Is US Taxation Going to Affect Cryptocurrency Investors?
April 1, 2018
April 27 is the deadline for US taxpayers to pay taxes on profits from cryptocurrency investment, and this process is indeed complicated, because current tax rules are extremely unfriendly to tech innovators and pioneers.
The problem of cryptocurrency taxation arise many questions. Because even airdrops, such as 1 BCH for 1 BTC are in the gray area and it is unclear, whether to consider they dividends or not. All these problems must be addressed as soon as possible, but the current tax legislation can become an obstacle.
An U.S. non-profit research and advocacy center Coin Center demands exempt small profits from taxation. The agency believes that this would make the life of small cryptocurrency investors much easier.
Coin Center CEO Jerry Brito told NewsBTC:
"Say you buy 100 euros for 100 dollars because you’re spending the week in France. Before you get to France, the exchange rate of the Euro rises so that the €100 you bought are now worth $105. When you buy a baguette with your euros, you experience a gain, but the tax code has a de minimis exemption for personal foreign currency transactions, so you don’t have to report this gain on your taxes. As long as your gains per transaction are $200 or less, you’re good to go."
Cryptocurrency is considered property by the Internal Revenue Service (IRS), which means that profits from sale and exchange of them are taxed as capital gains, not as ordinary income. De minimis exemption is not used for transactions and changes of exchange rate of property. No matter how small they are. As a result, this makes bitcoin adoption as means of payment hard.
Coin Center believes that in order to make the situation better and easier, the de minimis exemption must be applied to cryptocurrencies. This move can eliminate legal tension and encourage the development of this innovative technology.
Meanwhile, only 100 people out of more than 250 thousand filed their federal taxes through Credit Karma Tax service this year declared cryptocurrency profits or losses.