Congressman Ted Budd has introduced a bill to the U.S. House of Representatives to reform the national tax code around cryptocurrency.
According to the text of this bill, first filed on July 25, 2019, the goal is “to allow exclusion of gain or loss on like-kind exchanges of virtual currency.” While the proposed changes to the tax code appear minor in procedure, they could have a large impact on the cryptocurrency space.
Gains and losses realized in transactions of like-kind real property remain unrecognized under the current tax code, and crypto assets fall under the umbrella of “real property” for the purposes of these taxes.
As Budd explained to the House Committee on Ways and Means, “The use of digital assets is already treated as a sale of the asset, even though the economic reality of the transaction is a purchase of a simple consumer good.”
Having already proposed a similar bill earlier this year, Budd is continuing his mission to make the IRS stop double-taxing crypto users both on crypto assets as property and on like-kind exchanges of crypto assets.
Small legal quirks like this can have big implications on the crypto space as a whole, and it is a work in progress to see how the tax codes can adapt. Earlier this year, for example, Representative Tom Emmer made multiple attempts to formally clear up the way that tax codes apply to hard forks and “forkcoins.”
The bill has been referred to the House Committee on Ways and Means for further discussion and development.