Digital Assets, Public Policy, Joint Committee on Taxation, Tax, Law, Internal Revenue Service, Cryptocurrency
In response to the Joint Committee on Taxation’s July 2023 request for comments on application of various Internal Revenue Code sections on digital assets, we propose a consistent set of rules to apply current law to digital assets. We highlight that the underlying economics and characteristics of transactions should be the primary concern for the application of rules and the valuation of digital assets. We believe any digital asset rules should (1) treat classes of digital assets with unique characteristics differently based on their economics, (2) minimize incentives for users to engage in tax-motivated structuring of transactions, and (3) allow the Internal Revenue Service authority to react to and regulate new classes of digital assets as they are created. We do not believe that the unique features of digital assets are a challenge to applying current law or warrant special tax preferred treatment.
Beale, Linda M. and Bearer-Friend, Jeremy and Bird-Pollan, Jennifer and Brunson, Samuel D. and Calderón Gómez, Luís Carlos and Camp, Bryan T. and Chodorow, Adam and Cochran, Mark and Cong, Lin and Foreman, Matthew and Gaudiano, Phil and Gershon, Ira Richard and Goldman, Nathan C. and Grennan, Jillian and Justice, Megan and Kim, Young Ran (Christine) and Lazerow, Herbert I. and Li, Tao and Lokken, Lawrence and Marian, Omri Y. and Mazur, Orly and McMahon, Stephanie Hunter and Menzer, Tyler and Metras, Matt and Murphy, Ann M. and Ordower, Henry and Parsons, Amanda and Rabetti, Daniel and Raskolnikov, Alex and Roberts, Tracey and Ryan, Kerry A. and Zelinsky, Edward A., Common Sense Recommendations for the Application of Tax Law to Digital Assets (September 8, 2023). U of Colorado Law Legal Studies Research Paper #23-22, Wayne State University Law School Research Paper No. 2023-22, UC Irvine School of Law Research Paper No. 2024-01, St. Louis University School of Law Legal Studies Research Paper Series 2023-14.