Tax: BTC Price Slump is Last Opportunity to Exploit Loophole
![Tax: BTC Price Slump is Last Opportunity to Exploit Loophole](https://howdylittlecrypto.com/wp-content/uploads/2021/12/Tax-BTC-Price-Slump-is-Last-Opportunity-to-Exploit-Loophole.jpg)
[ad_1]
Bitcoin’s price slump is offering US investors a final opportunity to take advantage of the longstanding ‘wash sale’ tax loophole that will finally close in early 2022.
The wash sale exemption allows crypto investors to sell crypto assets at a loss and immediately buy back the same asset to remain in the market. Those recorded losses can then be used to offset gains, reducing the overall tax burden.
If a person bought bitcoin at its recent peak of $69,000 on November 10, and sold at today’s value of $47,000, they could record a tax loss of $22,000. They could then immediately buy back in at $47,000 without interruption and use the $22,000 to offset profits from the stock market, crypto and NFT.
As CNBC’s Robert Frank told Squawk Box last week, the last window of opportunity to exploit this loophole will effectively close at the end of the year.
“Tax advisors recommend investors sell the tranches with the highest cost basis before January 1,” said Frank. “Also starting January 1 crypto platforms such as Coinbase and Gemini, they will be required to report customer holdings to the IRS, so the days of under-reporting your crypto taxes may be numbered.”
Following the changes to the tax rules, investors who sell any crypto asset at a loss will have to wait over 30 days before buying back into the same asset if they wish to record the tax loss. A quick repurchase of the same asset within that 30 day waiting period will make any claim of loss invalid.
US investors now have a little under two weeks to exploit the rule. Those who now wish to take advantage will have to hope that their accountant doesn’t take the festive period off.
Follow up: You may be interest to know that the 87.000 IRS agents has made a minor revision to the crypto reporting question in the 1040 tax form.
Disclaimer
All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.
[ad_2]