Well, well, well… Looks like Uncle Joe’s administration is throwing some shade at the crypto world! The proposal on the table is to double Biden capital gains tax rate for some investors and limit the sale of digital assets in the fiscal 2024 budget plan. Sounds like a total bummer, right? But let’s not jump to conclusions just yet, crypto enthusiasts. Let’s break it down and see if Biden tax plan will make or break your investments.
How Biden Wants to Double Capital Gains?
Hold onto your butts, folks! Biden is coming for your capital gains! Yep, you heard that right. The Biden administration is proposing to double the capital gains tax reform for certain investors in their upcoming fiscal 2024 budget plan. And that’s not all – they’re also looking to clamp down on crypto wash sales.
Their goal? Raising around $24 billion to reduce the deficit by almost $3 trillion over the next decade. The Biden tax plan proposes nearly doubling the capital gains tax rate for investors making at least $1 million to pay a whopping 39.6% on long-term investments, up from the current 20% tax rate.
Hold on, let me catch my breath here. It’s a lot to take in. But if you’re a crypto trader, you better hold onto your wallets tightly. These changes could potentially hurt your bottom line. And don’t forget – the Biden administration released its fiscal 2024 budget plan on March 9th. So, get ready to say goodbye to some of those sweet tax breaks.
Why does Biden want to limit the sale of cryptocurrency?
The Biden administration isn’t pleased with how some crypto enthusiasts have been evading taxes, and are looking to tighten regulations on the sale of cryptocurrencies. This is part of their efforts to combat Biden wash sales and generate revenue to reduce the country’s deficit.
If you’re not familiar with the term ‘crypto wash sales,’ it’s basically when you sell a cryptocurrency at a loss only to buy it back again shortly after, thus claiming a tax deduction without actually losing any real money. Pretty slick, eh? But the crew isn’t impressed and they’re aiming to put a Biden tax reform.
So, what’s the plan? The proposed changes to Biden crypto tax treatment include shutting down tax-loss harvesting and making the wash sale rule apply to crypto as well.
Will Biden`s new decisions hurt cryptocurrency investors and traders?
The proposed changes to crypto taxation treatment could potentially put a real dent in our wallets, and that’s just not cool, man. By cracking down on crypto wash sales and ending tax-loss harvesting, the government is essentially trying to limit our ability to offset our gains with losses, which could lead to some serious tax liabilities for us crypto investors.
But what does this mean for crypto traders? Well, say goodbye to tax-loss harvesting, a popular strategy in which traders sell assets at a loss for tax purposes before repurchasing them immediately after.
Sure, it’s worth noting that the impact of these changes will depend on each individual’s specific circumstances, but come on, who has time for all that tax professional mumbo jumbo? Ain’t nobody got time for that.
Does cryptocurrency fall under the new rules?
The Biden administration wants to throw crypto into the mix of their new rules. The proposed application of the wash sale rule to crypto would mean that traders can no longer sell and then immediately buy digital assets for tax purposes.
Now, for those of you who don’t know what the heck tax-loss harvesting is, it’s basically selling assets at a loss for tax purposes before repurchasing them immediately after. It’s a pretty slick strategy that’s been used in the past, but the Biden crew wants to put a stop to that. But here’s the thing, currently, crypto isn’t under these same rules, as digital assets haven’t been classified as securities.
Will digital assets be classified as securities?
Let’s talk about whether digital assets, AKA crypto, should be classified as securities. Right now, they’re not considered securities under U.S. law, but there’s been a whole lot of chatter about whether certain digital assets should be given that label. The U.S. Securities and Exchange Commission (SEC) has previously stated that whether a digital asset is considered a security depends on the facts and circumstances of its sale and is subject to a case-by-case analysis.
Now, the Biden administration is considering changes to tax on crypto assets, which could be a sign that they’re moving towards more regulation of digital assets. But who knows, maybe they’ll finally classify crypto as securities, or maybe they won’t. It’s anyone’s guess at this point. But hey, we’re crypto enthusiasts, we’ll find a way to crypto tax avoidance thrive regardless.
