President Joe Biden’s proposed budget includes changing tax treatment for “wash sales” of digital assets.
The administration’s fiscal year 2024 budget, released on Thursday, includes a provision that would make crypto subject to “wash sale rules,” which would eliminate tax deductions on losses incurred on selling and quickly rebuying the same or a similar crypto investment. Stocks and bonds are already subject to that tax treatment.
The Biden administration estimates that change would raise approximately $31.6 billion in revenue over a standard ten-year budget window.
Other crypto-related line items of the budget include:
- Information reporting by “certain financial institutions and digital asset brokers for purposes of exchange of information.”
- A change to mark-to-market tax rules to include digital assets.
- A requirement for U.S. individuals with large holdings in foreign digital asset accounts to report those holdings to the IRS.
Added together the administration believes those changes would raise nearly $40 billion over the ten-year budget projection window standard to the U.S. government.
Regardless of the administration, presidential budget requests in the current political era are never fully accepted by Congress and instead reflect the priorities of the administration and policies that could become law through a more piecemeal legislative approach.
In 2021 Biden signed into law an infrastructure bill that included new definitions for “broker” among cryptocurrency network participants as part of a way to offset the cost of the law, a so-called pay-for, which the items in Thursday’s budget request could also become. The expanded definitions looked to increase the collection of taxes owed on digital assets, but the broker definition has been criticized as overly broad. Guidance for that new rule is expected to be released soon.
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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