Overview
- Cato Institute researcher Nicholas Anthony argues current U.S. capital gains rules make routine bitcoin spending impractical, estimating Form 8949 can reach about 70 pages and total filings can top 100 pages a year for daily coffee purchases.
- Because the IRS treats bitcoin as property, every payment counts as a taxable sale that must list when the coins were acquired, what they cost, when they were spent, and their value at payment on Form 8949 with totals carried to Schedule D.
- The analysis says this setup nudges users to hold rather than spend by rewarding long-term gains, and it warns that complex recordkeeping raises audit and penalty risk for small, everyday transactions.
- The report outlines options for Congress that include ending capital gains taxes, excluding crypto or foreign currency used for payments, carving out purchases of goods and services, or adopting a higher de minimis threshold than the proposed $200, with a suggested link to average household spending near $80,000.
- The push arrives as the IRS expands crypto reporting with broker matching and new 1099-DA disclosures, while lawmakers continue to debate de minimis relief and other changes with no statute enacted yet.