Cryptocurrency and taxation are two concepts which do not mix all that well. This is especially true in the United States, even though the IRS issued official crypto taxation guidelines not long ago. Many users are always looking for ways to reduce their capital gains tax in one way or another. The upcoming Swapper platform could certainly be of help in this regard. Its services seem pretty compelling, although it remains to be seen how the IRS responds to this particular platform.
From the website itself, it becomes apparent pretty quickly what the Swapper team aims to provide to US residents moving forward. Their main focus is on letting cryptocurrency users evade capital gains tax for at least six months of the year. While this may sound illegal, the company claims to have come up with a legal way to do so. It purports to lawfully use IRS Code US 1031 to provide this particular service.
More specifically, Swapper parks cryptocurrency funds on behalf of the user in an FDIC-insured escrow account managed by Bank of America. It does not happen all that often cryptocurrency service providers can partner with BoA in this regard, especially if said providers have yet to officially launch. If this statement is true, however, Swapper could quickly become one of the biggest service providers in the US as far as capital gains tax services are concerned.
According to its website, the company achieves all of this by converting users’ cryptocurrency investments into fiat currency. While that may sound like taking two steps backward, it is a viable solution according to the Swapper team. They offer a so-called strategic timing option which allows users to circumvent volatile market conditions. It’s an interesting take on things, and one that appears to be perfectly legitimate for all intents and purposes.
IRS Section 1031 allows individuals to defer their capital gains tax by exchanging the property in question for like-kind property. Since Bitcoin and altcoins are considered “property” in the US and not “currency”, this method becomes a viable solution in the long run. Through this like-kind exchange, users can park their cryptocurrency investments for up to six months at one time. This implies that investments are not subject to capital gains tax during this period either, which is a pretty interesting development.
It is also worth mentioning that Swapper users can take out cash during the exchange itself. Doing so subjects that amount to capital gains tax, though, so it is not a decision people should make on a whim. Users who take out cash equal to or greater than their capital gain will pay all taxes owed regardless. Of course, doing so would make the entire concept of the like-kind exchange worthless.
All things considered, Swapper sounds like an interesting service. The bigger question is whether or not this company will succeed. Launching an ICO to fund this service will raise a lot of questions, to say the least. It is unclear how much money it costs to set up such a business, but it seems plausible they could just charge users a fixed fee for this service. It will be interesting to see how things play out as far as Swapper is concerned.
The cryptocurrency world has always been a hotbed of innovation, attracting both seasoned investors and…
Dogecoin's 2021 rally was a historic one, turning ordinary investors into overnight millionaires. This magnificent…
The crypto market is always evolving, with big names like Bitcoin and Ethereum leading the…
The crypto market is ablaze with excitement as altcoins like XRP and BNB make major…
Rollblock is quickly becoming the best crypto presale to buy, delivering unmatched value for its…
While Rollblock's continues its crypto presale, with its value increasing regularly, Polkadot (DOT) and Uniswap…