In a bid to modernize the US approach to cryptocurrency taxation, Congressmen Steven Horsford and Max Miller have reintroduced the Digital Asset Protection, Accountability, Regulation, Innovation, Taxation and Yields (PARITY) Act. This revised bill aims to address the complexities surrounding crypto taxes, an issue of paramount importance for US-based crypto owners who must report their digital asset holdings and transactions. The revised PARITY Act, initially released in December and re-released in March for further review, introduces several key changes. Notably, it addresses 'de minimis' gains, which allow for small transactions to be exempt from tax reporting.
This exemption could simplify everyday transactions, such as buying coffee with crypto, by eliminating the need to report capital gains or losses. The previous version of the bill proposed a $200 threshold for de minimis exemptions, specifically for regulated payment stablecoins. However, the latest draft takes a different approach, stating that no gain or loss will be recognized on the sale of a regulated payment stablecoin unless the taxpayer's basis is less than 99 percent of the redemption value.
This version also removes the $200 threshold and establishes a deemed basis of $1 for exchanges. Furthermore, the bill applies wash sale rules to digital asset transactions, a provision that has garnered support, including from Senator Cynthia Lummis. It also differentiates between 'passive staking' and trading activities.
While the bill's future is uncertain, with discussions around a potential reconciliation tax bill and President Donald Trump's fiscal year 2027 budget requests, industry insiders anticipate a strong push to include crypto in any forthcoming tax legislation.