"Virtual Asset Tax Bill Needs Revision"...Senator Lummis Sends Letter to Treasury

Prominent pro-virtual asset (cryptocurrency) politician, Senator Cynthia Lummis, has voiced concerns over tax issues. She argues that under the current tax law, companies holding virtual assets could suffer unreasonable losses.

On the 13th (local time), according to the virtual asset specialized media The Block, Senator Lummis, along with Senator Bernie Moreno, sent a letter to Treasury Secretary Scott Besant, requesting intervention, stating that the current tax law could lead to unforeseen consequences for companies holding digital assets.

In the letter sent, the two senators argued, "If corporate tax (ALT) is imposed under the new accounting standards, unfair taxes will be levied on unrealized gains," and "such tax imposition could ultimately hinder U.S. investment."

The provision in question is the Corporate Alternative Minimum Tax included in the 'Inflation Reduction Act' passed during the Biden administration in August 2022. The Corporate Alternative Minimum Tax imposes a 15% corporate tax on companies with an average annual income exceeding $1 billion on adjusted financial statements for three consecutive years prior to the first taxable year.

At the time, it was thought that this provision would not apply to digital assets, but the situation has changed. After the implementation of the Corporate Alternative Minimum Tax, the Financial Accounting Standards Board mandated fair value asset reporting for companies holding digital assets. The value of assets is now linked to market value rather than cost.

The letter explained, "The combination of the new accounting standards and the Corporate Alternative Minimum Tax has led to unintended consequences," and "as a company's Bitcoin holdings increase, it may look good on paper, but tax liabilities on unrealized gains arise."

Meanwhile, it is reported that the Treasury has not yet responded to this.