Senators Cynthia Lummis and Bernie Moreno have urged the US Treasury to address an unintended tax burden caused by a Joe Biden-era tax on corporations, which could hurt digital asset companies.
The corporate alternative minimum tax (CAMT), which Biden signed into law as part of the Inflation Reduction Act, imposes a 15% minimum tax on corporate profits.
While this accounting method may apply to certain assets, it creates a challenge for companies in the digital asset sector.
The tax is based on adjusted financial statement income (AFSI). This includes the fair value of digital assets. As a result, corporations with large digital asset holdings could be taxed on asset appreciation. This applies even if they haven’t sold the assets.
Lummis and Moreno proposed that the Treasury use its regulatory authority to adjust the tax code to exclude unrealized digital asset gains from the AFSI calculation.
Under the new standard, entities holding appreciated digital assets would pay taxes on unrealized gains. This could force companies to sell assets just to cover tax liabilities. As a result, their ability to grow and innovate would be limited.