Democrats in the US Congress Want to Eliminate Tax Loopholes in Reporting Crypto Transactions

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As reported by Politico, the second $3.5 trillion infrastructure plan being developed by the US Congress could be adopted with amendments that will extend anti-money laundering regulations to crypto transactions.

According to the proposed amendments:

“This section includes commodities, currencies, and digital assets in the wash sale rule, an antiabuse rule previously applicable to stock and other securities. The wash sale rule in section 1091 prevents taxpayers from claiming tax losses while retaining an interest in the loss asset. The amendments made by this section apply to taxable years beginning after December 31, 2021.”

Under current US regulations, taxpayers may not include losses from “wash-sale” in taxable income. These are understood as a disposal of securities followed by the acquisition of “substantially identical assets” within 30 days.

The idea behind this operation is to avoid the understatement of the capital gains tax (so-called tax loss harvesting). This provision does not currently apply to digital assets.

The authors of the paper have also proposed extending the constructive sale rule to cryptos.

The second infrastructure plan, valued at $3.5 trillion, is supposed to be submitted for public review by the end of September.