Ryan cooper
Something has changed since Bitcoin became the first crypto currency in 2009.
The total value of all cryptocurrencies is now approaching $ 3 trillion. Sotheby's and Christie's, the global auction houses, have auctioned more than $ 165 million in crypto assets so far in 2021 and are accepting bids on Ethereum.
The Lakers will play at the Crypto.com arena, formerly the Staples Center. Coinbase is a publicly traded company.
The U.S. Securities and Exchange Commission approved a Bitcoin futures exchange-traded fund that began trading in October. Wyoming allows the legal registration of a new type of business entity called a decentralized autonomous organization LLC, which allows management not only by humans but also by software algorithms.
Simply put, we are not only looking for completely new asset classes, but also new ways of doing business. This is much bigger than cryptocurrencies; in fact, some describe this as the early stages of "Web 3.0".
You must be absolutely cautious and skeptical. Much of this space is a modern equivalent of the Wild West, with little or no regulation, where "buyer beware" reigns.
But the winds of change are blowing. We are seeing demands from the IRS to improve data reporting, as well as crackdowns by the SEC against cryptocurrencies that could be considered securities under US law.
Institutional investors and venture capital have started to enter the space and are demanding greater security and compliance. You may find this all ridiculous, extremely volatile, and incredibly risky, and you'd be right. I've been following these developments for about five years now, and I can only say one thing for sure: crypto assets won't go away.
In recent years, more people have started asking about the tax implications of buying and selling cryptocurrencies. Did you know that for the past two years, have you testified if you made any cryptocurrency sales by signing your tax returns?
If you did and those sales don't appear on Schedule D, you may have filed an incorrect return. The IRS position on this has been established since 2014, so this is not new territory.
The terminology for crypto assets is very different, but in most situations, the income tax implications are similar to buying and selling stocks, and similar tax planning strategies apply. There are reliable resources available if you want to donate appreciated crypto assets to charities or if you want to protect your tax earnings by transferring the proceeds to an investment in the Opportunity Zone. As with most things related to tax, there are finer points and complexities, and I recommend speaking with a professional who understands crypto assets.
Someone recently shared a 1995 video clip of David Letterman interviewing Bill Gates. Letterman was joking about the first baseball game streamed on this new thing called the internet. "Have you heard of the radio?" is the auction.
My point is that we can all make jokes, but being stubborn in the face of progress is a reaction, not a strategy. Be cautious, be skeptical, do your research but don't dismiss or ignore it.
(Ryan Cooper, CPA / PFS, is the Special Projects Manager at Nagel CPA, LLC - Accountants and Consultants, serving the middle of the Rio Grande Valley, central Utah, and beyond. Learn more at nagelcpa. us).
