Bitcoin holders have just a few months left to take advantage of a tax break that may expire in 2022 the house ways and means committee is attempting to close one of the most lucrative crypto tax loopholes
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a move that according to the joint committee on taxation could cost holders of bitcoin and other virtual coins nearly 17 billion dollars according to a committee summary report the bill would apply the so-called wash sale
rule to digital assets treating them similarly to stocks when a tax deduction is involved the rule requires an investor to wait 30 days between selling and repurchasing a security it is one of the tax increases democrats are considering to help pay for president
biden's proposed spending of 3.5 trillion dollars to expand the united states social safety net while democrats face numerous obstacles in finalizing legislation and passing it in a deeply divided congress crypto experts
are already investigating ways to help investors minimize their 2021 tax if the proposal is approved taxpayers will have until december 31st to fully utilize the existing loophole which allows cryptocurrency investors to sell coins
at a loss and immediately buy them back given the recent collapse in cryptocurrency prices the market is down 26 percent from its may high the timing is ideal for tax loss harvesting
keeping your 2021 crypto tax bill to a minimum due to the irs's current classification of digital currencies such as bitcoin as property losses on crypto holdings are treated very
differently than losses on stocks and mutual funds one strategy that astute investors employ is to sell at a loss and repurchase bitcoin at a lower price said shahan chandrasekhara head of tax
strategy at cryptocurrency tax software company cointracker dot io you want to appear as impoverished as possible chandrasekhara added that investors can deduct an unlimited amount of losses
and carry them forwards indefinitely the larger the cryptocurrency market the more frequently this occurs i see individuals doing this on a monthly weekly or quarterly basis depending on
their sophistication chandrasekhara explained accumulating these losses allows investors to offset future gains and reduce the capital gains tax on other assets in other words they
minimize their tax liability to the irs rapidly repurchasing the cryptos is another critical component of the equation if purchased at the right time buying the dip enables investors
to ride the rebound back up assuming there is one digital coins are infamous for their volatility with sharp drops frequently followed by sharp spikes here's a simple way to consider the
equation if bitcoin were treated like apple or tesla stock someone who purchased one bitcoin for ten thousand dollars and sold it for fifty thousand dollars would face forty thousand dollars in taxable capital gains.