The highly controversial Infrastructure bill is being looked at by the Ways and Means Committee. The Committee of Ways and Means is the chief tax-writing committee of the United States House of Representatives. The Committee has jurisdiction over all taxation, tariffs, and other revenue-raising measures and a number of other revenue-generating programs.
Ways and Means summary report published on September 13, 2021 talks about subjecting cryptocurrency to the wash sale rule. Cryptocurrencies are not subject to the wash sale rule at the moment. This loophole has allowed crypto holders to generate tax losses (without economically realizing a loss) and artificially reduce the tax bill.
What is a Wash sale?
According to the §1091 of the IRS code, a wash sale occurs when an individual sells a stock or security at a loss and, within 30 days before or after this sale, buys a “substantially identical” stock or security, or acquires a contract or option to do so.
The current language only subjects “stocks & securities” to the wash sale rule. Since cryptocurrencies are treated as property per IRS Notice 2014-21, they are not subject to the wash sale rule.
Let’s see how the wash sale rule works with stocks and