Anyone who sticks with cryptocurrency investing long enough will eventually find themselves holding worthless or nearly worthless coins. Altcoins of limited utility will simply fail to catch on, or developers will disappear, or the market will fail to show favor to an obviously useless meme coin. In almost all cases, worthlessness will coincide with the…
The IRS requires a qualified appraisal for donations of property. Without it, your charitable donation deduction may be disallowed. Generally, IRC Sec. 170(f) requires a taxpayer to satisfy certain substantiation requirements to claim a charitable contribution deduction. Recently, the IRS disallowed a taxpayer’s charitable contribution deduction for a donation of more than $5,000 in cryptocurrency…
In late 2022, the IRS announced that brokers will not be required to report or furnish additional information with respect to dispositions of digital assets, issue additional statements, or file any returns with the IRS on transfers of digital assets, until the IRS issues applicable final regulations. In the meantime, a broker may report gross…
The answer: it depends. Tax rules in the United States look to the “origin of the claim” to determine whether funds paid in connection with a lawsuit are taxable. For example, damages paid in satisfaction of lost income would be taxable because the claim originated in the loss of monies that would have been taxable…
Who Is Required to Pay Estimated Taxes? Taxpayers with income not taxed at the source generally have a quarterly estimated tax obligation. This includes those receiving income from the following sources: Self-employment Interest Dividends Alimony Capital gains from selling stock, bonds, cryptocurrency, and other assets A business, including rental property income Prizes and awards According…
Here are a couple of federal tax updates relating to cryptocurrency, courtesy of our colleagues at the AICPA Journal of Accountancy. Form 1040 virtual currency query revised for 2021 A draft version released in July of Form 1040, U.S. Individual Income Tax Return, for the 2021 tax year on page 1 retains the question from…
The Limited Liability Company (or LLC) is a popular form of organization for new businesses in the United States. LLCs generally provide the same personal liability protection as a corporation, but without the additional layer of taxation or burensome administrative requirements. These requirements, commonly referred to collectively as “the corporate formalities,” generally include naming a…
We are often asked for guidance on how long clients should retain personal income tax records. You may have to produce those records if IRS (or a state or local taxing authority) audits your return or seeks to assess or collect a tax. In addition, lenders, co-op boards, or other private parties may require that…
Equity based compensation such as options or restricted stock has grown tremendously in popularity in recent years. For startups and small businesses, equity can be a valuable and effective means of compensating key employees (and incentivizing retention) during early growth periods when cash flow is tight. We are frequently asked by clients to help determine…
One of the major ambiguities in virtual currency reporting in recent years has been the question of whether non-US exchanges should be considered “foreign financial accounts” for the purpose of reporting on FinCEN Form 114 (commonly known as the FBAR). Generally, a U.S. person who has a financial interest in, or signature or other authority…
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