Treasury Urged to Revise Crypto Tax Rules That Penalize Unrealized Gains

TLDRRepublican Senators Lummis and Moreno have asked Treasury to exempt unrealized crypto gains from the Corporate Alternative Minimum Tax (CAMT)The 2022 CAMT combined with FASB’s new fair-value accounting rules forces companies to pay taxes on digital assets they haven’t soldLawmakers argue this puts US crypto businesses at a competitive disadvantage compared to foreign firmsThe request comes amid other pro-crypto actions under the Trump administration, including repeal of the DeFi broker ruleMissouri is considering becoming the first state to eliminate all capital gains taxes, including on cryptocurrenciesTwo Republican lawmakers have called on the US Treasury to fix a tax policy they say unfairly targets American crypto companies. Senators Cynthia Lummis (Wyoming) and Bernie Moreno (Ohio) sent a letter Tuesday to Treasury Secretary Scott Bessent requesting immediate action on how digital assets are taxed under the Corporate Alternative Minimum Tax (CAMT).The senators warned that current rules could force companies to pay taxes on crypto they haven’t sold. This comes from a clash between tax law and new accounting standards that wasn’t intended by either Congress or accounting regulators.“Our edge in digital finance is at risk if US companies are taxed more than foreign competitors,” Lummis wrote when sharing the letter on social media platform X. The lawmakers asked Treasury to act quickly to prevent harm to American crypto innovation.The issue stems from the 2022 Inflation Reduction Act, which created the CAMT. This law applies a 15% minimum tax on large corporations with over $1 billion in average annual income, based on their financial statements rather than traditional tax rules.Our edge in digital finance is at risk if U.S. companies are taxed more than foreign competitors. @berniemoreno & I urged the @USTreasury to lift an unintended tax burden on U.S. digital asset companies. To lead the world in digital assets, we need a level playing field.️ pic.twitter.com/V7pwAUqRc4— Senator Cynthia Lummis (@SenLummis) May 13, 2025How Accounting Changes Created Tax ProblemsThe tax problem emerged when the Financial Accounting Standards Board (FASB) changed how companies must report digital assets on their books. In December 2023, FASB issued a new rule requiring companies to use fair-value accounting for cryptocurrencies.Under fair-value accounting, also called mark-to-market, companies must update the value of their crypto holdings to reflect current market prices each quarter. This means any price increases get recorded as income on financial statements, even if the company hasn’t sold the assets to realize those gains.When combined with the CAMT, this creates a unique tax problem. Companies could owe taxes on paper profits they haven’t actually received in cash.“Neither Congress nor FASB planned this outcome,” the senators wrote in their letter. “It’s the unintended result of basing tax liability on decisions by a private organization... not principles of taxation.”The lawmakers argued this situation is especially unfair because foreign companies follow different accounting standards. This means US firms face tax costs their overseas competitors don’t have to pay.In their letter, Lummis and Moreno warned companies might be forced to sell crypto assets just to pay the taxes on their unrealized value. This could harm US competitiveness in digital finance and push innovation overseas.The post Treasury Urged to Revise Crypto Tax Rules That Penalize Unrealized Gains appeared first on CoinCentral.