Katie Lobosco (Tax Analysts): Bipartisan Crypto Tax Bill Introduced After Months of Discussion

A bipartisan duo of House taxwriters introduced a bill that would address the way digital assets are taxed in an attempt to make it easier for consumers and investors to use digital payment technology.

House Ways and Means Committee members Max L. Miller, R-Ohio, and Steven Horsford, D-Nev., unveiled the Digital Asset Protection, Accountability, Regulation, Innovation, Taxation, and Yields (PARITY) Act on May 19, less than a week after taxwriters met in a closed-door roundtable on the subject.

The proposed bill’s deemed-basis rule would be limited to stablecoins compliant with the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act (P.L. 119-27), according to the release.

The bill would also clarify rules for digital assets used in charitable contributions and lending agreements, as well as for foreign investors trading digital assets on U.S. platforms. It would apply a wash sale rule to digital assets, prohibiting investors from reducing their tax liability by selling a losing security and purchasing a similar one within 30 days.

The bill would also provide a five-year tax deferral period for those receiving rewards from staking or mining. That process allows crypto holders to earn rewards by validating transactions on a blockchain network.

A previous discussion draft of the bill made only “passive validators” eligible for the deferral period, effectively excluding bitcoin miners.

Miller and Horsford’s bill differs from other lawmakers’ proposals, such as the Virtual Currency Tax Fairness Act (S. 4171), in that it wouldn’t create a de minimis tax threshold for all digital asset transactions.

Marie Sapirie (Tax Analysts): What Happens When the Wash Sale Rule Meets Crypto?

Congress is working on a comprehensive digital assets tax bill and packing it full of new provisions. One notable proposal would apply an established tax law concept — the wash sale rule — to cryptocurrency. But the collision of the old code with a new technological environment seems destined to be more fraught than legislative drafters realize.