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If you own any cryptocurrency, there's a secret tax loophole that can save you thousands




  • In Business
  • 2021-07-30 01:25:31Z
  • By BGR
 

Recent weeks have seen a flurry of cryptocurrency news, from Tesla announcing just a few days ago that it's still holding $1.3 billion worth of bitcoin - and that it's also planning to accept bitcoin as payment soon. The city of Miami is also continuing to talk up MiamiCoin, its own cryptocurrency token that would be used to fund development projects in the Magic City.

Meantime, some crypto market investors are celebrating the recent 46% dip from the market's all-time high in May. That's because of a tax loophole which has been garnering headlines in recent weeks. This particular loophole treats crypto losses differently than losses associated with an asset like a stock. And more awareness of it comes at a time when Democratic lawmakers in Congress want to squeeze crypto investors for more money.

Latest cryptocurrency news

The loophole, which may sound a little esoteric for the average American, works like this. Crypto investors can sell their assets at a loss. Then, they can use that loss to whittle down or wipe out capital gains tax on other investments that are doing well. And they can buy back the crypto asset they sold at a loss to make sure they're ready when a price rebound happens for it. Whereas, normally, they have to wait essentially a month to do that same thing with a stock.

"One thing savvy investors do is sell at a loss and buy back bitcoin at a lower price," CPA Shehan Chandrasekera told CNBC. "You want to look as poor as possible."

Chandrasekera went on to explain that he sees people doing this every month, week, and quarter. Depending, of course, on their level of investment sophistication. Investors can rack up so many of these losses, he said. Losses that they can just put toward offsetting any future gains.

The infrastructure bill, and Amazon

We should add that this comes against the backdrop of other major cryptocurrency news. Specifically, a major development associated with the infrastructure bill that the Biden administration desperately wants Congress to pass.

Basically, new crypto reporting requirements are part of this bill's mix of policy goals. Don't ask us what the relation is to roads and bridges - you know, infrastructure. It seems that the idea is for the new crypto reporting requirements to help raise billions of dollars. For - what else? To help pay for other infrastructure-y aspects of the legislation.

Also, on an unrelated note, we mentioned in a post a few days ago that Amazon is seeking an experienced individual to lead its digital currency and blockchain department. The finding led to speculation that Amazon will eventually support bitcoin payments - and might even, eventually, launch its own cryptocurrency. "Amazon has an official position on the matter," we reported earlier this week. The company's position is that the swirl of reports claiming that bitcoin payments are coming soon are "unfounded." However, it ended up sounding more like a non-denial denial, truth be told. The company certainly seems to be interested in the blockchain landscape.

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