I was confused by this statement, as my understanding is that treating it as a currency would result in worse tax consequences.
The problem I have with treating cryptocurrencies as property instead of currency is that it creates a massive accounting burden, effectively killing its potential use as a transactional currency. Can you imagine what it would be like if you had to report all of your bank statements, credit card transactions, and cash transactions to the IRS and have it all reconciled?
I think the issue is that for tax purposes anytime something changes to dollars and gains or losses occur.
Whether crypto is currency or an asset won’t affect this much. I think you need a new tax rule altogether that let people “settle up” at the end the tax period or something.
I'm not sure about the US but this is definitely not the case in the rest of the developed world.
You are saying that every American citizen when they travel overseas, exchanging money and purchasing items on their card have to report that to the IRS?
Get the feeling this only applies to professional traders not people on holiday.
It actually is in the EU, and most of Asia.
You are saying that every American citizen when they travel overseas, exchanging money and purchasing items on their card have to report that to the IRS?
That is not forex investing.
For most American citizens, the only taxable forex transaction would be when they convert the foreign currency back to USD, because that is the point at which the change in exchange rates may have created conversion-related gain or loss. (I.e., very simplified example: you paid $100 USD for $100 AUD on arriving in Sydney Australia, and paid $100 AUD for $110 USD leaving Australia, resulting in forex gain because the AUD became worth more by the time you left.) However, if you are not a person who regularly trades currencies, generally you don't have to report forex gain unless it exceeds $200 for the year (in the US; the threshold differs for each country).
I have 4 different currencies sitting in a bank for years, they've moved far more than $200 in gain/losses over that time.
Accountants in both Sydney and Singapore have never wanted the details of me moving that cash around.
I pay my income tax (converted rate) on them and that's it.
I've also been paid in crypto before and that gets capital gains applied plus income tax. Not complaining though, often worked out ok.
Seems like that would be easier. They tell me how much they think I owe, and I either send it in or file an appeal.
That might be the point.
The same is not true if you replace Euro with Bitcoin above.
https://www.irs.gov/publications/p525#en_US_2019_publink1000...
So if you exchange $20 USD for foreign currency and then buy something a month later where it would have cost $25USD to get the same amount of currency, that's a capital gain.
And then you have an example that didn’t show how proper accepted legal designation as a currency, in the future, would lead to worse tax treatment, which is the supposition we were talking about. Let me know if you come up with something.