I don’t trust the elderly 80 year old congress members to come up with good rules for crypto since it’s something old people barely understand or care about.
*Jokes on the cryptocurrency wallets.
Are crypto taxes recursive?
For example: Person A gets paid $1,000 BUSD for services rendered to company B. The transaction/movement of crypto from Company B to Person A is treated as a transfer of property and is taxed at 10% for short-term capital gains tax of $100.
Assume Person A wishes to pay these taxes using crpyto, and then sells/swaps $100 BUSD for USD (with no transaction fees). Would this then constitute another transfer of property that would then be taxed another 10%?
I've been having some trouble wrapping my head around how it would like for a person to live a crypto-only life.
If person A gets paid $1,000 BUSD for services rendered to company B, that's not transfer of property, that's definitely income and taxed as income at the appropriate income tax rate no matter if the compensation for services rendered was paid out in USD, BUSD, gold, goats or other services (e.g. barter of services according to https://www.irs.gov/taxtopics/tc420) - in all non-USD cases, you just use the USD value of the non-USD-thing, which should be simple for stablecoins. On the other hand, if BUSD is stable and does not grow in value, then short-term capital tax does not apply, since there are no capital gains.
If person A was paid 1000 randomcoin that was worth $1000 at the time of payment, and by the time they needed to sell some of them to pay taxes they had doubled in value, then yes, they would have to pay 10% of the value increase as well. That sale/capital gains trigger would likely be in the next tax period, so the "recursive" tax would be due a year later than the "initial" tax.
Most laws are written by private industry not law makers, odds are you couldn’t find a dozen lawmakers that have read legislation much less written it. They have staff, usually young law grads that read it and give them talking points.