Senators Lummis and Gillibrand propose a crypto tax bill with broker definitions and asset marking. Concerns arise over closing a tax loophole.
- Senators Lummis and Gillibrand propose crypto tax bill.
- Bill defines brokers and mandates crypto asset market marking.
- Possible closure of tax loophole raises industry concerns.
- Implementing loophole closure may pose challenges for investors.
Can Taxes Able To Shut The Income?
Legislation and proposed regulations surrounding cryptocurrency taxation are poised to address some lingering uncertainties regarding the taxation of digital assets. However, not all potential changes are met with enthusiasm within the industry.
— Stock Market News (@Stock_Market_Pr) October 19, 2023
Senators Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) have introduced a bill that delves into various cryptocurrency tax issues. The bill aims to offer a specific definition of brokers for tax reporting purposes and necessitates the marking of crypto assets to market for year-end accounting. Additionally, it seeks to close a tax loophole that has been a point of contention. The Senate Finance Committee had previously requested further information on these crypto taxation issues earlier in the fall.
On a recent episode of Talking Tax, Lisa Zarlenga, the head of Steptoe & Johnson LLP’s tax policy practice and a former tax legislative counsel at the Treasury Department, discussed this legislation and the new proposed regulations concerning tax reporting rules for crypto brokers with Bloomberg Tax.
One contentious aspect of the proposed changes involves closing a tax loophole that currently enables investors to claim losses by swiftly selling and repurchasing their digital assets. Implementing this closure may prove challenging, as some investors could inadvertently trigger the rule.
The introduction of Senators Lummis and Gillibrand’s crypto tax bill signals a significant step toward regulating the cryptocurrency market. While defining broker roles and instituting market marking for crypto assets aim to bring clarity to the tax landscape, the closure of the tax loophole presents a potential hurdle.
Balancing the need to prevent abuse of the tax system with the unintentional consequences for investors will be crucial for successful implementation. The cryptocurrency industry will be closely watching how these proposed changes evolve and their impact on digital asset taxation.