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The recently reintroduced Token Taxonomy Act (TTA) will create a de minimis tax exemption for crypto transactions under $600, according to the executive director of Coin Center, Jerry Brito, at Consensus 2019 on May 13.
The de minimis tax exemption stipulates that if a crypto owner experiences a capital gain up to $600 of crypto, then that owner is not required to report the gain to the Internal Revenue Service (), the United States’ tax authority.
Brito notes that this situation parallels how small gains on foreign currencies were treated prior to a de minimis provision that was introduced in the 1990s by Congress. Before then, if a person has bought foreign currency to take a short vacation in another country, any capital appreciation incurred in the course of holding that currency should technically be reported.
Brito added that one could technically be obligated to report capital gains when using cryptocurrencies to purchase simple things like a laptop, plane tickets, or even in writing a smart contract, which requires the expenditure of a small amount of ether () or other so-enabled cryptocurrencies. Legally, Brito stressed, regulators could choose to require reporting of these small expenditures.
As previously reported by Cointelegraph, the TTA, if passed, would also exclude cryptocurrency from classification as a security. The TTA would also delimit the jurisdiction of the Commodity Futures Trading Commission (CFTC) and the Federal Trade Commission (FTC), as well as provide regulatory certainty for the compliance and enforcement of crypto statutes.
