A draft law has been proposed with bipartisan support to exclude from taxation small capital gains of up to $200 when making purchases. The bill says:
“Gross income of an individual shall not include gain, by reason of changes in exchange rates, from the disposition of virtual currency in a personal transaction (as such term is defined in section 988(e)).
The preceding sentence shall not apply if the gain which would otherwise be recognized on the transaction exceeds $200.”
A straight reading of this suggests any transaction under $200 is excluded as you can’t have a $200 gain if you’re spending $190.
In addition any capital gains on any amount are excluded as long as the capital gains are $200 or less.
“This bill, introduced by Reps. DelBene, Schweikert, Soto, and Emmer, would address the problem by simply treating cryptocurrency similarly to any other foreign currency,” Crypto advocacy group Coincenter says, adding:
“Low value day to day transactions would be exempted from capital gains, up to a point. This easy solution to an obvious problem with today’s tax treatment of cryptocurrencies would help level the playing field for this technology.”
As the law currently stands if you bought $1 bitcoin which increases to $3, and you now buy a coffee with this $3, you have to report a $2 gain to IRS.
That’s technically, practically no one can really keep account of such small amounts, so congress is just trying to remove needless red tape.
Whether they’ll be able to agree, however, is a different matter with President Trump previously stating he does not like bitcoin.
Trump got a billion dollars or so in cheap “loans” from banks so it wouldn’t be too surprising if he came out against this bill, but the current technical crypto tax requirements are perhaps not desirable even for Trump when it comes to small amounts.
That’s because it is a nonsense law and obviously so, which thus undermines the rule of law if it is kept on the book because laws are meant to be followed not ignored.
Yet not even angels can follow this law when it comes to small amounts. So making it potentially unconstitutional.