Bitcoin & Crypto Losses - Can they Offset Gains? Are they Subject to Wash Sale Rules?

Описание: Is there a silver lining to your recent Crypto losses? Can you act now to take advantage of a tax loophole to save on your taxes? YES!

This was discussed yesterday in this CNBC article https://www.cnbc.com/amp/2021/05/25/b...

▬ Contents of this video ▬▬▬▬▬▬▬▬▬▬

0:00 - Video Intro
0:26 - Channel Intro
0:59 - Recent Crypto Volatility
2:01 - Tax Loophole: No Wash Sales with Crypto Losses
6:41 - How to Harvest Tax Losses
10:10 - Wash Sales Rules Might Change
10:58 - Closing

There are no wash sale rules for Cryptocurrency like Bitcoin. So, you can sell your loser investments to recognize the tax loss, use that loss to offset some of your taxable gains, and then buy back your crypto investment a day later!

The IRS considers Crypto "property" (like gold), it is not currency or securities. If held for over a year, crypto and other capital gains receive low, preferential tax rates, from 0-23.8%. If held for less than a year, net capital gains are typically taxed at your higher ordinary rates.

Capital losses can offset capital gains AND $3000 of ordinary income. Leftover capital losses are carried forward to future years.
Under "wash sale" rules, if you sell stock or other security at a loss and buy back basically the same stock up to 30 days BEFORE the sale or up to 30 days AFTER the sale, then you haven't really suffered an actual loss; you are in essentially the same position as you were before, so you get no tax benefit.

But there are no "wash sale" rules for property like cryptocurrency, which means there's a "loophole;" it's a way to benefit from the losses on crypto that you can't do with securities like stock. This means you can and probably should "harvest" your losses when they happen and use them to offset earlier or later gains or to offset your ordinary income.

Unlike with stock, after you harvest your crypto losses by selling the currency, you can jump right back in, if you want....just not TOO soon. Give it a day or so. If you buy it back immediately, the IRS can argue your sale was a sham without economic substance. There should be some risk involved in cashing out, so wait a day before you buy back the crypto.

The wash sale rules might change in the future to include cryptocurrencies, but you should be good harvesting your crypto losses and buying back crypto until they do. Talk to your CPA or financial adviser to determine whether this is right for you.