You might be aware that your Bitcoin or other cryptocurrency transactions have a possible taxable impact. However, you might not know exactly how to report them. You can use this bitcoin tax calculator or read on for more guidance on cryptocurrency taxes.
What is Bitcoin?
Bitcoin is a worldwide payment system where users buy virtual currency using an exchange. The Bitcoins are stored in a digital wallet and can be transferred using a mobile app. No bank or other intermediary institution is involved.
Bitcoins can be used as a digital currency to send or receive funds, pay for goods or services, or simply for investment. Transactions are anonymous and are tracked only via the digital wallet identifiers on a public ledger. Originally used by illicit operators, mainstream companies such as Overstock.com now accept Bitcoin as payment.
Enter the IRS
The Internal Revenue Service (IRS) isn’t blind to Bitcoin and provided guidance about “convertible virtual currency” in its Notice 2014-21.
The IRS defined convertible virtual currency as virtual currency that has an equal value in real currency, or that is a substitute for real currency.
The IRS specifically referred to Bitcoin as a type of convertible virtual currency that can be digitally traded. In addition, you can buy or exchange virtual convertible currencies into U.S. dollars or other real or virtual currencies. However, virtual currency itself does not have legal tender status in the U.S.
“Though cryptocurrencies seem like a brand-fangled new investment, one with which our, by comparison, antiquated tax system can’t compete, they are actually taxed like pretty much any other mundane item,” emailed Mark Durrenberger, Certified Financial Planner®, Enrolled Agent and author of The Modern Day Millionaire.
If you sell, exchange, or use convertible virtual currency to pay for goods or services, you might have a tax liability. For tax purposes, the IRS treats convertible virtual currencies as property. If you receive Bitcoin as payment for goods or services you provide, then when you compute your gross income, you must include the fair market value of Bitcoin in U.S. dollars as of the date you received the Bitcoins.
Durrenberger gave the following example:
“If you buy Bitcoin for $100, and later sell it for, say, $1,000, [y]ou would owe capital gains taxes on that $900 gain. If you held that Bitcoin for less than one year, the tax rate would be whatever rate you pay on your regular income. If you held it for longer than one year before you sold, you are taxed at the more favorable (i.e., lower) long-term capital gains rates,” Durrenberger said.
Fair Market Value
How would you determine the fair market value of Bitcoin? “It can get a bit tricky as the value of Bitcoin jumps and dips constantly and those changes can be quite drastic at times,” emailed David Hryck, a tax lawyer, and partner at Reed Smith in New York City. “You will have to convert the Bitcoin value to U.S. dollars as of the date each payment is made.”
In this world of anonymous payments, recordkeeping of your transactions might be a challenge. “Make sure you keep careful records of the dates and value,” Hryck said.
If a company or individual pays you in Bitcoins for services you performed as an independent contractor, you might wonder if it constitutes self-employment income.
According to the IRS, self-employment income includes all gross income from any trade or business you engage in, other than as an employee. The fair market value of Bitcoins you receive for your services (measured in U.S. dollars as of the date you receive payment) is self-employment income and consequently is subject to self-employment tax.
Reporting to the IRS
You might wonder how to report your Bitcoin or other cryptocurrency transactions on your annual tax return.
The basic tax rules that are applicable to property transactions apply to transactions using virtual currency. The IRS has made it clear that Bitcoin is a type of property and your transactions must be reported.
You should file Form 8949, Sales and Other Dispositions of Capital Assets and Schedule D (1040), Capital Gains and Losses, with your annual tax return to reflect your cryptocurrency transactions.
Failure to Report
What will happen if you skip reporting your Bitcoin or other digital currency transactions on your tax returns? Will the IRS know?
The fact that in 2014 the IRS issued a comprehensive notice including a Q&A section shows that the IRS is well aware that Bitcoin and other cryptocurrency transactions are more than a passing fad. As with any tax law or IRS rules, you assume certain risks if you fail to comply.
This article by Valerie Rind first appeared on TaxAct.
If you are even slightly active on the Internet medium, you must have come across the term “Blockchain Technology” at some point in life. The Blockchain technology is considered as one of the most revolutionary technological advancements in modern times that offer the assurance of enhanced security and reliability of the digital transactions. With its wide range of technological applications and benefits, the Blockchain technology is revolutionizing almost realm of life out there. In the modern era, the Blockchain technology is known to be disrupting a wide number of industries out there.
What is the Blockchain Technology?
In simplest words, the Blockchain is referred to as the decentralized database. The presence of the decentralized, distributed database ensures the safest and the most reliable transactions on the digital platform. The Blockchain technology makes use of cutting-edge cryptography technology. This offers the assurance that once the information in the given system goes inside, it becomes virtually impossible to get the same out again without the original key or passcode.
Industrial Disruption Due to the Blockchain Technology
One of the major disruptions of the significant industry verticals due to the Blockchain technology is through the trust ensured through the secure code & collaboration, instead of the central authority. As such, by making use of the Blockchain technology, there is no longer the need for making use of the respective bank for making the money transfer across the globe. When it comes to buying a new home or facilitating some real estate agent, there is no more requirement of an Escrow account. There is no longer the need for any centralized authority or company for facilitating a transaction of any type. The Blockchain technology is highly revolutionary and has the potential of revolutionizing or transforming almost every industry vertical out there.
Here are some of the major industries that are or might be facing disruptions due to the Blockchain technology:
There are several industries making use of the revolutionary Blockchain technology for bringing about an effective disruption for ensuring an enhanced user experience. What opportunity to observe and feel for the Blockchain technology in disrupting your field of the industry?
Author: Ryan Smith
Social networking permeates much of our modern day lives. So much so that entire industries and companies have emerged out of nowhere in an effort to cash in on one of man’s most basic necessities – the need to connect. But now, as these networks approach full maturity, the internet community is asking some serious questions about the benefits over the drawbacks.
You will no doubt be familiar with the Facebook scandal that affected many of its users. As usual, the unfolding drama all boiled down to one major problem – a question of trust. And trust-less systems are front and center of blockchain-based solutions. What exactly will the blockchain social network of the future look like? Let’s take a look at how current networks could evolve.
Freemium – It’s Free But You Still Have to Pay
The digital social network experience has ushered in a new type of business model, the freemium one. Almost all successful tech-based social media platforms these days offer free access to their content. Facebook, Twitter, LinkedIn, Reddit, you name it, they all provide it.
But unlimited free access does not pay the bills. Development, server infrastructure, and staff are no small costs in a social networking business. So how are these companies bringing in cash? In short, advertising and analytics.
The freemium model’s first priority is to build up a large user base. Once you’ve achieved this, the tough bit really kicks in: how to sell stuff to these people. Unfortunately, online advertising is not a very innovative field and has remained relatively unchanged for quite some time. As a result, most networks these days simply sell website whitespace. The more eyeballs you get, the more money you make.
A sobering look at popular social networks reveals a worrying trend; platforms are ramping up their advertising efforts. Let’s look at a simple comparison of the well-loved question or answer site Quora. On the left, we have the current site and the right, a cleaner version from a few years back:
The Quora feed is now riddled with advertising links. This is a big no-no in the world of online marketing. A marketer’s goal has always been to drive people to a site through valuable content creation, not link users away aggressively as above.
A growing number of previous Quora users no longer use the site because finding relevant content while digging through all the trash has become too much of a hassle.
While the bulk of Facebook’s revenue is generated from targeted advertising, it does also make money, controversially, from selling user data. Facebook is in the powerful position of seeing consumer trends well before just about any other business on the planet.
And you can be sure that all those other businesses are prepared to pay, and pay well, for that kind of information. There are no official revenue numbers on this, however, as companies like Facebook and Google typically prefer to keep those numbers hush-hush for obvious reasons.
Blockchain to the Rescue?
Steem is one of the oldest examples of a blockchain social network in action. It provides us with valuable insights into the early exploration of this field. The first players in the space do not always dominate, as we saw with MySpace and some other early adopters that were crushed by second-generation companies.
Some of the fundamental problems facing the mature social network of today include:
The Facebook debacle has certainly provided an opportunity for budding blockchain entrepreneurs to jump in and promise “a revolution if you’ll just throw some money our way.” But do these blockchain social network startups have the chops to back up those claims? It’s clear that they have a tough road ahead. Fortunately, blockchain has much to offer.
1. Transparency & Governance
A properly implemented blockchain would allow important information and transactions to be verified by different servers, developers and, in fact, users of the actual community. Blockchain social networks that implement a transparent democratic process of how the network is run, will adopt users far more quickly than those that don’t.
Projects like Aragon are tackling these issues of blockchain governance and digital jurisdictions head on. The focus of Aragon is on allowing anyone to build decentralized organizations with more horizontal company structures. Furthermore, you gain the ability to build your own digital court system and let the network decide how to resolve disputes and move the company forward.
2. Monetizing Your Content
Full-time content creators know all too well that making money in the current internet environment requires handing over your power to third-party ad networks or subscription-based services. Seems like the middleman is just around every corner.
However, blockchain projects like the Brave browser, through the use of their cryptocurrency the Basic Attention Token (BAT), are attempting to remove these middlemen altogether. In the Brave ecosystem, publishers, users, and advertisers transfer value amongst themselves, and users can contribute to their favorite creators directly with BAT.
In addition, you can choose to opt-in on advertising and get paid for doing so, eliminating the need for advertisers to force their campaigns on users who are simply not interested. Publishers too can reward loyal followers through competitions, social media shares and so on. All of this, without the need for a third party.
3. Control Over Your Data
An important element of functional blockchains is removing the ability to double spend on transactions. Each ledger entry needs to be unique. This principle can be applied to protect user identities from fraud and deal with the current epidemic of bots and fake accounts.
Civic, a self-described “secure identity ecosystem,” is working to address these problems. In a blockchain social network, you finally have the opportunity to own your own data and decide exactly who else has access to it. Furthermore, if you decide to delete parts or all of your data, it would be deleted everywhere on the network. There’s no need to worry whether unauthorized players still have access to it and could, therefore, buy or sell in the shadow advertising market.
The Steem platform is an interesting experiment and continues to highlight some of the problems that blockchain social networks will have to overcome as these networks are being built.
Plagiarism is still a very big problem for content creators on Steem. Despite Google’s ongoing demonetizing campaign via YouTube, its content algorithms are particularly effective at dealing with duplicate content. Google understood early on as they were building their search engine, that an internet filled with copy-pasted content could become worthless very quickly. This is a serious problem that blockchain social networks are currently not addressing.
Bots have become a real threat to the viability of some social networks. Sneaky developers comb through lines of code looking for ways to game the system. For example, on Facebook, likes and shares hold a lot of weight, and bots are used to create hundreds and thousands of fake accounts. The use of bots can result in pages can be pushed up the rankings.
In the case of Twitter, bots are known to ambush important figures and popular accounts. In addition, fake profiles promoting scams are making it difficult to have genuine discussions on the platform. This problem has found its way onto the Steemit network too. A commenter in a recent medium post on the subject had the following to say:
Bid bots are destroying the platform and it’s too far gone I’m afraid. Manual curation is no longer incentivized.
3. Token Economics
Despite promises of financial equality in the cryptocurrency ecosystem, we are still seeing problems that exist in the traditional system. Namely, when a few players get hold of a large number of tokens this inevitably leads to these whales directing how the network functions. Democracy does not just come pre-packaged with every blockchain, it needs to be properly implemented.
The Steem token price has not held up particularly well in the markets to date either. Attracting top-quality content creators to a network requires a community that can pay them with a valuable token. And with a token that will hopefully hold its value in the future.
4. First Mover Advantage
The fact is that Facebook has over two billion monthly active users. It took 14 years to achieve this. Projects X, Y, and Z are not just simply going to roll in and beat older, more established projects without a fight, blockchain or not. There is a very real possibility of Facebook simply adding their own cryptocurrency into the mix. They have a huge war chest to fund development too. Likewise, they have working products that don’t need to be associated with the somewhat scammy image of ICO’s
Conclusion: The Future of the Blockchain Social Network
Making the next blockchain Facebook or blockchain Twitter is not going to be an easy task. In the cases of Facebook and Twitter, decisions are made by the most powerful people in the organization. Since these companies are publicly traded, those decisions tend to be based on maximizing profits for shareholders, not maximizing value for users.
The blockchain social network of the future will turn this model on its head and will look to create value for everybody in the network: developers, creators, investors, and users alike. It’s still early days and there will be many failures. But at first glance, many projects are hinting that we are in for a wild revolutionary ride. So strap yourself in and stay tuned!
This article is originally posted at Coincentral.com
Singapore. Blockchain-based data marketplace Open Data Exchange (ODX Pte. Ltd) gained traction on their mission to provide free internet to emerging markets when the company announced a commitment of more than US$60 million from its private token sale.
The private sale was backed by committed investors made up of big blockchain funds that include DNA Fund, BlockTower Capital and Pantera Capital. Famous individuals such as entrepreneur Brock Pierce, Akamai co-founder Randy Kaplan and Russian composer Alexander Shulgin were also involved in making this happen.
“Free and fair access to the web is a fundamental human right,” says DNA Fund co-founder Scott Walker. “The dynamic nature of emerging markets creates unique challenges that have never confronted the developed world but also opens up opportunities for innovation and growth. The ODX platform will leverage blockchain technology to enable the delivery of free mobile internet access to underserved populations.”
The move reveals that ODX is on its way to becoming the largest initial coin offering (ICO) in the region as it follows its plan to raise US$100 million through its ICO. Singapore-based TenX currently owns the record for the biggest ICO in the Southeast Asian region after raising US$80 million in a token sale back in June.
ODX is set to create a decentralized data marketplace to address the problems of internet access in emerging markets. According to ODX chairman and co-founder Nix Nolledo, countries such as Southeast Asia, South America and Africa have average users that pay for internet access for less than ten days a month. This is due to expensive mobile data charges, scarce public Wi-Fi access, and limited cable or DSL options.
“This is especially significant when you consider the fact that over 80% of the world’s Internet population live in emerging markets,” Nolledo says.
With the majority of the population residing in these fledgling markets, ODX has found a need to resolve this issue.
ODX Pte. Ltd. is a subsidiary of Xurpas, Inc., the largest consumer tech in the Philippines. The startup will rely on Xurpas’ extensive infrastructure to realize its goal of making internet access readily available in emerging markets around the world. The Open Data Exchange (ODX) will democratize internet access through the blockchain.
Publishers and ISPs meet in a global marketplace for data. Powered by blockchain, Publishers and ISPs can transact at scale through a network of trust. https://odx.network/
Taipei, Taiwan – April 2018 -- Artila Electronics, which specializes in the development and manufacture of Linux-ready Arm embedded industrial computers, launches the brand new FreeRTOS programmable device server, Aport-214PG. Merging the legacy RS-485 based devices into an industrial Ethernet network is a challenge task to all of the system integrators today due to the characteristic of slow response and various data format. To cope with the challenge of speed inconsistency, by skillful programming and design, the programmable device server plays an important role in the field data acquisition.
Artila’s Aport-214PG is powered by a 32-bit Atmel SAM4E16E 120MHz Arm Cortex-M4 processor which is equipped with 256KB SRAM, 3MB Flash and FreeRTOS real time operating system. This module features one 10/100 MHz Ethernet port, two RS-485, four isolated digital input channels, two relay output channels and micro SD socket.
This C programmable device is shipped with a FreeRTOS+lwIP board support package (BSP), device manager utility and example programs. Users can download the Toolchain, Atmel Studio from Atmel web site. Web configuration and I/O controls are available in the Aport-214PG application development kit. The device manager utility featuring device discovery, network configuration, user’s web page and firmware upload is also included, which makes programming easier
The role of programmable device server is to proactively polling the serial devices and then buffer the data for Ethernet based master’s inquiry or push the data to the server via MQTT. Doing this will tune up the overall system performance and ensure data reliability in the device networking applications.
Artila Electronics is an emerging force in the industrial computer field, dedicated to minimizing mass while maximizing utility. Unlike other industrial computer providers in the market who mainly use x86 plus Windows solutions, Artila focuses on ARM-core RISC CPUs with embedded Linux solutions, matched with Artila's 10 plus years of experience in RS-232 / 422 / 485 industrial communication and TCP/IP networking. Artila's product range consists of Intelligent IoT Gateway, IoT Device Platform, ARM / Linux box computers, ARM / Linux SOMs (system-on-modules), Programmable Automation Controller, and Serial-to-Ethernet embedded modules.
Sunny Wu | firstname.lastname@example.org | Artila Electronics Co., Ltd.