The US President Donald trump has made changes to article 1031 of the internal revenue code. According to this article cryptocurrency traders could trade “assets of a similar nature” without paying taxes. From 1 January 2018 will be subject to tax even the exchange of one cryptocurrency to another.
This event was the largest change to the Tax code of the USA over the past 30 years. To this day, article 1031 you can safely be called a loophole for cryptocurrency traders, merchants, real estate and art objects.
Since March 2014 the IRS has transferred bitcoins and other cryptocurrencies in the class property. Thus, the conducted transactions subject to tax on capital gains. Such actions consisted of the exchange of cryptocurrency for Fiat money, as well as the purchase of goods and services for cryptocurrencies. Also income tax ( from 10 to 37 %) were subject to tokens owned less than a year; those owned more than a year were subject to long-term income tax – about 24%. Therefore, in order to get around this tax, the owners only had to exchange one cryptocurrency to another before the expiration of one year of ownership.
Signed trump the law limited the scope of Section 1031 exclusively to the sphere of real estate. Since cryptocurrencies are digital assets, they are the rule no longer applies.
What remains to be seen is, will the owners of the cryptocurrency to check out the law. For anybody not a secret that many American investors have a bad habit to avoid taxes on profits from bitcoin. From 2013 to 2015, the IRS found that the annual taxes on the bitcoins were paid a total of about 1000 people. This situation has led to a controversial lawsuit against Coinbase, which demanded to provide information about all user transactions over the years.
Strained relations with the IRS next year will only get worse if investors of Bitcoin will continue to evade their tax liabilities. The price of Bitcoin is $14 000 in 2017, means billions of dollars of missed tax revenue.