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The Henry Raines Show

Why is Bitcoin?

May 29, 2018 • By

Last week started with an article where the president and CEO of the American Institute of CPAs, Barry Melancon, called for accountants to embrace emerging technology, particularly the blockchain. Sadly, his choice of words may not have been the best in mobilizing the profession. I trust his intention was to not allow the fear of technology to be the reason we ignore it.

“We don’t need to really understand the underlying software,” he said. “It’s the implications and power of blockchain that are more important that (sic) the actual software.”

I disagree. I believe that we do need to understand the underlying software. Not to the degree of being able to program or develop, but we need a clear understanding of the terminology, applications, and how certain platforms differ from others; particularly as it relates to our respective disciplines. For example, my work with retail clients. I cannot write code for a point-of-sale system, but by learning the underlying systems, I know where to look for vulnerabilities and determine if an area requires additional controls.

The first questions I am asked by my peers interested in learning about blockchain is generally one of the following: “How do you know all of this?” “Where do I start?” “What is Bitcoin?” or “When should I buy bitcoin?”

I had the pleasure of being in studio for The Henry Raines Show this week where we had, Bitcoin pioneer, Charlie Shrem, of Crypto.IQ as a guest. A powerful reminder that what you read and hear  is not always a complete story or worthy of developing an informed opinion. Charlie left us with a final thought, the one question we fail to ask, should be our starting point.


“When it comes to Bitcoin, don’t ask ‘What is it?” ask “Why is it?”


Start with “Why?” And if you think that our current processes and systems are working, if you cannot recall some accounting scandals, failed regulation, or even relate to an example of occupational fraud, I have a primer for you: this presentation by Caitlin Long. Regardless, I urge everyone to watch. She does a remarkable job of explaining the overleveraged nature of our current economy and highlights a couple of accounting examples where “we” could never arrive at the same number twice.

For those who revert to asking “What?” and remain comfortable with stopping at the uniformed answers of a Ponzi scheme or “Tulip Mania,” I ask that you refrain from draining the limited US resources in convincing you otherwise at this time. “Why?” As you will hear from both Shrem and Long, the US is so far behind in this space.

We need to leverage the resources of the accounting professionals and local leaders like Joel Greenberg, the Seminole County Tax Collector (and another great interview) interested in moving our community and country forward.

Both interviews and the presentation have downloadable audio. No excuses. Find the “why.”

This post and the contents included are provided for informational purposes and shall not be considered legal advice.

Photo by Ken Treloar on Unsplash


Have you seen a blockchain shoebox?

April 2, 2018 • By
Big Pile of Stacked Shoe Boxes

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.