United States Congress and the Crypto Taxation Issue May Be Addressed In One of These Three Ways
As the United States and IRS starts looking into how it can put in place stricter BTC tax compliancy, various interested parties have come out to say that Congress needs to step in and provide clarification on how cryptocurrencies need to be treated when it comes to tax issues.
Below are three probable ways that lawmakers can use to approach the BTC taxation issue.
‘De Minims’ BTC Tax Exemption
Using cryptocurrencies and bitcoin for microtransactions are likely to cause serious tax headaches, especially given that the Internal Revenue Service has classified digital assets like properties. For this reason, some in the crypto community believe that BTC tax laws ought to come with a de minimis exception.
Including this kind of exemption will mean that digital asset holders will not need to pay taxes on digital asset transactions that are below a certain amount. As Bitcoinist had reported:
“Critics of the de minimis exemption approach say it places a greater burden on the IRS.”
‘Like-Kind” Exchange Exemption
In spite of the revenue authority having classified cryptocurrencies as assets, crypto-crypto trading pairing is still likely to trigger an event that is taxable. It’s a situation that is likely to lead to double taxation—cryptocurrency traders will be required to pay capital gains and sale taxes on this pairing.
In such a case, congress may be able to prevent this by passing a law that would effectively place cryptocurrencies under the like-kind exchange exemption model.
Treating BTC as a Legal tender for Taxation Purposes
This is the third school of thought that involves having bitcoin classified as a currency. If the property designation in the US is abandoned, this will see transactions that are below two hundred dollars being exempted from BTC taxation.
As is the case with de minis exemption, the classification of crypto assets as micro-transactions means that they will no longer pose a tax problem.