U.S. bill to exempt small virtual currency transactions from CGT [pdf](coincenter.org)
coincenter.org
U.S. bill to exempt small virtual currency transactions from CGT [pdf]
https://coincenter.org/files/2020-01/delben-049-xml-final.pdf
145 comments
If that's true, that makes a huge difference. AFAIK, the fraction of transactions for goods is minuscule.
Yeah I’m not 100% on it, but I seriously doubt that selling your Bitcoin in small chunks to keep the capital gains under $200 in each transaction would fly.
The intention of the original law is exactly like the example I provided; we don’t want people to have to account for trivial gains and losses every time they travel overseas and spend in a foreign currency. The law is not intended to provide a loophole to recognize tax-free gains in currency trading, and if you tried that you would probably lose in court.
The intention of the original law is exactly like the example I provided; we don’t want people to have to account for trivial gains and losses every time they travel overseas and spend in a foreign currency. The law is not intended to provide a loophole to recognize tax-free gains in currency trading, and if you tried that you would probably lose in court.
I imagine if the total was over $10,000 it would violate laws against structuring.
Structuring laws are any attempt to evade reporting. There's no dollar limit on it; the limits depend on the reporting laws or policies. You're thinking $10,000 because that is the limit for deposit reporting. But if this law has a limit of $200 for reporting, then that is the limit for structuring.
So if someone bought 3 BTC in say 2015 for $200 each, they now would have roughly $25,000.
If I understand right, they could then use that without paying any taxes on all transactions under $200?
I assume you would still have to account for that somewhere? Even if only in your personal accounts, in case you do some larger transactions or trading. For example if you decide to sell $5,000 of your BTC for US dollars. That now becomes a capital gain tax. You need to list the date you purchased it (date in 2005) & the date you sold it (now).
Your accounting software or books would still need to keep record of when you bought/sold/lost/used BTC though to properly mark which ones are long term gains and which are short and which were used for small transactions.
Please correct me if I'm wrong.
If I understand right, they could then use that without paying any taxes on all transactions under $200?
I assume you would still have to account for that somewhere? Even if only in your personal accounts, in case you do some larger transactions or trading. For example if you decide to sell $5,000 of your BTC for US dollars. That now becomes a capital gain tax. You need to list the date you purchased it (date in 2005) & the date you sold it (now).
Your accounting software or books would still need to keep record of when you bought/sold/lost/used BTC though to properly mark which ones are long term gains and which are short and which were used for small transactions.
Please correct me if I'm wrong.
IANAL. My reading is the same. All BTC transactions -- and by that I mean transactions made in BTC, not currency conversions -- for which the difference in the basis and current value are less than $200, exclude that difference from income. Note that the transaction does not have to be less than $200; the gain needs to be less than $200. The volatility of BTC might make this relatively hard to qualify for.
My big question is how this will work for accounting purposes as far as which basis is used. When you sell, say, a stock, you have to designate exactly which stock you are selling to calculate gains. If this works the same, you can choose in ways that get you as close to that $200 line as possible.
My big question is how this will work for accounting purposes as far as which basis is used. When you sell, say, a stock, you have to designate exactly which stock you are selling to calculate gains. If this works the same, you can choose in ways that get you as close to that $200 line as possible.
> My big question is how this will work for accounting purposes as far as which basis is used. When you sell, say, a stock, you have to designate exactly which stock you are selling to calculate gains. If this works the same, you can choose in ways that get you as close to that $200 line as possible
100% yes. I've heard some arguments about needing to be consistent with a formula, FIFO or LIFO. Though I'm not sure how true that is. I'm also not sure how you would do that if you have currency split among different apps.
> transaction does not have to be less than $200; the gain needs to be less than $200
Thank you for this clarification.
100% yes. I've heard some arguments about needing to be consistent with a formula, FIFO or LIFO. Though I'm not sure how true that is. I'm also not sure how you would do that if you have currency split among different apps.
> transaction does not have to be less than $200; the gain needs to be less than $200
Thank you for this clarification.
FIFO and LIFO are common options, but for stocks you can also elect to calculate based on specific shares. (Depending, of course, on support from your brokerage.) If one can do the same with BTC transactions, it will make staying under the limit much more achievable... Especially if you can mix lots, allowing losses to offset gains in a single transaction.
sort of (if i'm reading you right), the $200 doesn't apply to the basis you bough things at, but the capital gain. So your purchase price is irrelevant.
If you bought 3 at 100 and sold them at 150, you would have a net capital gain of 3x(150-100) = 150 and wouldn't have to report it.
If you sold them at 1100 gain is 3x(1100-100) = 3000 and you would report as capital gain on your taxes. Right now you have to do this for any amount.
Structuring is a separate issue. Typically that would mean that you can't break up a large gain into a bunch of < 200 gains to take advantage of this.
Note that the language is pretty specific though, and I don't think it applies to any transaction.
If you bought 3 at 100 and sold them at 150, you would have a net capital gain of 3x(150-100) = 150 and wouldn't have to report it.
If you sold them at 1100 gain is 3x(1100-100) = 3000 and you would report as capital gain on your taxes. Right now you have to do this for any amount.
Structuring is a separate issue. Typically that would mean that you can't break up a large gain into a bunch of < 200 gains to take advantage of this.
Note that the language is pretty specific though, and I don't think it applies to any transaction.
I had to read up on structuring. Thank you for that. It's nice to have a term to search for when trying to understand a topic.
What's still not clear to me is at what point does it become structuring. I've found plenty of obvious examples such as splitting two deposits of $8,000 into a bank after selling an item for $16,000.
But what about someone who just buys their groceries and fills their vehicle up with gas with BTC that is worth much more than they paid for it years ago? Is it structuring if you're spending this money in multiple transactions that only add up to $1,000/month every month for the rest of your life?
After reading up on a few structuring cases all, my conclusion is that there is no black & white rule on this & it is up to the prosecution to show that the accused knew that they were structuring & that it was illegal. If that's the case, I would assume the above example could be found guilty.
Side note, I'm in no way able to benefit on this. I just have an interest in IRS rules and politics.
What's still not clear to me is at what point does it become structuring. I've found plenty of obvious examples such as splitting two deposits of $8,000 into a bank after selling an item for $16,000.
But what about someone who just buys their groceries and fills their vehicle up with gas with BTC that is worth much more than they paid for it years ago? Is it structuring if you're spending this money in multiple transactions that only add up to $1,000/month every month for the rest of your life?
After reading up on a few structuring cases all, my conclusion is that there is no black & white rule on this & it is up to the prosecution to show that the accused knew that they were structuring & that it was illegal. If that's the case, I would assume the above example could be found guilty.
Side note, I'm in no way able to benefit on this. I just have an interest in IRS rules and politics.
IANAL or a tax accountant, but believe you have the right general idea except in most cases for tax (and some other financial) purposes the onus is on you to demonstrated that you did not structure transactions, not on them to demonstrate that you did.
You are right that it is all a bit fuzzy because real life use is complicated.
Exceptions on reporting like this are meant to make "normal life" transactions less burdensome. For example in general you have to report gains/losses made on foreign exchange, but typically countries have an allowance so that you don't have to calculate this every time you go on vacation.
The proposed amendment would add virtual "currency" transactions to that.
You are right that it is all a bit fuzzy because real life use is complicated.
Exceptions on reporting like this are meant to make "normal life" transactions less burdensome. For example in general you have to report gains/losses made on foreign exchange, but typically countries have an allowance so that you don't have to calculate this every time you go on vacation.
The proposed amendment would add virtual "currency" transactions to that.
I'm 100% behind this being passed as I can't see digital currencies being useful as a US citizen with the current reporting requirements.
At the same time, I also think this is an incredibly difficult policy to get right.
I think structuring could become a common thing among those who have done well with digital currencies to either avoid taxes or purely out of convenience & without ill intent.
At the same time, I also think this is an incredibly difficult policy to get right.
I think structuring could become a common thing among those who have done well with digital currencies to either avoid taxes or purely out of convenience & without ill intent.
If the spending is for clearly separate transactions, such as your example of shopping at different stores, then that seems like it would be fairly easy to defend.
What would be problematic here is, say, buying a car with BTC in multiple "transactions", each of which is individually below the $200 gain threshold. It's really a single transaction taking place: BTC for a car. That could be interpreted as intentionally structuring the payments in a way that obviously works around the spirit of the proposed law.
What would be problematic here is, say, buying a car with BTC in multiple "transactions", each of which is individually below the $200 gain threshold. It's really a single transaction taking place: BTC for a car. That could be interpreted as intentionally structuring the payments in a way that obviously works around the spirit of the proposed law.
"Structuring" is only to do with violating the "spirit" of the paperwork rules, tending to avoid detection of taxable or otherwise regulatable activity.
It is separate from the rules about what you are legally obligated to pay in taxes, which generally apply to total amount transacted/gained and aren't affected by the size of individual transactions.
It is separate from the rules about what you are legally obligated to pay in taxes, which generally apply to total amount transacted/gained and aren't affected by the size of individual transactions.
I don't think i suggested otherwise, but edited to make it clearer.
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> AFAIK, the fraction of transactions for goods is minuscule.
Yes, it’s a commodity, not currency.... yet, if ever.
Yes, it’s a commodity, not currency.... yet, if ever.
The reason for that may be that it is so difficult to use precisely because of these tax policies.
Software can easily track when transactions happened and what the value was, just consider day trading as the extreme version. The real issue was unlike the original proposal transaction fees eventually grew large enough killed off the traction bitcoin was gaining.
IMO, there is still a huge opportunity for sub 1 cent transaction fees when buying a soda at a vending machine or at small shops.
IMO, there is still a huge opportunity for sub 1 cent transaction fees when buying a soda at a vending machine or at small shops.
Nobody wants to file a 1000-page Schedule D listing every consumer transaction they made with cryptocurrencies, regardless of whether it's generated by software or not.
Most people don't even know what it is, they just know it's ugly and painful and taxes are hard.
Transaction fees were only large for a short time due to the BCH attack.
The vast majority of people don't understand doing taxes for day trading.
There are plenty of cryptocurrencies with very low transaction fees. That doesn't fix the issue.
The vast majority of people don't understand doing taxes for day trading.
There are plenty of cryptocurrencies with very low transaction fees. That doesn't fix the issue.
> Transaction fees were only large for a short time due to the BCH attack.
Well that's new. There was no "BCH attack" that drove up the fees.
BTC simply couldn't keep up with the demand and the fomo that made people pay ridiculous fees to not miss out on the crazy pump.
Well that's new. There was no "BCH attack" that drove up the fees.
BTC simply couldn't keep up with the demand and the fomo that made people pay ridiculous fees to not miss out on the crazy pump.
The 1c per transaction of early bitcoin was compelling. That’s the case I am talking about, once they broke 10c/transaction bitcoin lost and it’s still past that threshold.
Don’t forget buying bitcoin’s also has transaction fees and you get real volatility, so it needs very low fees not just seemingly reasonable ones.
Don’t forget buying bitcoin’s also has transaction fees and you get real volatility, so it needs very low fees not just seemingly reasonable ones.
There are still cryptocurrencies with that - Nano, Iota, EOS, Stellar all have basically negligible transaction fees, and even Ethereum isn't that expensive. That Nano hasn't really caught on is an indication that the barrier to mass adoption of cryptocurrencies lies somewhere other than transaction fees.
credit cards have higher fees than 10c per transaction. It's not the transaction fees, it's the friction in its use that prevents users from wanting to use it, and it's the tax implications in its use that prevents business adoption.
Yes, but credit/debit cards can be paid via bank transfers without fees and they can also give cash back, reverse charges etc. Using Bitcoin on the other hand means buying it which Coin Base for example charges 1.49% to do.
Anyway, a 10+cent transaction fee is not really a downside as long as it’s competitive, but it does reduce the incentives for adoption.
Anyway, a 10+cent transaction fee is not really a downside as long as it’s competitive, but it does reduce the incentives for adoption.
You don't have to buy from coinbase, but that sort of thing is what I was referring to by friction.
I wonder if market-making or other HFT trading strategies would (accidentally) fall under this law, though. There you naturally end up with lots of very small gains that happen frequently, of essentially random amounts.
Isn't there precedent in forex trading? Why not just use that taxation scheme. Cryptocurrencies are quite different from securities.
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In non-legal terms: if you gain less than $200 from personal transactions, this amount is not included in your gross income, hence not subject of capital gains tax. If it is more, the whole amount is taxable.
So if you gain $199, it‘s tax free. If you gain $201, the whole $201 is treated as gross income and hence taxable.
So if you gain $199, it‘s tax free. If you gain $201, the whole $201 is treated as gross income and hence taxable.
Why couldn't a crypto millionaire simply automate every transaction in chunks of $199 and avoid taxes then?
That’s known as “structuring” and is illegal:
https://en.m.wikipedia.org/wiki/Structuring
https://en.m.wikipedia.org/wiki/Structuring
This conversation reminds me of https://xkcd.com/1494/
And yet you can hire a lawyer who can show you similar looking loopholes that are completely legal. Structuring to avoid taxes is illegal but the double Irish method isn't? There are many other such loopholes and telling the legal from the illegal appears mostly arbitrary.
I was always wondering why no one steals luggage at the airport. You can walk in and take stuff!
Ah, but how often is that law enforced? And is it easily enforced? This seems ever increasing in importance nowadays.
It's enforced so often that people who aren't even trying to circumvent the law get nailed:
https://www.forbes.com/sites/robertwood/2017/04/05/91-of-irs...
https://www.forbes.com/sites/robertwood/2017/04/05/91-of-irs...
It's certainly enforced, you'll see it often in money laundering cases where people have tried to deposit funds just under the 10k reporting limit.
This is not possible, since the law exempts anything up to $200 from your gross income calculation, from which your taxable income is derived. Taxable income is periodically calculated according to your taxable year. So if you exceed those $200 within your taxable year, it is taxed. Does not matter how many transaction it takes.
Well you can do that. But it is the income that the entity declares what is taxed. In the same vein, you can also work without declaring your income to avoid taxes.
Avoiding taxes is something that millionaires already do, I do not see why this should be any different.
Avoiding taxes is something that millionaires already do, I do not see why this should be any different.
Avoiding tax illegally, which not reporting income would imply, is what some people do. Not only millionaires and not all millionaires do this.
It’s also called “we see what you are really doing”
Typically law (at large) forbids purposefully bending the law against its spirit and intent, which is also noted and publicized.
If you were interested in tax free trading of cryptocoins, one hack is to set up a self-directed IRA LLC, so you have checkbook control. Then you could fund the LLC through your IRA and the LLC crypto trades are tax free (subject to IRA compliance of course).
No tax loss harvesting either though, which for most people I've talked to seems to be the better value.
Only if you're losing money on your cryptocurrency trades... in which case it's probably better to stay in the U.S. Dollar and tape off your trading finger. If your cryptocurrencies finally turn positive after you've harvested your losses then you'll owe it all back in taxes. If your trades never go south, then you'll be better off with tax-free gains.
That sounds incredibly smart because crypto taxes are a huge headache to do yourself and crypto-tax preparers charge $500-$1000/year. Does having the LLC increase your tax complexity? If so, by how much?
> Does having the LLC increase your tax complexity?
Based on the verbiage of your question, I would simply say this isn't something you would try to structure without tax counsel/IRA counsel. Note, what I am referencing is known as a self-directed IRA LLC (sometimes called a special purpose LLC).
If structured properly the IRA LLC should not need to file a federal tax return (it should be a single member LLC, so it is considered a disregarded for tax purposes, with the IRA being the sole member). That said if you dip into a tax free retirement account, you will likely trigger significant taxes, so again this is where the tax counsel/IRA counsel would guide you to avoid those potential liabilities. There are some other potential issues with IRA LLCs concerning disqualified persons and prohibited transactions, to avoid triggering taxes (all pretty simple and navigable once you are informed and aware of the issues)
Based on the verbiage of your question, I would simply say this isn't something you would try to structure without tax counsel/IRA counsel. Note, what I am referencing is known as a self-directed IRA LLC (sometimes called a special purpose LLC).
If structured properly the IRA LLC should not need to file a federal tax return (it should be a single member LLC, so it is considered a disregarded for tax purposes, with the IRA being the sole member). That said if you dip into a tax free retirement account, you will likely trigger significant taxes, so again this is where the tax counsel/IRA counsel would guide you to avoid those potential liabilities. There are some other potential issues with IRA LLCs concerning disqualified persons and prohibited transactions, to avoid triggering taxes (all pretty simple and navigable once you are informed and aware of the issues)
A good general rule of thumb is if you think you've found some clever simple "hack" to get around tax or other regulations, it's probably not as clever as you think and has already been accounted for.
Another good general rule, especially when law is concerned, is there are always exceptions to the rule.
Self-directed IRA LLCs are nothing new, but using them for tax free crypto trading is (obviously)...though I welcome any specific concerns.
Self-directed IRA LLCs are nothing new, but using them for tax free crypto trading is (obviously)...though I welcome any specific concerns.
It's not getting around regulations, it's using IRA regulations as intended.
Unless you are a unicorn tech company
Does the US have any sort of capital gains allowance? In the UK you can make £12000 (about $16000) of capital gains every year tax free so this covers most smaller investors, etc.
Note that this "annual exempt amount" is on top of an individual's personal allowance (defaults to £12500). If you had no other income in a tax year, you'd only pay Capital Gains Tax on gains over £24500.
The long term capital gains rate is 0% if your income is $0 to $39,375; so essentially your first $40k of capital gains is exempt if you have no income.
For the purposes of this calculation, your cap gain is added to your income to work out your bracket.
For the purposes of this calculation, your cap gain is added to your income to work out your bracket.
I would expect that 50% or more of hackernews readers make over $39,375
Certainly, but what OP actually meant is that capital gains from $0-$39375 is taxed at 0% (if you're a single filer). Then your next $395175 is taxed at 15%. Anything over that is taxed at 20%.
It's similar to our tax brackets. Going to a higher bracket doesn't suddenly mean that all the money fitting in the prior bracket is taxed at that higher rate.
It's similar to our tax brackets. Going to a higher bracket doesn't suddenly mean that all the money fitting in the prior bracket is taxed at that higher rate.
The problem isn't the total cost, it's the reporting requirements. Who wants to look up and record the fair market value of bitcoin and then calculate gains every time they use it to buy a coffee?
Nope
That's not exactly true in practice.
If your income + capital gains is less than $40,000 this year, your long term capital gains rate is 0%.
Go 1% over, and you pay 15% on the whole thing. It's really silly (and also not progressive; as the vast majority of America falls under the $40k to $440k bracket).
If your income + capital gains is less than $40,000 this year, your long term capital gains rate is 0%.
Go 1% over, and you pay 15% on the whole thing. It's really silly (and also not progressive; as the vast majority of America falls under the $40k to $440k bracket).
This is false, and is an (unfortunately) common misunderstanding about tax brackets generally.
You pay 0% up to $40K, and the 15% starts applying only to income greater than $40K. You absolutely do not pay 15% on the whole thing.
You can verify on the IRS worksheet itself line 11 "This amount is taxed at 0%":
https://apps.irs.gov/app/vita/content/globalmedia/capital_ga...
Here's a blog entry describing:
"Notably, because the 0% long-term capital gains rate only applies until crossing the threshold of... taxable income..., the reality is that the opportunity for 0% capital gains is inherently limited – as with other low tax brackets, it only applies until there’s enough income to cross out of that bracket, and any additional income falls in the next higher bracket."
https://www.kitces.com/blog/understanding-the-mechanics-of-t...
You pay 0% up to $40K, and the 15% starts applying only to income greater than $40K. You absolutely do not pay 15% on the whole thing.
You can verify on the IRS worksheet itself line 11 "This amount is taxed at 0%":
https://apps.irs.gov/app/vita/content/globalmedia/capital_ga...
Here's a blog entry describing:
"Notably, because the 0% long-term capital gains rate only applies until crossing the threshold of... taxable income..., the reality is that the opportunity for 0% capital gains is inherently limited – as with other low tax brackets, it only applies until there’s enough income to cross out of that bracket, and any additional income falls in the next higher bracket."
https://www.kitces.com/blog/understanding-the-mechanics-of-t...
This isn’t correct. The calculation can be found as the worksheet on page 33 of https://www.irs.gov/pub/irs-pdf/i1040gi.pdf — regular income gets taxed first, and then long-term gains after. The 15% bracket only applies to the portion in excessof $40k, not the whole amount (lines 11-20 on the worksheet).
Be careful giving tax advice here, because you're partly wrong and missing key details.
For instance, I'm married and I can make $120k (with no other income) of long term capital gains and pay $2.5k in federal taxes on it.
The cap gains bracket is progressive.
Source:https://turbotax.intuit.com/tax-tools/calculators/taxcaster/
For instance, I'm married and I can make $120k (with no other income) of long term capital gains and pay $2.5k in federal taxes on it.
The cap gains bracket is progressive.
Source:https://turbotax.intuit.com/tax-tools/calculators/taxcaster/
When are they going to stop using fixed dollar amounts in laws as if they didn’t know in a decade $200 will be worth way less than it is now? Kind of a slap in the face.
Proposed bills rarely go anywhere, and so are not on topic for HN unless there is something else that's significant about them. The only reason they ever seem to get attention is because of something sensational in the proposal, and those are invariably the least likely proposals to get enacted.
If something comes of this, we can discuss it then. On HN there's no harm in waiting.
If something comes of this, we can discuss it then. On HN there's no harm in waiting.
The headline should be amended to emphasize that de minimus and economically insignificant transactions would be exempt.
I doubt compliance is high now, and the reporting burden exceeds any likely amount of races collected, especially as it would force filers to use differentirs forms.
I doubt compliance is high now, and the reporting burden exceeds any likely amount of races collected, especially as it would force filers to use differentirs forms.
Does an Electronic Funds Transfer (EFT) qualify as using a "virtual currency"?
‘virtual currency’ means a digital representation of value that is used as a medium of exchange and is not otherwise currency under section 988.
‘virtual currency’ means a digital representation of value that is used as a medium of exchange and is not otherwise currency under section 988.
no, because it's currency under section 988
no court in the world is going to find that a bank account denominated in dollars is not "currency" just because you're not holding actual canvas bags with dollar signs on them.
"we see a lot of programmers here..." https://xkcd.com/1494/
no court in the world is going to find that a bank account denominated in dollars is not "currency" just because you're not holding actual canvas bags with dollar signs on them.
"we see a lot of programmers here..." https://xkcd.com/1494/
I don't mean the bank accounts on either end of the EFT; I mean the actual EFT itself. My thinking is that an end-to-end transfer of asset value via bitcoin is essentially the same thing as doing it via EFT; while the sum to be transferred is not in the source or destination accounts; it's just bits on a wire.
Seems reasonable, I think in Spain is 400Euro for common shares.
If I am a merchant who accepts crypto as pent what is my tax liability? How do I determine my cost basis if I only price my goods in crypto?
Your cost basis is in notional USD as a US taxpayer. It’s not different than if you bartered for sacks of wheat and priced everything in sacks of wheat. (Actually, it’s probably more clear what the BTC/USD cross is than what the SoW/USD cross is.) If you took the midpoint of any spread, you’d almost surely be safe. You could also probably argue to use a different point in the spread as long as you do it consistently.
What's an investor's ability to do do a large number of $200 transaction, rather than one large transaction?
Severe criminal penalties if you get caught structuring transactions to avoid the reporting limit.
As a technical matter, it will be cheap and convenient for an Ethereum user to buy $200 of an asset one hundred times instead of $20,000 of that asset once.
Programmatic money has a blurring effect on the definition of a "transaction".
Programmatic money has a blurring effect on the definition of a "transaction".
And that would be structuring which the exchange will note and report to the IRS and will end with you in a court room and/or jail cell.
Why would you do this on a centralized exchange in the first place? They are good for changing USD into crypto and vice versa but any kind of trading is much easier on a dex such as Uniswap or the like.
I don't see why income can't be treated as income no matter where it comes from.
The tax system in the US is commonly used to encourage behaviors the state finds desirable and discourage others. Capital gains are taxed lower because of the perception that that money will get reinvested and that investments are good for the economy.
The other way to interpret this is that lobbying by wealthy interests have cut their own tax rates by half as compared to the working class, perpetually creating a class of wealth-holders and a class of renters through systematic distortions in the tax system.
Is it really fair that a wealthy investor pays 15% tax, while a doctor pays 35%?
Is it really fair that a wealthy investor pays 15% tax, while a doctor pays 35%?
> Is it really fair that a wealthy investor pays 15% tax, while a doctor pays 35%?
no. But then the wealthy's capital gains could come from gains in stock or a company, and those gains have already had company tax paid on them, e.g., if a company makes a profit of $100, they'd have to pay $21 in tax, and the company's equity gain is then $79. If you then charge a 35% tax on top of the $79, then that means you've taxed the $100 profit at 56%, which is a lot higher than the normal amount. So by reducing capital gains tax to 15%, you'd end up charging only 36% in total.
It makes sense.
However, why this doesn't apply to a bank's interest payment is beyond me. So may be it is rigged...
no. But then the wealthy's capital gains could come from gains in stock or a company, and those gains have already had company tax paid on them, e.g., if a company makes a profit of $100, they'd have to pay $21 in tax, and the company's equity gain is then $79. If you then charge a 35% tax on top of the $79, then that means you've taxed the $100 profit at 56%, which is a lot higher than the normal amount. So by reducing capital gains tax to 15%, you'd end up charging only 36% in total.
It makes sense.
However, why this doesn't apply to a bank's interest payment is beyond me. So may be it is rigged...
The counterargument here is that the officers of the company can make most of their income not from being paid oodles of cash, but from being given oodles of stock that they later sell back to the company, which is now capital gains and not ordinary income.
From a matter of tax form simplicity, it is much easier--and probably better for society--just to count everything as ordinary income and tax it as such. Fewer potential for loopholes that drive your effective tax rate down to 0; easier to actually do your taxes yourself; etc.
From a matter of tax form simplicity, it is much easier--and probably better for society--just to count everything as ordinary income and tax it as such. Fewer potential for loopholes that drive your effective tax rate down to 0; easier to actually do your taxes yourself; etc.
How do they avoid paying tax on receiving the stock? If you're given shares, that counts as income at fair market value.
> The counterargument here is that the officers of the company can make most of their income not from being paid oodles of cash, but from being given oodles of stock that they later sell back to the company, which is now capital gains and not ordinary income.
Unless the stock option gains value (which is capital gains), no, the option itself is treated the same as if they had been paid cash.
> In general, the tax treatment for stock received as compensation for your services -- that is, stock in lieu of pay -- is the same as for regular pay. You must pay income taxes on the fair market value of the stock you received. Say an employer gave you 100 shares of stock in lieu of pay, and on the day you received the shares, the stock was trading at a price of $40. You've received the equivalent of $4,000 in income, so you'll be responsible for paying taxes on $4,000 in income. How much that tax will be depends on your tax bracket.
https://finance.zacks.com/tax-stock-lieu-pay-11287.html
Unless the stock option gains value (which is capital gains), no, the option itself is treated the same as if they had been paid cash.
> In general, the tax treatment for stock received as compensation for your services -- that is, stock in lieu of pay -- is the same as for regular pay. You must pay income taxes on the fair market value of the stock you received. Say an employer gave you 100 shares of stock in lieu of pay, and on the day you received the shares, the stock was trading at a price of $40. You've received the equivalent of $4,000 in income, so you'll be responsible for paying taxes on $4,000 in income. How much that tax will be depends on your tax bracket.
https://finance.zacks.com/tax-stock-lieu-pay-11287.html
Many corporations pay 0 tax as well. So in many instances, double taxation is not occurring.
This is just another example of the rich getting richer, leading to the massive income inequality that is destabilizing America.
This is just another example of the rich getting richer, leading to the massive income inequality that is destabilizing America.
If your life is also becoming easier and more comfortable as well, how does income inequality affect it?
>If your life is also becoming easier and more comfortable as well, how does income inequality affect it?
Is his though? only seems to be getting easier for the top.
Is his though? only seems to be getting easier for the top.
Then you admit income inequality isn't what is important here. but absolute quality of life.
A priori, that's a huge if.
Income inequality causes auction-priced goods and sevcices (much to most spending, including housing) to be bid up in price, it also creates power imbalance that can lead to more wealth extraction from the poor.
Income inequality causes auction-priced goods and sevcices (much to most spending, including housing) to be bid up in price, it also creates power imbalance that can lead to more wealth extraction from the poor.
Is that what's going on, wealth extraction from the poor? Because it seems to me that poor people today are taking more out of the system than putting into it.
48.65% is not 56% fyi
where did you get 48.65 from?
> if a company makes a profit of $100, they'd have to pay $21 in tax, and the company's equity gain is then $79. If you then charge a 35% tax on top of the $79, then that means you've taxed the $100 profit at 56%, which is a lot higher than the normal amount. So by reducing capital gains tax to 15%, you'd end up charging only 36% in total.
35% of $79 is $27.65. Total tax according to your example would be $21 + $27.65 = $48.65.
They were being a bit pedantic, but their math is correct.
35% of $79 is $27.65. Total tax according to your example would be $21 + $27.65 = $48.65.
They were being a bit pedantic, but their math is correct.
good spot, i miscalculated.
Long term gains are 23.8% for high earners. To get an effective federal tax rate of 35% in the US today, a single doctor would need to be earning about $2 million per year.
There are several arguments for a lower long term gains rate:
- It accounts the effect of inflation. Doctors don't receive their paychecks years after they perform the work, and they expect their salaries to keep up with inflation.
- Holding assets for long periods of time imposes risk that other forms of income don't have. Doctors don't typically risk having their paycheck cut in half suddenly.
- Progressive tax rates can be particularly harsh on investors, because sales typically come in big lump sums. Doctors get nice smooth paychecks that don't suddenly move them up and down income percentiles per year.
There are several arguments for a lower long term gains rate:
- It accounts the effect of inflation. Doctors don't receive their paychecks years after they perform the work, and they expect their salaries to keep up with inflation.
- Holding assets for long periods of time imposes risk that other forms of income don't have. Doctors don't typically risk having their paycheck cut in half suddenly.
- Progressive tax rates can be particularly harsh on investors, because sales typically come in big lump sums. Doctors get nice smooth paychecks that don't suddenly move them up and down income percentiles per year.
Investors also have plenty of opportunities for tax loss harvesting and spreading out gains using financial engineering techniques.
Yeah and doctors get free vacations from drug reps and that all gets expensed. Everyone finds ways to minimize their tax exposure.
Also, doctors often invest their earnings in the stock market and real estate, so let's not pretend "investor" and "doctor" are mutually exclusive entities.
People already have incentive to invest, inflation. I don't really buy the argument that capital gains taxes encourage investment, because without them, you'd still be stupid not to put your money to work.
Incentive isn't a yes or no thing, it's a scale. The more you tax saving relative to spending, the more you encourage people to spend. Mathematically, if we view save vs spend as a choice between consuming now vs consuming later, with some fixed time discounting function, then for any given save vs spend decision, taxing one increases the relative payoff of the other.
Seems strange then, that all politicians talk about is putting people to work, yet working is the most highly taxed activity.
This is pretty common world wide you want to encourage investment in companies and not just Guilts (T-bills in US speak)
And also it incentivises things like employee shares which everyone agrees is a good thing, even the SWP Socialist Workers Party Grudgingly accepts this
And also it incentivises things like employee shares which everyone agrees is a good thing, even the SWP Socialist Workers Party Grudgingly accepts this
I wish there was a way to truly be neutral in phrasing. I did not mean to imply this was bad or a lie, but I also didn’t want someone to pop up and say “capitalist lies!” :-)
Because there is a reporting burden to keep track of income, and the more nit picky you get about reporting all income the more deadweight loss you impose upon society as they waste time on accounting for trivial transactions.
one reason other replies haven't mentioned is that long-term gains don't play well with a progressive income tax system.
imagine you make $35k salary and you make an investment that increases in value by $50k over ten years. we'll ignore inflation and tax bracket hikes for simplicity. assuming you live in the US, your salary places you in the 12% bracket, and the 22% bracket starts around $40k income. if you realize that gain in the last year and it counts as income, almost all of that $50k gets taxed at 22%, despite the fact that "on average" you only made $40k each year. this effect gets worse the longer you hold onto the asset.
imagine you make $35k salary and you make an investment that increases in value by $50k over ten years. we'll ignore inflation and tax bracket hikes for simplicity. assuming you live in the US, your salary places you in the 12% bracket, and the 22% bracket starts around $40k income. if you realize that gain in the last year and it counts as income, almost all of that $50k gets taxed at 22%, despite the fact that "on average" you only made $40k each year. this effect gets worse the longer you hold onto the asset.
A few replies.
First, I don't believe this is actually an issue for people with 35k salaries as a whole. The vast majority of Americans do not have savings in excess of $1k let alone the ability to make an investment in the ballpark you're talking about.
Secondly, if this is true - why is the "long term" tax capped at 1 year? And not 10? Or adjusted for the length of an investment? To me the answer is because it's not designed to fix this problem.
First, I don't believe this is actually an issue for people with 35k salaries as a whole. The vast majority of Americans do not have savings in excess of $1k let alone the ability to make an investment in the ballpark you're talking about.
Secondly, if this is true - why is the "long term" tax capped at 1 year? And not 10? Or adjusted for the length of an investment? To me the answer is because it's not designed to fix this problem.
it's a contrived example to make the math easy. you can get the same outcome with more realistic values by putting the income closer to $40k and decreasing the gain, or you could do the analysis at a higher tax bracket boundary.
my point is that it doesn't make sense to naively tax gains as if they were income acquired in a single year. I'm not arguing for/against the specific implementation of cap gains we currently have.
my point is that it doesn't make sense to naively tax gains as if they were income acquired in a single year. I'm not arguing for/against the specific implementation of cap gains we currently have.
Why not simply apply the gain over the time period. If you get $50k gain after 10 years, that's counted as $5k gain per year and we already know what tax bracket you were in for those years so you submit a revision and pay the tax that would've been due in each of those years.
that would be a reasonable solution. I wouldn't oppose it if it came with a slight cut to income tax rates.
The issue is double taxation. Income at the corporate level is already taxed at corporate tax rates (albeit these were significantly higher before a Trump). When a profit is realized by selling shares that same income is effectively taxed a second time so the lower rate compensates a bit for that. Personal income is only taxed once.
I never understood that argument: If I buy some Google stock for $8000 and then the value of it goes up and I then sell the shares for $10000, then the $2000 I made have not yet been taxed. Making the argument "but them there people at the Google company already paid this and that tax!" seems to just be some weird category error, in my estimation of the circumstances.
This line of argumentation, whenever it comes up, has the feeling of a "pre canned response" that people somewhere are taught to offer up any time someone argues for higher capital gains taxes (though I'll admit I haven't thought about the issue in great enough detail to be completely firm on my assessment, or maybe I'm misunderstanding some important detail)
This line of argumentation, whenever it comes up, has the feeling of a "pre canned response" that people somewhere are taught to offer up any time someone argues for higher capital gains taxes (though I'll admit I haven't thought about the issue in great enough detail to be completely firm on my assessment, or maybe I'm misunderstanding some important detail)
It’s the difference between the value of the stock and dividend payout before and after corporate taxes are paid.
If you bought stock in January 1, 2019 and then sold the stock before the end of 2019 then you were double taxed. Your effective rate is still low in the history of the US but you were technically double taxed.
Where it gets tricky and fundamentally alters the equation is when you defer and don’t sell in the same year you bought. You’re still technically double taxed but the effective rate can become comically low.
I’m also just outright ignoring inflation but inflation is a huge aspect in this calculation.
If you bought stock in January 1, 2019 and then sold the stock before the end of 2019 then you were double taxed. Your effective rate is still low in the history of the US but you were technically double taxed.
Where it gets tricky and fundamentally alters the equation is when you defer and don’t sell in the same year you bought. You’re still technically double taxed but the effective rate can become comically low.
I’m also just outright ignoring inflation but inflation is a huge aspect in this calculation.
Not a single comment in this thread, nor the OP document, contained the word "dividend", so I am completely lost as to why you are now referencing something that applies only to dividends, when the discussion clearly is about "investment income" in the general sense, not to mention that dividends don't exist with cryptocurrencies.
This isn't a pre-canned response. I'm not arguing for or against the current tax regime. Here is the theory: Assume a normal corporate tax rate of 20%. If a company makes $100 of profit it will have $80 of after tax profit. Let's just be very simple an say that $80 of retained profit makes the value of the company increase by $80 and no dividends are paid. When you go to to sell that stock assuming you hold it long-term then you pay another 20% capital gains tax on the $80 profit so now you are at $64 of after tax profit as an investor from the original $100.
Compare that to $100 of income taxed at 35%. You end up pretty much the same place of $65 retained earnings. Prior to the Trump corporate tax cuts (which no I don't agree with before I am downvoted again as a right-wing corporate shill) the difference of double taxation was more stark. At a 35% corporate tax rate and then a 20% short term gains tax the double taxation led to an effective tax rate around 50% on investment profits.
One can argue the tax code should disfavor capital income vs. labor income etc but that is a different matter.
Compare that to $100 of income taxed at 35%. You end up pretty much the same place of $65 retained earnings. Prior to the Trump corporate tax cuts (which no I don't agree with before I am downvoted again as a right-wing corporate shill) the difference of double taxation was more stark. At a 35% corporate tax rate and then a 20% short term gains tax the double taxation led to an effective tax rate around 50% on investment profits.
One can argue the tax code should disfavor capital income vs. labor income etc but that is a different matter.
My comment was a bit flippant, I admit.
But still, from an economic standpoint I think it's flawed to think of the $80 after tax profits as just "money owned by the company sitting in a bank account". The idea of "value investing" (in the original sense of the term as it was used in the 1920s-1940s, where people would value companies by just taking "cost of building"+"cost of desks"+"cost of chairs"+"money in bank") is no longer how the stock market works: Virtually all companies are now valued at more than the mere physical assets that they own, so clearly that $80 in the bank account of the company should be worth more than $80 in terms of stock market valuation. After all, the whole point of a corporation is to act as a machine that turns small amounts of money (i.e. capital) into larger sums of money- This is in large part what determines the price of a stock in the investment markets, i.e. how well this machine works... the $80 is merely (a small bit of) evidence that this machine is functioning properly.
In conclusion, stock valuation and raw revenue/assets/income are categorically different things and arguing that taxation of one category is equivalent to taxation of the other is a categorical mistake, in my opinion.
But still, from an economic standpoint I think it's flawed to think of the $80 after tax profits as just "money owned by the company sitting in a bank account". The idea of "value investing" (in the original sense of the term as it was used in the 1920s-1940s, where people would value companies by just taking "cost of building"+"cost of desks"+"cost of chairs"+"money in bank") is no longer how the stock market works: Virtually all companies are now valued at more than the mere physical assets that they own, so clearly that $80 in the bank account of the company should be worth more than $80 in terms of stock market valuation. After all, the whole point of a corporation is to act as a machine that turns small amounts of money (i.e. capital) into larger sums of money- This is in large part what determines the price of a stock in the investment markets, i.e. how well this machine works... the $80 is merely (a small bit of) evidence that this machine is functioning properly.
In conclusion, stock valuation and raw revenue/assets/income are categorically different things and arguing that taxation of one category is equivalent to taxation of the other is a categorical mistake, in my opinion.
This is only true if you sell shares and realize a profit on an annual basis. As soon as you start deferring, as virtually every shareholder does, the math fundamentally changes.
In reality the “double tax” is still significantly lower than the top tax rates in the US. And the top tax rates in the US are less than half of what they used to be during the years Donald Trump thought America was great.
In reality the “double tax” is still significantly lower than the top tax rates in the US. And the top tax rates in the US are less than half of what they used to be during the years Donald Trump thought America was great.
Sounds like a senator just bought a bunch of bitcoin.
Maybe a Congressperson sees the possibility of crypto currency as a currency and wants to lower barriers on behalf of companies working on this?
Would have to be ~0.023 BTC or less for them to benefit from this.
Per transaction! This seems like it'll make day trading tax free, if it isn't your main source of income
The exemption is limited to "personal transactions" - using currency as a currency, not trading for profit.
If it's not your main source of income then it's presumably a personal transaction, i.e. it's not a company transaction. This would cover most crypto day traders.
That you're buying Litecoin from a stranger with your Bitcoin doesn't make it not personal.
That you're buying Litecoin from a stranger with your Bitcoin doesn't make it not personal.
The bill introduces the exact same exemption made for foreign currencies: you don't pay tax on small capital gains that you happen to accrue while you hold the currency and then spend it.
A capital gain of $200 for a single transaction is plenty for day traders who do it in their spare time. This is still a personal transaction, even if you happen to profit from it.
> This is still a personal transaction, even if you happen to profit from it.
It’s a novel interpretation, but sadly the Internal Revenue Code already defines “personal transaction”, and it includes all business transactions, or transactions made for the purposes of producing income. I guess you’re free to interpret the law any way you like, but i’d recommend that anybody who wants to avoid criminal charges should not base any decisions on your definition of a personal transaction.
It’s a novel interpretation, but sadly the Internal Revenue Code already defines “personal transaction”, and it includes all business transactions, or transactions made for the purposes of producing income. I guess you’re free to interpret the law any way you like, but i’d recommend that anybody who wants to avoid criminal charges should not base any decisions on your definition of a personal transaction.
> recommend that anybody who wants to avoid criminal charges should not base any decisions on your definition of a personal transaction.
Well of course
Well of course
Just realized I meant to say “excludes” in my parent comment. Basically, no day trader transactions would be exempt from tax under this.
I'm confused then, we seem to be in agreement? If you're not a professional day trader, and you don't trade crypto as a primary source of income, then are your trades not "personal" going by the definition you gave?
They are not. Any transaction entered into for the purposes of generating income is not a personal transaction. It doesn’t matter what your primary income is, what legal entities you have or have not created, or how you structure your transactions. This only covers transactions that are not business transactions, where a small capital gain is incidentally generated seperate to the purpose of the transaction. The same rule already applies to foreign currency. If you casually trade forex on the side, you have to pay tax on all your capital gains. If you go on holiday and incidentally make a < $200 capital gain when converting your money back to USD when you return home, you don’t have to pay tax on that.
The line of reasoning that this somehow creates a loophole for avoiding tax on for-profit trading seemed to dominate this thread, and it is based on a complete misunderstanding of the existing tax code. If you just read the words “personal transaction” and knew nothing else about tax law, then I can see how you could come to that conclusion. But those words are already legally defined in this context. The 988e personal transaction does not allow for tax free forex or crypto trading, and any attempt to contrive it to mean that would have you laughed at in a criminal court.
Lastly, and I’m not 100% sure about this, but I’m reasonably confident that personal purchases made with crypto would already be covered by this exemption, given existing IRS guidance on how to handle crypto transactions. If that’s true then this is more of a legislative clarification than a change.
The line of reasoning that this somehow creates a loophole for avoiding tax on for-profit trading seemed to dominate this thread, and it is based on a complete misunderstanding of the existing tax code. If you just read the words “personal transaction” and knew nothing else about tax law, then I can see how you could come to that conclusion. But those words are already legally defined in this context. The 988e personal transaction does not allow for tax free forex or crypto trading, and any attempt to contrive it to mean that would have you laughed at in a criminal court.
Lastly, and I’m not 100% sure about this, but I’m reasonably confident that personal purchases made with crypto would already be covered by this exemption, given existing IRS guidance on how to handle crypto transactions. If that’s true then this is more of a legislative clarification than a change.
Most crypto day traders wont have to pay any tax.
Or somebody with a lot of Bitcoin just bought a senator or two.
Both reasonable possibilities, but I'm going to side with the former; all politicians are the same, regardless of perceived affiliation, and self-interest is chiefly what got them where they are and what drives most, if not all, of their actions.
So, this is looking a lot like post-Maidan revolution Ukraine, a lot of the political class championed a ton of favourable legislation for Bitcoin. As it turned out later, a lot of them had accumulated BTC over that time. Surprise!
I think we should see that as a variable in the equation at this point, considering we've plateaued in adoption as all of the tech inclined have either already on-boarded or have dismissed it off entirely as a passing fad/ponzi scheme and are waiting for its constantly-touted 'demise.'
We need to focus on getting the curious and motivated, but not entirely tech-savvy, introduced to this tech and having the threat of yet another tax burden to deal with if they use it to buy their morning latte is and was always going to put them off.
Personally, I don't think crypto was ever intended to be used for such transactions, but this the standard by which everyone asks if/when they ask what can it buy.
In my opinion, given what we saw in Hong Kong with UBS stealing the crowd-sourced funds of protestors, focusing on on-boarding a movement like Extinction Rebellion would be a better fit, perhaps seeing a well-versed Greta Thunberg at Davos speaking about the pitfalls of fractional reserve banking, quantitative easing and rehypotheication (and that of War and the impacts it has on climate change and resource mismanagement) would do much more good than getting shaked down by every politician waiting for the crypto rich to get a law introduced.
Also worth noting, though I'm not sure if its positive, the ex-ceo of Bakkt is now a Senator for Georgia: https://www.newsbtc.com/2019/12/04/a-bitcoiner-in-the-senate...
So, this is looking a lot like post-Maidan revolution Ukraine, a lot of the political class championed a ton of favourable legislation for Bitcoin. As it turned out later, a lot of them had accumulated BTC over that time. Surprise!
I think we should see that as a variable in the equation at this point, considering we've plateaued in adoption as all of the tech inclined have either already on-boarded or have dismissed it off entirely as a passing fad/ponzi scheme and are waiting for its constantly-touted 'demise.'
We need to focus on getting the curious and motivated, but not entirely tech-savvy, introduced to this tech and having the threat of yet another tax burden to deal with if they use it to buy their morning latte is and was always going to put them off.
Personally, I don't think crypto was ever intended to be used for such transactions, but this the standard by which everyone asks if/when they ask what can it buy.
In my opinion, given what we saw in Hong Kong with UBS stealing the crowd-sourced funds of protestors, focusing on on-boarding a movement like Extinction Rebellion would be a better fit, perhaps seeing a well-versed Greta Thunberg at Davos speaking about the pitfalls of fractional reserve banking, quantitative easing and rehypotheication (and that of War and the impacts it has on climate change and resource mismanagement) would do much more good than getting shaked down by every politician waiting for the crypto rich to get a law introduced.
Also worth noting, though I'm not sure if its positive, the ex-ceo of Bakkt is now a Senator for Georgia: https://www.newsbtc.com/2019/12/04/a-bitcoiner-in-the-senate...
You are really taking this bad attempt at humor seriously?
A single Senator has no power. And, as the rest of the threat makes clear, this change does not allow anyone to save any sort of relevant money.
These everyone-is-corrupt-takes may (sometimes) make you look oh so smart, cynical, and contrarian. And I'm over asking people to bring evidence when accusing others.
But at least reserve them for the times where the scheme makes some sort of sense in theory.
The problem, otherwise, is that it stops making sense for politicians to be honest. Because why bother, when everyone is going to yell "liar" or "kill the corrupt bastard" at you, completely independent of any actual things you did?
A single Senator has no power. And, as the rest of the threat makes clear, this change does not allow anyone to save any sort of relevant money.
These everyone-is-corrupt-takes may (sometimes) make you look oh so smart, cynical, and contrarian. And I'm over asking people to bring evidence when accusing others.
But at least reserve them for the times where the scheme makes some sort of sense in theory.
The problem, otherwise, is that it stops making sense for politicians to be honest. Because why bother, when everyone is going to yell "liar" or "kill the corrupt bastard" at you, completely independent of any actual things you did?
> The problem, otherwise, is that it stops making sense for politicians to be honest. Because why bother, when everyone is going to yell "liar" or "kill the corrupt bastard" at you, completely independent of any actual things you did?
No, that is the Nature of the profession and merely a perk of the job. I'll never understand what compels Humans to want to rule over other Humans, it seems altogether like a defect of Human Social Order; so, no I don't accept your politician-apologists position, if you don't like being seen as a corrupt crony of the State, then find a more honorable job, there are plenty more. These people are not the bastion of Social order, and are often exposed for their predatory behaviour, especially when they fall out of favor of the Media; but that is some how excused because its part of the 'legislative process.'
The world can do with less politicians, I'm sure we will cope.
As for the Bakkt CEO, I'm not sure what to make of it... I'm one of he few people in my social circle that is completely detached from the circus people call modern politics--it doesn't amuse me, it actually makes me despondent to think this is what modernity has afford us in order to maintain the illusion of civilization/society when we can and should do so much more as a Species in what is the Greatest period of Human existence.
No, that is the Nature of the profession and merely a perk of the job. I'll never understand what compels Humans to want to rule over other Humans, it seems altogether like a defect of Human Social Order; so, no I don't accept your politician-apologists position, if you don't like being seen as a corrupt crony of the State, then find a more honorable job, there are plenty more. These people are not the bastion of Social order, and are often exposed for their predatory behaviour, especially when they fall out of favor of the Media; but that is some how excused because its part of the 'legislative process.'
The world can do with less politicians, I'm sure we will cope.
As for the Bakkt CEO, I'm not sure what to make of it... I'm one of he few people in my social circle that is completely detached from the circus people call modern politics--it doesn't amuse me, it actually makes me despondent to think this is what modernity has afford us in order to maintain the illusion of civilization/society when we can and should do so much more as a Species in what is the Greatest period of Human existence.
More like a lot of people with $199 worth of crypto did if they dont want to pay taxes.
DID THIS BILL PASS??
It took me a moment to realize CGT was Capital Gains Tax.
Is this per country or summed over all countries? Is it per transaction? If per transaction, this is a pretty massive loophole.
It took me a moment to realize CGT was Capital Gains Tax.
Is this per country or summed over all countries? Is it per transaction? If per transaction, this is a pretty massive loophole.
This bill would include digital currency under that rule, so buying a cup of coffee with Bitcoin would no longer trigger recognition of capital gains income.
I think the headline should be modified to make it clear that 95% of purchases of goods and services using digital currency would be exempt from gains, but that most crypto transactions are for trading and investing purposes anyway so gains would still be recognized.