Bitcoin tax and accounting was a hot topic at this week’s All Payments Expo in Las Vegas, with discussions led by Chris Gerke of PwC, Jake Benson of LibraServices, and Ryan Lazanis of Xen Accounting. These leading professionals brought clarity to a set of complex issues for Bitcoin holders and their advisors.
In support of the same mission, this past week the Digital Currency Council (DCC) launched a new free accounting course on Udemy. More than 300 people have already taken the course. The hour-long session provides the basics of what accounting professionals need to know to help their clients with Bitcoin this year.
With more than 80,000 merchants accepting bitcoin payments today and over 7 million wallets holding the digital currency, business owners and individuals are looking to their accountants for answers on how to handle their tax returns.
As tax season approaches, it’s clear that H&R Block isn’t going to cut it for Bitcoin holders. More and more accountants recognize the need to keep up with the digital economy and are seeking training in Bitcoin and virtual currencies. We asked five leading professionals who specialize in Bitcoin tax issues for their insights:
“People holding and transacting in bitcoins need to know what a bitcoin is and that there is usually a tax impact once bitcoins are disposed of or spent,” says Ryan Lazanis, CPA at Xen Accounting. “The tax treatment differs depending on where you live,” he comments. “Since transactions may be taxed differently than if you were simply transacting in fiat currency, understanding the regulatory and tax landscape is critical to avoid any negative consequences.”
Jake Benson, CEO of LibraServices, adds that “the toughest thing about transacting with digital currency is calculating capital gains or losses.” Benson says that like stocks, “the accounting is basically the same, but the burden of that calculation is yours, not the brokerage or exchange.”
“Entrepreneurs and startups just want their accounting handled without having to think about it,” says Kirk Philips, CPA at InviziBiz. “What they really want to focus on is what will build their businesses.”
Daniel Winters of Global Tax Accountants added, “Individuals with limited Bitcoin activity may be asking themselves if this is worth the trouble. Here’s a good reason: Although Bitcoin’s price dropped significantly during 2014, taxpayers can deduct the capital losses from Bitcoin transactions. Capital losses reduce capital gains, but you can deduct $3,000 of losses per year even if you have NO capital gains.”
Jason Tyra of TyraCPA noted, “Virtual currency holders should remember to keep careful, accurate records and fully report gains at tax time. Other than convincing bitcoiners that tax fraud is not in their best interest, my biggest challenge is reconstructing records to appropriately report activity. When clients start with complete records, they save time and money on preparation. They may also end up paying less in taxes because it is easier for me to do great work.”
The DCC released “Bitcoin for Accountants” in time for professionals to prepare for this year’s tax season. Students participating in the course on Udemy learn the basics of Bitcoin along with the details of the IRS guidance. DCC members – including over 300 accounting professionals – have access to more in-depth professional curriculum along with the DCC Certification exam.