US legislators propose to subdue cryptocurrencies of the WASH-SALE rule-control
US legislators propose to subdue cryptocurrencies of the WASH-SALE rule-control
A committee of the US representative house has proposed to subject cryptocurrencies of the "Wash sale" rule. Since cryptocurrencies are treated as property by the Internal Revenue Service (IRS), they are currently not subject to the Wash-Sale rule. This proposal tries to close a large loophole in the crypto tax.
crypto included in the new offer
The Committee on Ways and Means, The Supreme Tax Committee of the US Representative House, suggested to submit the washing sale on Monday. If they are accepted, the rules for crypto trades apply after December 31st.
The provision "laundry sale" in the draft law says:
This section includes goods, currencies and digital assets in the Wash-Sale rule, a provision for combating abuse that previously applied to stocks and other securities. The WASH-SALE rule in Section 1091 prevents taxpayers from asserting tax losses while keeping a share of loss.
The Wash-Sale rule was developed to prevent people from selling securities with loss, just to claim a tax advantage. A WASH SALE is available when a person sells a securities with loss and then buys the same securities or essentially identical securities within 30 days.
Shehan Chandrasekera, Head of Tax Strategy at the crypto tax software company Cointracker, commented on the committee With this WASH-SALE proposal "tries to close a large crypto tax gap". He stated:
Since cryptocurrencies are treated as property (IRS 2014-21), they are not subject to the Wash-Sale rule. This enables you to harvest losses at Krypto more aggressive than with stocks. You don't have to wait 30 days. The Ways & Means Committee tries to subdue crypto of the washing sales rule.
According to Chandrasekera, "the new rules will not remove the tax advantage, but post the tax benefit".
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