Biden’s ‘Build Back Better’ Act Would Close Crypto Tax Loophole
The provision adds cryptocurrency transactions to constructive sale rules under the tax code.
A new draft of the Build Back Better Act – U.S. President Joe Biden’s hoped-for spending bill – still contains language meant to close tax loopholes that cryptocurrency investors could exploit.
A section of the Rules Committee print of the bill, dated Oct. 28, adds cryptocurrency transactions to the constructive sale rule. The rule addresses transactions that would be subject to capital gains taxes, preventing traders or institutions from using short sales or derivatives that deliver “already-held assets,” according to Investopedia.
“The amendments made by subsection (a) shall apply to constructive sales (determined after the application of the amendment made by subsection (b)) after the date of the enactment of this Act,” the bill said.
The bill defines a digital asset as “any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology.”
A much longer draft text of H.R. 5376, also published by the Rules Committee, contains an identical provision.
A second provision in the first version of the bill directs some funding for the Internal Revenue Service, the U.S. tax collector, for “provid[ing] cryptocurrency monitoring and compliance activities.” The longer draft does not explicitly mention cryptocurrency at all.
A draft of the bill published by the House Ways and Means Committee last month contained similar language, but unlike a crypto tax provision included in a bipartisan infrastructure bill, industry proponents are not concerned about the BBB provision.
However, the two bills have been linked by progressive lawmakers in the House, who have vowed not to vote for the bipartisan bill unless the House also votes on the BBB Act. Senate negotiations on the BBB Act between Sen. Joe Manchin (D-W.V.) and Kyrsten Sinema (D-Ariz.) and the rest of the Democratic Caucus, as well as Biden, have been ongoing.
Biden announced a framework for the new version of the bill on Thursday morning, saying that “no one got everything they wanted” but the parties had created a compromise document.
The BBB Act is meant to enact a signature portion of Biden’s campaign pledge in providing funding for child care and preschool, Medicaid, child tax credits, clean energy, housing, education and other issues, according to a White House press release.
Also of interest
Another provision would enable the Federal Trade Commission to create a “privacy bureau” to address the agency’s privacy concerns.
“The Federal Trade Commission shall use the funds appropriated under subsection (a) to create and operate a bureau, including by hiring and retaining technologists, user experience designers, and other experts as the Commission considers appropriate, to accomplish the work of the Commission related to unfair or deceptive acts or practices relating to privacy, data security, identity theft, data abuses, and related matters,” the provision said.
One billion dollars will be set aside through Sept. 30, 2031, for this bureau.
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