• U.S. President Joe Biden’s proposed budget, set to be unveiled Thursday, will include a provision to close tax loss harvesting on crypto transactions.
• The provision would be expected to raise up $24 billion and lower the U.S. deficit by $3 trillion over the next 10 years.
• In 2021, the Bipartisan Infrastructure Framework passed into law a controversial tax provision that would impose certain reporting rules onto brokers facilitating crypto transactions.
Biden Budget Plan Includes Crypto Tax Loss Harvesting Loophole Closure
U.S. President Joe Biden is set to unveil his budget proposal on Thursday which will include a provision to close the tax loss harvesting loophole on crypto transactions. This measure is expected to generate an additional $24 billion in revenue and reduce the U.S.’s deficit by $3 trillion over the next 10 years according to White House officials speaking with the Wall Street Journal.
What Is Tax Loss Harvesting?
Tax loss harvesting is a method of reducing one’s overall taxes by selling any cryptocurrencies at a loss and then claiming it on their taxes before repurchasing them again at potentially lower prices than when they were sold off originally, resulting in a net profit after taxes are paid for those involved in such activities.
Infrastructure Investment & Jobs Act
In 2021, the Bipartisan Infrastructure Framework was passed into law as an Infrastructure Investment and Jobs Act which included a controversial tax provision that would impose certain reporting rules onto brokers facilitating crypto transactions, effectively narrowing down its definition of “broker” from what many in the industry deemed overly broad due to it encompassing miners as well as other types of entities not directly involved in transaction facilitation or personal information collection for taxation purposes .
Passage Through Congress Necessary For Finalization
Any budget proposal must pass through both chambers of Congress before being sent back for presidential signature before becoming fully enacted into law; however, lawmakers have already introduced bills aiming at closing this particular loophole even prior to its inclusion in this budget proposal put forth by President Biden..
The inclusion of this measure within President Biden’s proposed budget further highlights his administration’s desire towards greater regulatory oversight within cryptocurrency markets while simultaneously attempting to reduce government deficits caused by large-scale spending plans like infrastructure investment packages through increasing revenue sources such as these targeted taxation measures against certain cryptocurrency trading practices like wash sale trading via tax loss harvesting schemes