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Bipartisan Bill to Eliminate Taxes for Small Bitcoin Transactions

A bipartisan bill introduced Thursday would exempt bitcoin transactions from tax liabilities if the associated capital gains are $200 or less, to boost the use of the digital currency as a medium of exchange in the U.S. economy. Currently, any profit derived from the sale of cryptocurrency must be reported as taxable income, regardless of the size or purpose of the transaction. “Outdated virtual currency regulation doesn’t consider its potential for use in our everyday lives, but instead treats it more like a stock or ETF,” Rep. Suzan DelBene, co-author of the bill, said in a statement. “However, virtual currency has evolved rapidly in recent years with more possibilities to use it in our daily lives. This common sense law reduces bureaucracy and opens the door to further innovations, ultimately growing our digital economy.” Virtual Currency Tax Fairness Act is co-authored by Rep. David Schweikert and co-sponsored by Representatives Darren Soto and Tom Emmer. “Virtual currencies are reshaping our daily lives, and the United States must recognize this and work to treat these currencies fairly in our tax laws,” Schweikert said in a statement. “This legislation is an important step forward and lays the foundation for the growth of the digital economy.” Using bitcoin as a payment method constitutes a sale to the Internal Revenue Service (IRS) as the payer disposes of some of their BTC holdings for a good or service in return. If the funds issued at a lower price had been acquired in US dollars, the difference would be characterized as capital gains, which would require reporting and taxation. perceived capital gains do not exceed $200, and are therefore targeted specifically at smaller transactions in an effort to boost, or at least better enable, the use of bitcoin as a means of payment in the US
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