Earlier this week, Tesla CEO Elon Musk announced that the company has started accepting Bitcoin payments against any Tesla model’s purchase. During a webcast hosted by the CBOE, Ark Investment’s Cathie Wood warned Bitcoin (BTC) investors not to get swayed by the offer until they really understand the tax code. Wood said that any decision in a hurry could possibly attract scrutiny from the IRS, as investors might face massive taxes.
Using bitcoin to purchase anything could lead to massive capital gains taxes.
“The IRS has something to say about this, so if you have huge gains in your bitcoin, I don’t think I would bear much in the way of transactions until we get maybe some changes on the tax front,” Cathie Wood said. Under the current tax code, the IRS considers Bitcoin and other digital currencies as “property,” similar to bonds and stocks. Thus, the use of Bitcoin to purchase any goods/services could lead to massive capital gains taxes. The percentage of tax a person pays depends on how long the investor has been holding the assets.
Cathie Wood has been a huge advocate of Bitcoin.
Even if the period of holding is above one year, the capital gains taxes are anywhere between 15-20%. Wood’s comments came just two days after Tesla CEO Elon Musk made the announcement. Cathie Wood has been a huge advocate of Bitcoin in the past and continues to be, with her company also having some exposure to the world’s largest cryptocurrency. However, Wood sees Bitcoin as more like a “store of value,” aka digital gold, instead of a form of currency. At the time of writing, Bitcoin is changing hands at just above $54,400.