World News

Wall Street Journal Recommends Ways To ‘Lower Your Taxes’

This year’s market slumps has generated quite a skeptical vibe in investors. However, the tax season may give them a bit of relief, as an article published by The Wall Street Journal has some advice to save on taxes.

The article published on Dec. 21 by The Wall Street Journal (WSJ) suggests that investors should sell and then repurchase their Bitcoin (BTC) as a strategy to save on taxes. The article notes, “The only good thing about investing in cryptocurrencies [in 2018] was the tax break.”

The current United States tax policy regarding cryptocurrency has been criticized for applying unrealistic and unnecessary hurdles for frequent traders. Also, the investors petitioned for a reformed set of guidelines that treat the digital asset in the context of practicality.

The United States tax authority, the Internal Revenue Service (IRS), has considered digital assets as an investment property as of 2014, similar to stocks and bonds, not currency. The Crypto investors can obtain profit from the “special and often favorable” taxation policy the country gives to investments.

Here, the Wall Street Journal explains that cryptocurrency as an investment property gives a chance to recoup on losses through more favorable taxation. Unlike traditional fiat currencies, Bitcoin and other crypto assets are beholden to tax laws that apply to investment property. The reason behind it is that the cryptocurrencies are exempt from so-called “wash sale” rules, which “prohibit capital-loss deductions when investors purchase security such as a stock within 30 days of selling a loser.”

Detailing further, WSJ emphasizes that timing is crucial because tax losses can be carried forward but not back. Moreover, a tax strategist from Twenty-First Securities, Robert Gordon noted that whether or not investors intend to repurchase crypto, traders can make the profit from either harvesting all their losses, or even just up to the amount of the total of their taxable gains, from crypto or otherwise.

In July 2017, the IRS had demanded major U.S. crypto Coinbase hand over detailed information on each of its over 500,000 users at the time to prevent tax evasion. Later, due to a court order, the number of users decreased to 14,000 “high-transacting” users.

Tags

Ruti Vora

Ruti regularly contributes in-depth news articles for leading cryptocurrencies. She contributes technical chart-based price updates and analysis pieces on world's leading digital currencies. She holds graduate degree in journalism.
Back to top button
Close