U.S. tax experts suggest to sell and then repurchase crypto to lower your taxes
According to the U.S. tax authority, the Internal Revenue Service (IRS), cryptocurrency is treated as an investment property and not currency, same as stocks and bonds. Therefore, amidst crypto bear market, crypto holders might actually benefit from selling, and then repurchasing their crypto assets. Due to the special and often “favorable” taxation policy IRS has for investments, losses can be used to offset taxes on gains for all investments, making the potential relief even greater than for traditional assets.
Additionally, crypto traders can enjoy the benefit “to flip” their crypto assets, which is not available to those trading fiat. According to the American tax laws, cryptocurrencies are exempt from the so-called “wash sale” rules, which prohibit capital-loss deductions when investors purchase an asset or a stock within 30 days of selling a “loser.”
According to Jim Calvin, CPA and crypto specialist at Deloitte Tax, waiting for as little as “an hour” is actually enough for traders to remain on the right side of the law if they choose to repurchase their crypto assets. Notably, in 2017, the top year for the crypto value so far, only 0.04% of crypto holders – 802 people– paid taxes on their cryptocurrency profits.