US Senate Finance Committee Seeks Input on Taxation of Digital Assets
Jessie A Ellis Jul 12, 2023 08:02
The US Senate Finance Committee has issued an open letter to the digital asset community and other interested parties, seeking their input on the taxation of digital assets. The letter, dated July 11, 2023, was signed by Chair Ron Wyden and Ranking Member Mike Crapo.
The US Senate Finance Committee has issued an open letter to the digital asset community and other interested parties, seeking their input on the taxation of digital assets. The letter, dated July 11, 2023, was signed by Chair Ron Wyden and Ranking Member Mike Crapo.
The rapid emergence of digital assets has raised novel regulatory issues, including the appropriate treatment under federal tax law. The Internal Revenue Code of 1986, as amended (IRC), draws distinctions between types of property, with no straightforward classification for digital assets. This uncertainty creates complex reporting issues for taxpayers and warrants examining how the IRC can provide clearer guidance for taxpayers on the treatment of digital asset transactions.
The Committee on Finance initiated a bipartisan effort to identify key questions that lie at the intersection of digital assets and tax law. To provide background on current law, Chair Wyden and Ranking Member Crapo asked the Joint Committee on Taxation to compile a report on the taxation of digital assets.
The letter seeks to better understand how Congress can address the tax challenges and opportunities presented by digital assets. It asks a series of detailed questions on topics such as marking-to-market for traders and dealers, trading safe harbor, treatment of loans of digital assets, wash sales, constructive sales, timing and source of income earned from staking and mining, nonfunctional currency, FATCA and FBAR reporting, and valuation and substantiation.
The Committee will collect answers to these questions on a rolling basis until September 8, 2023. Interested parties are requested to submit electronic copies of their answers to Committee staff at responses@finance.senate.gov.
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