Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond

by Chris Burniske

If some cryptoassets are commodities, this could open them up to different tax treatment than if they were considered solely as property. Commodities fall under the 60/40 tax ruling, meaning 60 percent of the gains on a commodity transaction are treated as long-term capital gains and 40 percent are treated as short-term capital gains. This is different from taxing stocks where profitably selling an equity after 12 months is classified as a long-term capital gain with a current tax rate cap of 15 percent. Selling prior to 12 months would be considered a short-term gain with the tax ramification based on an investor’s income bracket. All cryptoassets are not alike. There needs to be further clarity and understanding of these assets by government agencies and potentially a new set of regulations (including tax treatments) that recognize these differences. For now, the IRS and the CFTC view these assets differently, and this will surely necessitate further clarifying rulings by the IRS to provide appropriate direction. Don’t expect this to happen quickly; it took the IRS over 15 years to provide tax guidance on derivatives.