Investors in bitcoin and other virtual currencies would lose a lucrative tax break under the Republican tax bill that’s on its way to President Donald Trump’s desk.
New limits in the bill would bar cryptocurrency owners from deferring capital gains taxes when trading one type of virtual currency for another -- effectively closing a gray area in the tax code, experts say.
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For investors who hold the virtual currencies, “the bill is bad news,” said Kelsey Lemaster, a tax attorney with Goodwin Procter LLP. “Every time you trade one digital currency for another, one token for another, it’s going to be a taxable event.”
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Under current law, such trades have been protected under a provision that allows investors to defer capital gains taxes on so-called “like-kind exchanges” -- trades that traditionally have been staples for investors in real estate, art, racehorses and aircraft. The deferral applies when owners of such property swap it for other property of a similar kind, typically within a 180-day period.
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