With the number of Initial Coin Offerings (ICOs) increasing in the last quarter of 2017 and continued surge in 2018, I sense that there should be some “virtual” shoeboxes starting to fill corners of tax preparers’ offices.
I realize that not all of these are US based, have US employees or contractors, nor transact in the US. I am also aware that not all of these offerings are by individuals intending to comply with federal and state tax laws.
For a look at those well-intentioned participants, transacting in the US and may be seeking professional tax assistance … this is what I envision would be under the lid of that shoebox:
- tokens issued to employees and contractors with value
- exchanges of USD, crypto currency, and the token
- transactions for USD, crypto currency, and the token
- 1099’s with no basis for individuals trading cryptocurrencies
- a few pieces of paper with long wallet addresses
- transactions with 8 or more decimal places
It is with these well-intentioned individuals, my dedicated colleagues who deserve a few restful hours, and my enthusiasm for what the future of the accounting profession may look like as it evolves with the latest technology that I launch this blog and my practice.
There is plenty of fear, uncertainty, and doubt (FUD) in this space. However, the position of the IRS is known and I will begin with how we may address the knowns.
This blog and my practice are for small practitioners who may not have a crypto department, but have clients transacting in cryptocurrency or issuing ICOs.
Should you need assistance calculating payroll tax liabilities for alternate payment methods, navigating the blockchain, exchange rates, basis, have clients interested in accepting alternate payments, or other needs in this space, please get in touch.
For those projects and organizations that are considering issuing a token, I urge you to seek the advice of an accountant. It is imperative not only for tax planning, but also to test your model with some supply and demand scenarios.
Creating a token is neither a one-sided entry nor free.
I welcome comments and interaction. This is a centralized blog with my fellow practitioners in mind. So please see my blog guidelines here.
T-Accounts, token economic models, software examples, and ‘80s references (as my humor is not as advanced as my technology adoption) in the days ahead.
This blog post is for informational purposes only. Nothing herein shall be construed as legal advice.