What does the PARITY Act cover?
The legislation addresses six major areas where current law has left both taxpayers and practitioners without reliable guidance.
Wash sale and constructive sale rules
The bill extends the wash sale rules under IRC § 1091 to digital assets, closing what sponsors call the “fake-loss loophole.” Under current law, a taxpayer can sell a digital asset at a loss, immediately repurchase the same asset, and still claim the deduction. Something stock investors can’t do.
If enacted, a 30-day waiting period would apply before a repurchased asset qualifies for loss treatment. The bill also extends constructive sale rules under IRC § 1259 to prevent investors from locking in gains without triggering a taxable event.
To dig deeper, visit the original article on the Thomson Reuters blog.