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  A New US Law and the Taxation of Cryptocurrencies | Bit Updates
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A New US Law and the Taxation of Cryptocurrencies

Thursday, December 14th, 2017 | bitcoin updates

The US tax code is currently undergoing major changes. The Senate has issued a nearly 500-page decree with legal changes. It is quite possible that this may also affect the taxation of crypto wheels. The bill does not explicitly mention the trade in crypto currency and its taxation. According to the following, however, it is likely that the new laws will also affect the taxation of cryptocurrency trading.Like-child exchangesThe biggest influence on cryptocurrency deals could be the replacement of "like-child exchanges" with the "first-in, Have first-out "procedures. The "like-child exchanges" has allowed traders to save taxes so far. For the law provides that you can replace capital or assets with similar value carriers, without having to pay taxes for the sale or replacement. So if traders, for example, with the holding of Bitcoin made a profit, they could ether from it buy without being prosecuted for the Bitcoin profit. This allowed traders of cryptocurrencies to effectively circumvent the taxation of long-term gains so far and only had to tax short-term profits. However, the law planned for next year now plans to accept this rule only for real estate transactions. In the stock market and probably also on the crypto market then the principle of "first-in, first out" comes into force. "First-in, first-out" and the taxation of KryptosLaut bill you want the "first-in, first-out "Principle for" specified securities ". The authorities assume that the respective goods, commodities or securities which have been purchased first are also issued or sold first. So, if you have any questions about taxing cryptocurrencies, you would always count the difference between the first coin purchased and the current price. So if you buy a Bitcoin today for just under $ 17,000 and a few weeks for 20,000 and decide later, To sell one for 37,000, one must first sell the one bought for 17,000. One would then have to pay taxes for the difference of $ 20,000. However, since this principle so far refers to the (at least with regard to cryptocurrencies) unspecified securities, we are here on speculative ground. A more precise definition of the tax authority is still pending. Currently, Bitcoin is described by U.S. Pat. Commodities Futures Trading Commission still classified as a commodity ("commodity"). So it remains to wait until the law is finally waved through and whether more definitions follow. However, as the mainstream adoption of cryptocurrencies progresses day by day, it is likely to be classified as soon as possible. If the unfavorable case for US traders arises from higher taxation, any tax loopholes are inevitable. For example, switching between different wallets could have an impact on the date of receipt of the coins. In any case, more precise definitions are still pending. The situation for the taxation of crypto currencies in Germany seems (at least somewhat) clearer in this context. Taxation of cryptos in Germany In Germany, transactions with cryptocurrencies currently fall under the regulations of "speculative transactions" within the meaning of section 23 (1) no income tax Act. Since they are not officially recognized as a means of payment, they are classified as "ordinary intangible assets". These are then not "paid" – rather, it is a divestment business. Time intervals also play a role here. If the period of time between sale and purchase does not exceed the one-year deadline, an exemption limit of 600 euros per year applies, and you do not have to pay any taxes. Even if the period exceeds one year, the profits will not be taxed. Otherwise, the ordinary income tax rate applies. Cryptocurrencies and the minimum holding period The one-year minimum holding period, however, does not apply to commercial use – as with companies or self-employed. Depending on the individual case, profits may be subject to income, corporate and / or trade tax. So here must be clearly distinguished from case to case. Both in Germany and in the US, the situation for cryptocurrencies is not entirely clear. In both cases it shows once again that one tries to answer new technological questions with old ways of thinking.Disclaimer: The presented facts were researched and prepared to the best of knowledge and belief. However, the author is neither a lawyer nor a tax expert, but rather a crypto enthusiast and media scholar. Therefore, no final guarantee can be given for the accuracy and completeness of the information provided; liability is excluded. The article merely represents the author's opinion and should not be read as a guide.BTC-ECHOAbout Phillip HorchPhillip Horch completed his master's degree in Literature-Art-Media at the University of Konstanz in October 2017 and has been working as a freelance journalist ever since. Already during his studies he wrote for various magazines and now he is gaining a foothold in Berlin. The main focus of his journalistic work is on the opportunities and challenges of digitization, so that for some time now he has also dealt with the topic of blockchain and cryptocurrencies. All contributions by Phillip Horch


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