Amid widespread speculation over the eventual fate of Bitcoin and other digital currencies in the United States, the Internal Revenue Service (IRS) has issued a new taxable guidance that cryptocurrencies are capital assets, not currency.
Indeed, the new stance represents a stark departure in recent years from the Federal government, which has largely abstained from any sweeping reform or barriers for digital currencies, namely Bitcoin. However with Bitcoin’s augmented exposure into the realm of real world payments, the writing was on the wall for a taxable verdict to be issued.
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Cryptocurrency Gains Taxes Capped at 20%
The new ruling essentially decrees that capital gains tax will be applied to cryptocurrencies, which is the first such step the Federal government has taken to regulate the bourgeoning phenomenon. However, it is worth noting that capital gains rates are fairly accommodative to the ley taxpaying, given the propensity to claim deductions up to $3,000 off your return each year – furthermore rates for long term gains are between 0-20%, capping at this mark. While this is certainly not viewed as welcome news for Bitcoin proponents, the move was largely seen as inevitable though it remains to be seen how even relatively ‘manageable’ tax measures will be accepted by the cryptocurrency community.