Bitcoin - Passing Fad? Disruptive Technology? Either Way It's Now Taxable!
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Transcript of Bitcoin - Passing Fad? Disruptive Technology? Either Way It's Now Taxable!
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Photo: Flickr BTC Keychain
Bitcoin: Passing Fad, Disruptive Technology? Either Way, It’s Now Taxable!
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Tom Hood, CPA, CITP, CGMA
Tom Hood, CPA, CITP, CGMACEO
MACPA www.macpa.organdBusiness Learning Institute (BLI) www.blionline.org
http://www.linkedin.com/in/tomhood/
If there is a conversation about the future of the profession, you're bound to hear Hood's name mentioned as one of the people leading the way.
– Accounting Today Magazine
• Named the Second Most Influential in Accounting by Accounting Today Magazine 2013
• Linked-In Top 150 Influencer• Top 25 Influencers in Learning & HR by HR
Examiner• Top 25 Thought Leaders in Public Accounting
by CPA Practice Adviser• Working on Learning Management with
AICPA/CPA2Biz, Cloud Curriculum, Performance Management
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4 Careers Bitcoin can Disrupt
• Bankers• Cashiers• Armored Car
Drivers• Accountants
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Is Bitcoin a bubble?
Source: CoinDesk
Closing Price $817.12 as of Dec 30, 2013
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Bitcoin Theft Makes Headlines
Bitcoin hit new low of $557.40 on news of Mt. Gox (Japanese) Bitcoin Exchange theft of Bitcoins.
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More Bad News:Apple removes Block Chain from App Store
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Bitcoin Price 3/30/14
Down 43% since year-end
Source: CoinDesk
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How a Bitcoin Transaction Works
Source: PC World – 7 Things You Need to Know About Bitcoin
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How Bitcoins are Circulated & Used
Source: GAO Report
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Bitcoin Transaction Documentation
Source: Bitcoin: A Peer-to-Peer Electronic Cash System
Could this replace the general ledger for documenting transactions?
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Congress, GAO, FBI, and TreasuryStudy Virtual Currencies
Congress started studying the economic and tax issues with a hearing by a Joint Economic Task Force on April 1, 2008 to the GAO report on May 15, 2013. The FBI, Treasury and the National Taxpayer Advocate all were investigating the fast growing economies of virtual goods and virtual currencies that started with World of Warcraft & Second Life.
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IRS Issues Virtual Currency Guidanceon March 25, 2014
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Three Types of Virtual Currency Systems
Source: GAO Report
Generally not taxable Most likely taxableCould have taxable issues
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Virtual Currency Tax Issues
1.Taxpayer lack of knowledge about tax requirements
2.Uncertainty over how to characterize income3.Uncertainty over how to calculate basis for
gains (capital gains / barter)4.Challenges with third-party reporting (1099s)5.Evasion
Source: GAO Report
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7 Things to Know About Bitcoin1. Bitcoins are created, traded and
controlled by the people2. We’re definitely in a Bitcoin bubble3. You can mine Bitcoins but the gold rush is
over4. Most major retailers don’t accept
Bitcoins5. Bitcoins aren’t protected or insured by
anyone6. Nobody knows who really created Bitcoin7. Bitcoins aren’t the first virtual currency
and won’t be the last
Source: PC World – 7 Things you need to know about Bitcoin by Alex Wawro