While the crypto community stresses the mainstream adoption of cryptocurrency or bitcoin, such as the ability to use Bitcoin to buy a slice of pizza or cup of coffee – this is considered to be taxed in the U.S just like stocks are being taxed on such use-cases.
Bill to Exempt Taxes for Everyday Crypto Transactions
As an attempt to make bitcoin everyday currency such as US dollars where people don’t pay capital taxes, US lawmakers re-introduced a bill intending to exempt personal crypto transactions from taxation for capital gains. Noticeably, a bill dubbed “Virtual Currency Tax Fairness Act 2020” was introduced on Thursday by the Congresswoman Suzan Delbene of Washington and the Congressman David Schweikert of Arizona.
The crux of the matter is that the Bitcoin and Cryptocurrency transactions existed without having any particular rule made for it. Such transactions were treated equally as a commodity that can be transacted similarly to other currencies. Consequently, this scenario created a problem at the time of paying the annual taxes. As such, every time you spend some Cryptocurrency, there is a possibility of a tax event to occur. So, every user had to keep information about every single Bitcoin being transacted with its value which might have appreciated or depreciated.
“Gross income of an individual shall not include capital gain, by reason of changes in exchange rates, from the disposition of virtual currency in a personal transaction (as such term is defined in section 11 988(e)). The preceding sentence shall not apply if the capital gain which would otherwise be recognized on the transaction if it exceeds $200.”
If approved, the bill will cover all the transactions that have taken place after 31st December 2019.
Coin Center, which was equally involved in pushing for the de minimis exemption said on Thursday;
“This easy solution to an obvious problem with today’s tax treatment of Cryptocurrencies would help level the playing field for this technology.”
That said, now it is time for us to wait and watch until the bill is approved and the new amendments are brought into the action.