Can you tax cryptocurrency? Let’s find out!

Vinnie Fisher

Cryptocurrency technology shook up the economic world when BitCoin burst into the scene a couple of months ago. If you aren’t in the loop, you might want to consider checking it all out – starting here! Recently our CEO, Vinnie Fisher, had the privilege to be apart of The Future of Money Summit presented by Totally Crypto, where he talked about cryptocurrency and how is it impacting individual and businesses with respect to taxes. We encourage you to check out the whole presentation below, but we’ve highlighted a few key points for you below as well.

crypto tax talk with vinnie fisher

 

Advantages

bitcoin accounting

Cryptocurrency has many advantages and solves a lot of the problems which are in relation to the centralized nature of assets/currencies:

  • No fraud
  • No identity theft
  • Immediate settlement
  • Access to everyone
  • Lower fees

What’s Taxable vs. What Isn’t

tax faq

Remember: as a US citizen you are required to pay taxes, and cryptocurrency is no exception. Currently, the IRS is treating this as property (like stocks or bonds) and because of this, it is being treated like the taxation of property. So, what’s taxable and what isn’t?

Taxable

  • Trading cryptocurrency to a fiat currency.
  • Trading cryptocurrency to cryptocurrency.
  • Using cryptocurrency for goods and services.
  • Selling, trading, or using forked coins or coins you mined.

Not Taxable

  • Buying cryptocurrency with USD.
  • A wallet-to-wallet transfer (Ex: Bitcoin is sent from one Bitcoin wallet to another).
  • Giving cryptocurrency as a small gift.

 

Treat Cryptocurrency as a Business

cryptocurrency tax accounting

Do your business as an entity. Under the new law, pass-through entities – such as partnerships, S corporations, LLCs, and sole proprietors – can claim a 20% deduction on earnings, subject to special rules restrictions.

Here’s where it gets exciting, there is a way to NOT pay taxes on cryptocurrency. If an owner wants income but does not want to pay capital gains taxes, he can set up the installment contract to pay interest-only payments from the reinvested sales proceeds. According to IRC section 453, this strategy can defer the capital gains tax indefinitely.

 

Want to learn how to make a comprehensive tax plan? Let one of our tax experts help you out with that! 

 

Share This Article

Summary
Cryptocurrency and Taxes: 3 Things to Remember - Fully Accountable
Article Name
Cryptocurrency and Taxes: 3 Things to Remember - Fully Accountable
Description
Everyone is required to pay taxes, and cryptocurrency is no exception. Find out what is and isn't taxable. Learn tips & tricks. Read the article here.
Author
Publisher Name
Fully Accountable
Publisher Logo
Go Up
profitable social mediafinancial habits

Customer Avatar

Decide whether your products are true to your company’s mission …

The Top 10 KPI's Magazine

The Real Secret Weapon to Growth, Scale, and Profitability of your Digital Business

Outsmart Business

There are many reasons why organizations, especially small…

Benchmarking for Success

How to Use Industry and Competitor Key Performance Indicators (KPIs)



Beyond Your Shadow

Discover the 4P’s that will help you grow Beyond Your Shadow.

Keep Pulse

Why the company pulse is so important and how you can check yours!

Internal Controls

Reduce your risk of fraud by taking these steps …

Five and a Half

Creating a budget is one of the most common unfilled goals of small business…

What Accountants

E-commerce has many advantages for businesses and accountants to grow …

Driving Business

Dashboard reports are a series of charts that track results for key…

The COGS Report

This will show you how to measure the actual profit on products and services…

Cash Flow Best

The 5 Rules of Cash Flow ‘Best Practices’ for Small Businesses…

Services Audit

Describe what you offer as a service and identify whether it is aligned …

Products Audit

Decide whether your products are true to your company’s mission …

The Labor Indicators

This report focuses on specific Key Performance Indicators (KPIs) every service …



DIY Metrics

Every business has a series of key performance indicators (KPIs). Unlike metrics, …

Sample Metrics

This report focuses on specific Key Performance Indicators (KPIs) every service …

Recovering Your Business After the Pandemic

How Better Data Improves Your Decision Making for Your eCommerce or Digital Business