The new tax code is raising lots of questions, including: Should Bitcoin investors register as “traders” to save on taxes? And “What cryptocurrency tax write-offs are available?”
You’re busy, so let’s break this down, quickly.
Cryptocurrency Tax Write-Offs: How It Used To Work
Under the old tax code, using miscellaneous deductions, some cryptocurrency entrepreneurs could write off expenses (i.e., Internet costs, computers, subscriptions, etc.) that exceeded 2% of their adjusted gross income. However, the new tax code doesn’t accommodate the tactic.
Cryptocurrency Tax Write-Offs: Switch To “Trader”?
Since the new tax code doesn’t allow for the same itemized blockchain-related deductions, people are asking if they should register as “traders,” to take advantage of benefits delineated in Tax Topic 429, which absolves traders from paying tax on gains derived from qualifying securities trades.
Is it a viable option that makes financial sense? Depends.
Due to the 2% threshold, a limited number of people saw significant benefits from deductions. Moreover, most folks likely won’t meet the requirements to become a professional, registered trader. Entities that do enough token trading to qualify as a cryptocurrency hedge fund, however, may want to explore the possibility.
And lest we not forget: The SEC has yet to move Cryptocurrencies, in an of themselves, under the securities umbrella.
Connect With A Cryptocurrency Tax Lawyer
The IRS and SEC are currently laser-focused on the digital currency scene and aggressively pursuing ICO fraud and crypto tax evasion.
Get in touch with the cryptocurrency tax law team at Gordon Law. We can handle all your digital currency reporting needs, including calculations and figuring out the best money saving position for your exact situation. Get in touch today to start exploring your options.Contact A Cryptocurrency Tax Lawyer Today »