Ted Budd, North Carolina’s representative has introduced a crypto-related tax bill in the US House of Representatives. Titled “Virtual Value Tax Fix Act of 2019,” the bill aims to exclude the gain or loss on like-kind crypto exchanges. Budd initially introduced this bill on July 25 and referred to the Committee on Ways and Means.
Before introducing this bill, Budd noted that,
An effective sales tax of nearly 40% penalizes the use of digital units of commerce. The use of digital assets is already treated as a sale of the asset, even though the economic reality of the transaction is a purchase of a simple consumer good.
Excluding Crypto from Double Taxation
The bill seeks to amend the Internal Revenue Code of 1986, which states,
No gain or loss shall be recognized on the exchange of real property held for productive use in a trade or business or for investment if such real property is exchanged solely for real property of like kind which is to be held either for productive use in a trade or business or for investment.
Also, the bill noted that the above statement, shall not apply with respect to any exchange completed after December 31, 2024.
Should this bill pass into law, it would stop the double taxation of crypto under the Internal Revenue Code.
This news comes after Budd testified to the House of Representatives Ways and Means Committee regarding issues with the current tax laws on crypto in June. He asserted that crypto coins should have a de minimis tax exemption just like foreign currencies.
Prior to Ted Budd’s Virtual Value Tax Fix Act of 2019 bill, Tom Emmer, a US Congressman reintroduced his Safe Harbor for Taxpayers with Forked Assets bill. He originally brought this bill to Congress in the past year. According to him, passing this bill into law would simplify tax laws that regulate assets that run on blockchains with hard forks.
Also, the bill would spare businesses the trouble of trying to figure out the relevant tax laws. In so doing, Emmer believes that the US would encourage the growth of the blockchain sector. Per Emmer, taxpayers can only comply with the law when it is clear.
However, his bill does not seek to exclude hard-forked crypto coins from taxes. It only aims to offer a safe harbor to investors who do not take into account a hard fork while calculating their tax returns.
Do you think US legislators will pass the Virtual Value Tax Fix Act of 2019 into law? Let us know in the comments below