Examples of Bitcoin cost when buying a Tesla car▶ Click here for a larger view
According to an analysis, US consumers could get a tax bomb if they buy a Tesla car with bitcoin.
This is because Bitcoin is classified as an investment asset, not a legal currency in the United States.
On the 25th (local time), the US economic media CNBC broadcast said, “Elon Musk Tesla’s chief executive officer (CEO) said that you can buy Tesla with bitcoin, but that could mean a bigger tax bill.”
The U.S. Internal Revenue Service (IRS) classifies virtual currencies such as Bitcoin as assets, not legal currencies.
Buying a car with bitcoin is subject to capital gains tax, meaning that it may cost more than cash payments.
Tesla ranges from $38,000 to $80,000 depending on the model.
Currently, the price of bitcoin is over $50,000 each, and you can buy a Tesla car by spending 1 or 2 bitcoins.
However, the problem is that the U.S. tax authorities classify bitcoin as an asset with fluctuating prices, such as stocks, so depending on the time of purchase, you may get a tax bomb.
Tesla homepage to guide Bitcoin payments▶ Click here for a larger view
According to CNBC broadcast, the price of bitcoin a year ago was around $6,700.
So, if at that point, the person who bought bitcoin would benefit from buying a $38,000 Tesla Model 3 at a price of more than 5 times cheaper.
CNBC broadcast said, “The tax burden is different depending on how long you hold Bitcoin and how much profit you have made.”
If the holding period of bitcoin is less than one year, the market gain is classified as a short-term gain, and a normal income tax rate of 10 to 37% is applied depending on the total income.
In addition, if the holding period of bitcoin is more than one year, a capital gains tax of up to 20% will be added.
“It’s important to know when to buy cryptocurrency,” said Gerrit Watson, senior analyst at Tax Foundation, a tax analysis think tank.
Also, not only the US but also Korean consumers may have to worry about tax bombs when they buy a car with bitcoin.
This is because the Ministry of Strategy and Finance decided to separate and tax the income generated by transferring or lending virtual currency from next year at a 20% tax rate by classifying it as other income.
For example, if you earn 10 million won with bitcoin, you have to pay 1.5 million won, 20% of the 7.5 million won, excluding the basic deduction of 2.5 million won.
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