All cryptocurrency trades in the US will be taxed starting Jan. 1st, 2018, under a new tax bill signed by President Donald Trump, Bitcoinist reported.
The latest amendment eliminates all exemptions for “like kind exchanges,” allowing investors to swap similar assets without triggering a tax event.
Since March 2014, the Internal Revenue Service (IRS) has treated Bitcoin (EXANTE: Bitcoin) and other digital currencies as property for tax purposes, while the so-called “1031 exchanges” have long been used by traders to exchange property, such as art or real estate, without having to pay taxes on it.
Although trades between fiat currency and crypto have previously been taxed, the vast majority of trading which occurs between separate cryptocurrencies has flown under the radar.
Under the new bill, the 1031 exemption will only cover real estate swaps, excluding Bitcoin entirely. It specifically limits the scope of the law from previously covering “property” to now only covering “real property.”
Thus, starting next year, effectively all cryptocurrency trades will be taxed at the time of their execution, bringing an end to one of the most lucrative tax loopholes previously available to traders.