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The Virtual Value Tax Fix Act was reintroduced in the U.S. House of Representatives by North Carolina’s Rep. Ted Budd (R). The bill, which was first presented on July 25, aims to end the double taxation and record-keeping of cryptocurrency transactions by amending 1986’s Internal Revenue Code. Budd has called the bill a matter of national security.
Under the Internal Revenue Code of 1986, gains and losses in trades and exchanges involving real property remain unrecognized. The Internal Revenue Code, specifies:
“No gain or loss shall be recognized on the exchange of real property held for productive use in a trade or business or for investment if such real property is exchanged solely for real property of like kind which is to be held either for productive use in a trade or business or for investment.”
The aim of this bill is to treat the exchange of cryptocurrency for cryptocurrency in the same way as the exchange of real property is treated under this law. If this bill becomes a law, it would exclude cryptocurrencies from double taxation and record-keeping under the Internal Revenue Code.
Earlier in June, Budd pointed out issues with current tax laws related to cryptocurrencies in the House of Representatives Ways and Means Committee. He also said that the code places a 40% tax rate on transactions. The tax and record-keeping of transactions causes deterrence for crypto adoption. Budd also said that virtual currencies should be treated as a de minimis (“about minimal things”), like foreign currencies under tax exemption laws.
More Cryptocurrency Legislation
Apart from the bill introduced by Budd, there have been other cryptocurrency related legislation as well, such as the reintroduction of “Safe Harbor for Tax Payers with Forked Assets Act of 2019” by Rep. Tom Emmer (MN-R). This bill was to make tax laws clear following virtual currency forks and airdrops.
In July, Tom Emmer reintroduced this bill in order to encourage the development of blockchain technology in the U.S. by making the relevant tax laws clear for businesses. According to Emmer, taxpayers can only abide by the laws that are clear.
The Safe Harbor bill is not intended to eliminate the taxes on hard-forked blockchain. Its purpose is to provide a safe harbor to investors who do not qualify as a hard fork in their tax return calculations.
Another North Carolina Representative, Patrick Henry is very excited about the legislation involving matters of cryptocurrency, particularly Bitcoin(BTC)trade. Speaking in preparation for the Facebook’s Libra hearings, Henry expressed his enthusiasm by saying that there is absolutely no way in the world to kill Bitcoin.