• President Joe Biden’s proposed budget will include a provision to close tax loss harvesting on cryptocurrency transactions.
• The provision would raise an estimated $24 billion, and is intended to reduce wash sales trading by crypto investors.
• The president’s team has already passed one crypto tax-related piece of legislation into law in 2021.
Biden Budget Plan Includes Crypto Tax Loss Harvesting Loophole Closure
U.S. President Joe Biden’s proposed budget, set to be unveiled Thursday, will include a provision to close tax loss harvesting on cryptocurrency transactions. This is expected to raise an estimated $24 billion and is intended to reduce wash sales trading by crypto investors. A White House official confirmed the budget includes this tax provision, which must pass through the House of Representatives and Senate before going to the president’s desk for his signature.
What Is Tax Loss Harvesting?
Tax loss harvesting is a strategy used by crypto investors where they sell any cryptocurrencies at a loss, claim the loss on their taxes, and then buy the same amount and type of cryptocurrencies again. This loophole allows them to take advantage of losses for tax purposes without actually enduring any financial losses from their investment in cryptocurrencies.
Previous Legislation To Close Tax Loss Harvesting Loophole
Lawmakers introduced a bill in late 2021 that would similarly prevent investors from claiming a loss only to repurchase the same cryptocurrencies again; however, it did not pass into law at that time. In 2021, the Bipartisan Infrastructure Framework (which later became the Infrastructure Investment and Jobs Act) included a controversial tax provision that would impose certain reporting rules onto brokers facilitating crypto transactions; this was passed into law by President Biden’s team with broad definitions of „broker,“ potentially including miners or other types of entities that don’t directly facilitate transactions or collect personal information about customers‘ identities or activities related to buying or selling virtual currencies.
Biden Budget Plan Aimed at Reducing US Deficit
The proposed budget will lay out U.S. President Joe Biden’s fiscal priorities with an aim of reducing the U.S.’s deficit by $3 trillion over 10 years; if passed through Congress it would become law when signed by the president himself at his desk in Washington D.C..
Conclusion
President Joe Biden is proposing closing a loophole allowing for tax-loss harvesting on cryptocurrency transactions as part of his upcoming budget proposal – aiming both at raising revenue for government coffers as well as reducing wash sale trades made using virtual currencies like Bitcoin and Ethereum among others. The bill must still pass through Congress before becoming law when signed by President Biden himself; however, he has already gotten one crypto tax-related piece of legislation into law earlier this year – imposing certain reporting rules onto brokers facilitating crypto transactions while creating broad definitions including miners and other types of entities not directly involved in transaction facilitation itself