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Cathie Wood warns investors against transactions with Bitcoin until the tax code is changed

Earlier this week, Tesla Inc (NASDAQ: TSLA) announced that customers could now buy a Tesla with Bitcoin (CRYPTO: BTC), but Ark Invest’s Cathie Wood is unsure whether investors should use it as a means of payment. What Happened: On a webcast hosted by CBOE, Wood said those who made profits from the Bitcoin rally may be subject to IRS scrutiny. The founder of ARK Invest stated, “The IRS has something to say about this. So if you are making huge profits on your Bitcoin, I probably wouldn’t be involved in much transactions until we maybe get some changes on the tax front.” . Why It Matters: From a tax perspective, the IRS currently treats Bitcoin and other cryptocurrencies as “property,” as well as stocks and bonds. As a result, when investors sell their bitcoin for fiat currencies or use it as a means of buying another commodity, they may be subject to massive capital gains taxes. Investment income from taxes on assets held for less than a year will be taxed in the same way as an individual’s “other income”, while assets held for longer than that period would be subject to long-term capital gains taxes of between 15 and 20%. While this would make all Tesla purchases with Bitcoin slightly inconvenient for those who bought the cryptocurrency last year, newer investors could actually benefit from the current rules if, for example, an investor bought the leading cryptocurrency at a price higher than its current value he can actually report a loss and receive a tax deduction on the value of the asset. Price Action: After a volatile week, Bitc price rebounded from yesterday’s low of $ 50,856 to $ 53,900 today. At the time of printing, the cryptocurrency was trading at $ 53,223, according to CoinMarketCap. Related Stories Should You Buy a Tesla With BTC? More Info From BenzingaClick Here For Benzinga Option TradesElon Musk Backs DeFi Cryptocurrencies With Latest TweetCryptocurrencies Filecoin, BitTorrent Survivors Only As Crypto Markets Lose 0B Overnight © 2021 Benzinga.com. Benzinga does not offer investment advice. All rights reserved.