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Do you know if had how taxes are recorded and required to be…

Do you know if...

Do you know if had how taxes are recorded and required to be reported/paid for cryptocurrency like bitcoin? Is there a difference in reporting for entities like LLC's and Corporations and individuals?

Accountant's Assistant: Can you tell me what state the LLC is registered in?

CA, TX, WA, CO, and NY

Accountant's Assistant: Has anything been officially filed? If so, what?

Nothing regarding cryptocurrency, but the entities are all properly created with the proper creation docs.

Accountant's Assistant: Anything else you want the lawyer to know before I connect you?

All except the CA corporation are single member LLC's holding and managing real estate. I am considering holding some of the undistributed profits in cryptocurrency as a hedge against the dollar.

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Answered in 11 minutes by:
10/21/2017
Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 4,825
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

Basically, every Bitcoin transaction is taxable.

Tax Treatment:

  • "For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency."
  • "A taxpayer who receives virtual currency as payment for goods or services must, in computing gross income, include the fair market value of the virtual currency, measured in U.S. dollars, as of the date that the virtual currency was received."
  • "Transactions using virtual currency must be reported in U.S. dollars" on the tax return.
  • "Taxpayers will be required to determine the fair market value of virtual currency in U.S. dollars as of the date of payment or receipt."
  • "If a virtual currency is listed on an exchange and the exchange rate is established by market supply and demand, the fair market value of the virtual currency is determined by converting the virtual currency into U.S. dollars ... at the exchange rate, in a reasonable manner that is consistently applied."

The following links contain excellent information you will find helpful:

https://www.thebalance.com/how-bitcoins-are-taxed-3192871

https://turbotax.intuit.com/tax-tools/tax-tips/Taxes-101/Tax-Tips-for-Bitcoin-and-Virtual-Currency/INF29402.html

https://www.irs.gov/newsroom/irs-virtual-currency-guidance

Please let me know if I can assist you further.

If I have answered your question, please take a moment to rate my answer since that is the only way I receive credit for answering you.

Thank you and best regards,

Barb

Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 4,825
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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