Smart contracts permit trusted transactions and agreements to be carried out among disparate, anonymous parties without the need for a central authority, legal system, or external enforcement mechanism. That's where the actual problem is.
Since cryptocurrency is taxed like other kinds of property, it follows the same capital gains tax treatment as for stocks and other financial assets. As such, any cryptocurrency held for less than 12 months counts as a short-term capital gain and is treated as ordinary income.
More than a decade after Bitcoin’s introduction, there is still considerable confusion about its taxes. The cryptocurrency was conceived of as a medium for daily transactions but it has yet to gain traction as a currency. Meanwhile, it has become popular with speculators and traders interested in making a quick buck off its volatility.
Most taxpayers can simply adjust their cost basis to include commissions or transaction fees. For example, if a taxpayer purchased $5,000 of Ethereum and paid $100 of commission in doing so, he or she could report a tax basis of $5,100 on that purchase of Ethereum. The same goes for adjusting a sales price of cryptocurrency to account for transaction fees.
The Internal Revenue Service addressed cryptocurrency transactions in its notice 2014-21. The agency stated that cryptocurrencies would be treated as an asset similar to property.
You're required to pay taxes on crypto. The IRS classifies cryptocurrency as property, and cryptocurrency transactions are taxable by law just like transactions related to fiat and any other property.
If a person uses cryptocurrency that had appreciated in value to purchase an item, the difference between the cost basis and the value of the subsequent transaction would be taxable.
It’s 2022 — even those who are not familiar with blockchain are likely to have heard of Ethereum. Ethereum is the second-largest cryptocurrency with a huge market cap of over $44 billion. To fully understand Ethereum, one should properly understand what is a smart contract.
A smart contract is an agreement between two people in the form of computer code. They run on the blockchain, so they are stored on a public database and cannot be changed.
The transactions that happen in a smart contract are processed by the blockchain, which means they can be sent automatically without a third party. This means there is no one to rely on!
Smart contracts lay out the terms of an agreement or deal. They
are established and executed as code running on a blockchain, rather than on paper sitting on a lawyer’s desk. Smart contracts expand on the basic idea behind Bitcoin — sending and receiving money without a “trusted intermediary” like a bank in the middle — to make it possible to securely automate and decentralize virtually any kind of deal or transaction, no matter how complex.
While blockchain technology has come to be thought of primarily as the foundation for bitcoin, it has evolved far beyond underpinning the virtual currency.
The IRS addressed the taxation of cryptocurrency transactions in Notice 2014-21, which provides that cryptocurrency is treated as property for federal tax purposes. Therefore, general tax principles that apply to property transactions must be applied to exchanges of cryptocurrencies as well.
Unlike cash transactions, no bank or government authority verifies the transfer of funds. Instead, these virtual transactions are recorded in a digitized public ledger called a “blockchain.” Individual units of the currency are called “coins.”
Running an (offshore) company nowadays requires substance, transfer pricing regulations in case of international branches, and the quest for opening bank accounts becomes more and more of a challenge.
The amount of this income equals the market price of the coins on the day they were awarded on the blockchain. This amount also becomes the miner’s basis in the coins going forward and is used to calculate future gains and losses.
Accordingly, gain or loss is recognized every time that cryptocurrency is sold or used to purchase goods or services. How the gain or loss is recognized depends largely on the type of transaction conducted and the length of time the position was held.
Cryptocurrency appears to be here for the long term, and thus the scrutiny surrounding its reporting will continue to intensify. It behooves CPAs—especially those whose clients maintain positions in one or more cryptocurrencies—to keep abreast of the evolving regulatory picture surrounding this new kind of asset.
As with any disruptive technology, the laws regarding cryptocurrency are evolving but one fact has been certain since at least 2014: Cryptocurrency profits are taxable. The basics of cryptocurrency taxation were outlined by the Internal Revenue Service (IRS).
Virtually anyone with meaningful profits in cryptocurrency has to pay tax on their gains. There are some exceptions for lower-income people who only have long-term cryptocurrency gains.
Cryptocurrencies such as bitcoin and Ethereum were designed as a way to make payments without relying on traditional modes such as currency notes, debit cards, credit cards or checks. The bitcoin white paper, which set off the cryptocurrency revolution.
It’s as simple as it sounds, earn while you learn.
The only downside is that you may not fulfill some of the eligibility terms unless you relocate to a different country. So, this program is for selected countries, and Coinbase is trying to add more as we speak of it.
Ether works more like fuel than a normal cryptocurrency. In the same way that you need gasoline or diesel for your car, you need Ether to run the smart contracts and applications on the Ethereum blockchain.
In fact, it has become very expensive and slow to conduct transactions using cryptocurrencies. It takes about 10 minutes for a bitcoin transaction to be validated, and the average fee for just one transaction was recently about $20.
The sale of Bitcoin, Ethereum or other cryptocurrencies for dollars, euros, or other fiat currencies is a taxable event, with tax due on the amount of gain between the purchase and sale prices.
Bitcoin, the original cryptocurrency, was launched in 2009. Today, there are thousands of cryptocurrencies with a total value of about $2 trillion. The surge in their prices earlier this year minted tens of thousands of cryptocurrency millionaires—at least on paper. Cryptocurrencies might turn out to be a massive speculative bubble that ends up hurting many naive investors.
Ethereum, the second-largest cryptocurrency by market cap, is known for being one of the most profitable coins to mine. This thriving community has its unique blockchain network with smart contracts that developers can execute.
American cryptographer Nick Szabo first shared the concept of smart contracts in 1994—fifteen years before Bitcoin’s birth. Fast-forward to today; they have become very popular in the cryptocurrency and blockchain space.
Because of the growth in popularity that Ethereum has seen (this is obvious from visiting any crypto exchange platform out there), the question 'what is a smart contract?' has become one of the most-asked questions in the crypto space just lately.
If you happen to have huge amounts of ETH coins, you should make sure to keep them in secure cryptocurrency wallets. The recommended options include Ledger Nano S, Coinbase and Trezor Model T.
This type of investment in crypto is when you expect its price to increase over time — usually an investment that must be maintained for a minimum of 6 months to 1 year. In some cases, long-term crypto investors plan on holding their investments for decades.
Among stablecoins, Tether takes the top spot. All stable coins tie their value to another asset. For Tether, that asset is the U.S. dollar. In theory, Tether is like a “crypto-dollar” that should similarly maintain its value as physical U.S. dollars do.
How does cryptocurrency gain value? Like any currency, cryptocurrencies gain their value based on the scale of community involvement. Cryptocurrency gains value if the demand for it is higher than the supply. When a cryptocurrency is useful, people want to own more of it, driving up the demand.
Even though it's a highly volatile asset, cryptocurrency can help investors build wealth, especially if they invest in digital coins over the long-term by investing now.
Investing in cryptocurrencies should be second to having a solid financial plan that includes emergency savings and solid retirement planning, and now is the time because the industry is expanding everyday.
In traditional finance, swapping currencies is expensive and time consuming. And it isn't easy or secure for individuals to loan out their liquid assets to strangers on the other side of the world. But smart contracts make both of those scenarios, and a vast variety of others, possible.
Smart contracts running on Ethereum’s decentralized blockchain allow developers to build complex applications that should run exactly as programmed without downtime, censorship, fraud, or third-party interference.
This all feels weird in a way. How cooperations are using our hard earned money for their personal gain and we have little to nothing to do about it.
It's just so wrong on so many levels
It's just absolutely horrible.
Smart contracts permit trusted transactions and agreements to be carried out among disparate, anonymous parties without the need for a central authority, legal system, or external enforcement mechanism. That's where the actual problem is.
They make way for less paperwork, more guaranteed and reliable agreements, and trustless transactions between the parties involved.
Brought about reliability.
Fascinating
Yes it is😏
True
And fluidity.
It is
Well depends on how you see it.
Absolutely it is.
Since cryptocurrency is taxed like other kinds of property, it follows the same capital gains tax treatment as for stocks and other financial assets. As such, any cryptocurrency held for less than 12 months counts as a short-term capital gain and is treated as ordinary income.
How so? You just have to keep your funds in a more secure wallet
Given the state of the market, it's best to throw in as much as you can.
The capital is important, these things take time to grow.
Most important, set a target and go for it sooner than later.
Yeah. That seems like the best decision
Same way
I agree as much.
When its certain, investing big is best rewarding.
More than a decade after Bitcoin’s introduction, there is still considerable confusion about its taxes. The cryptocurrency was conceived of as a medium for daily transactions but it has yet to gain traction as a currency. Meanwhile, it has become popular with speculators and traders interested in making a quick buck off its volatility.
👍
Very true
Well don't see it that way
How's that?
Most taxpayers can simply adjust their cost basis to include commissions or transaction fees. For example, if a taxpayer purchased $5,000 of Ethereum and paid $100 of commission in doing so, he or she could report a tax basis of $5,100 on that purchase of Ethereum. The same goes for adjusting a sales price of cryptocurrency to account for transaction fees.
Blockchain? | IBM
Smart contracts are simply programs stored on a blockchain that run when predetermined conditions are met.
The Internal Revenue Service addressed cryptocurrency transactions in its notice 2014-21. The agency stated that cryptocurrencies would be treated as an asset similar to property.
As the word smart contract implies you need to be smart.
In addition to cryptocurrencies, another widespread innovation called smart contracts runs in the family of blockchain technology.
you owe taxes on the increased value between the price you paid for the crypto-coin and its value at the ...
But taxes shouldn't be considered now cause a lotta people would be left with nothing after the taxes are collected.
If a person or business sells products or services in exchange for cryptocurrency, the receipt of such funds is a taxable event.
You should take charge of your financial situation not put hope in another.
You're required to pay taxes on crypto. The IRS classifies cryptocurrency as property, and cryptocurrency transactions are taxable by law just like transactions related to fiat and any other property.
Leaving the fiat money in bank is worthless with little or no interest;
I rather stake, mine, invest in crypto and gold
If a person uses cryptocurrency that had appreciated in value to purchase an item, the difference between the cost basis and the value of the subsequent transaction would be taxable.
Have a financial plan, Once that's in place, however, it can make sense for investing to consider crypto as a key part of the long-term portfolio.
Can I get to know more about the smart contracts please?
It’s 2022 — even those who are not familiar with blockchain are likely to have heard of Ethereum. Ethereum is the second-largest cryptocurrency with a huge market cap of over $44 billion. To fully understand Ethereum, one should properly understand what is a smart contract.
A smart contract is an agreement between two people in the form of computer code. They run on the blockchain, so they are stored on a public database and cannot be changed.
The transactions that happen in a smart contract are processed by the blockchain, which means they can be sent automatically without a third party. This means there is no one to rely on!
Smart contracts lay out the terms of an agreement or deal. They
are established and executed as code running on a blockchain, rather than on paper sitting on a lawyer’s desk. Smart contracts expand on the basic idea behind Bitcoin — sending and receiving money without a “trusted intermediary” like a bank in the middle — to make it possible to securely automate and decentralize virtually any kind of deal or transaction, no matter how complex.
Where actually is our cut????🤔
I'd really like to know where it's all going. Perhaps it can be elaborated further in the next article
That's the million dollar question
There's no accountability to all these funds being wasted. It's all gone to shit
While blockchain technology has come to be thought of primarily as the foundation for bitcoin, it has evolved far beyond underpinning the virtual currency.
Based on these three mechanisms, here are the six strategies for making money with cryptocurrency:
Investing.
Trading.
Staking and Lending.
Crypto Social Media.
Mining.
Airdrops and Forks.
The IRS addressed the taxation of cryptocurrency transactions in Notice 2014-21, which provides that cryptocurrency is treated as property for federal tax purposes. Therefore, general tax principles that apply to property transactions must be applied to exchanges of cryptocurrencies as well.
Airdrop and mining seem like the most readily available options
I recently started trying out airdrop. They worked really well for me
This is really good and reliable means.
This is really good and reliable
Making it imperative that CPAs are prepared to understand and educate their clients on the tax implications of these virtual transactions.
It shouldn't be so
Experts predict the use of cryptocurrency will continue to increase.
What's their estimated time frame?
A million dollar question indeed.
Indeed it is.
Unlike cash transactions, no bank or government authority verifies the transfer of funds. Instead, these virtual transactions are recorded in a digitized public ledger called a “blockchain.” Individual units of the currency are called “coins.”
There is a clear tendency towards doing business without the burden of maintaining a physical foreign company while paying no tax.
Running an (offshore) company nowadays requires substance, transfer pricing regulations in case of international branches, and the quest for opening bank accounts becomes more and more of a challenge.
Probably into the deep pockets of corrupt billionaires and politicians
All our hard earned money🤦♂️
It's not going down the drain.
Cryptocurrency appears to be here for the long term and therefore appreciating.
The amount of this income equals the market price of the coins on the day they were awarded on the blockchain. This amount also becomes the miner’s basis in the coins going forward and is used to calculate future gains and losses.
Very true, I agree with that.
Accordingly, gain or loss is recognized every time that cryptocurrency is sold or used to purchase goods or services. How the gain or loss is recognized depends largely on the type of transaction conducted and the length of time the position was held.
You should actually go on the internet check out this things.
Necessary.
Yep✔
“Blockchain IS the future of the payments industry,” a reference to the computational technology that undergirds cryptocurrencies.
There's no denying that some cryptocurrency traders have become millionaires thanks to their successful investments.
Yes indeed, killing FOMO and pushing on will certainly meet the target.
Wow. I never knew that
Can u elaborate further?
Cryptocurrency appears to be here for the long term, and thus the scrutiny surrounding its reporting will continue to intensify. It behooves CPAs—especially those whose clients maintain positions in one or more cryptocurrencies—to keep abreast of the evolving regulatory picture surrounding this new kind of asset.
As with any disruptive technology, the laws regarding cryptocurrency are evolving but one fact has been certain since at least 2014: Cryptocurrency profits are taxable. The basics of cryptocurrency taxation were outlined by the Internal Revenue Service (IRS).
Cryptocurrency is taking over.
Is getting bigger and more innovative.
Yeah. I hope so.
Cryptocurrency is digital currency that uses encryption techniques, rather than a central bank, to generate, exchange, and transfer units of currency.
Yes. this is very true
I'm very curious
About?
Virtually anyone with meaningful profits in cryptocurrency has to pay tax on their gains. There are some exceptions for lower-income people who only have long-term cryptocurrency gains.
Cryptocurrencies such as bitcoin and Ethereum were designed as a way to make payments without relying on traditional modes such as currency notes, debit cards, credit cards or checks. The bitcoin white paper, which set off the cryptocurrency revolution.
What's not as often discussed is the great number of people who have lost significant sums trying to become rich by investing in crypto.
You can become a billionaire overnight if invest through the right channel but it depends on the amount you invest; the bigger the returns.
This is absolutely mind blowing 🤯
Fear of losing have caused some to regret while many who took the chance are rejoicing now and will never be poor.
The future is taking shape in the present 😌
In like 10 years, physical cash and debit cards will be almost non existent. Crypto is the future of transactions
So it's advisable to invest in any favourable ones right now
Yes, now is safer and smarter.
It is profitable, faster, easier to operates.
That's why investing now will save the future
The ultimate truth.
You should start up yours
Yeah. I'll get to that ASAP
Starting sooner is a great deal to save tomorrow.
Cryptocurrency is digital currency that uses encryption techniques, rather than a central bank, to generate, exchange, and transfer units of currency.
Big time tech moguls have to put their crypto in safe wallets.
Major corporations are taking big chunks of our hard earned money away and we don't have anything to do about it?
What is this world coming to?🤦♂️
How are we not bothered about this?🤦♂️
Say that about yourself.
It shouldn't be so, that's why we have people like Kushner Sophia helping out.
We all know how valuable cryptocurrencies are, but it becomes a whole lot more interesting if you can earn free crypto.
It’s as simple as it sounds, earn while you learn.
The only downside is that you may not fulfill some of the eligibility terms unless you relocate to a different country. So, this program is for selected countries, and Coinbase is trying to add more as we speak of it.
Exactly.
Because people are making means out of it.
Because there isn't much to be worried about. We just need to work smart from now on
Ether works more like fuel than a normal cryptocurrency. In the same way that you need gasoline or diesel for your car, you need Ether to run the smart contracts and applications on the Ethereum blockchain.
That's what it does.
It's all just a sad shame🤧💔
Really!!
To win we never give up.
The more we need to stand up to.
That's true
Indeed.
That's where wallets come in. If you store your crypto in highly secure wallets,they'll be very unlikely to be stolen
I always have my cuts by investing.
Why is our data being monetized in the first place??
Likeeeeee😩
Well🙄
Don't give a fuck bout them.
In fact, it has become very expensive and slow to conduct transactions using cryptocurrencies. It takes about 10 minutes for a bitcoin transaction to be validated, and the average fee for just one transaction was recently about $20.
20 bucks seems q bit high, don't u think?🤔
Don't give me that crap
The sale of Bitcoin, Ethereum or other cryptocurrencies for dollars, euros, or other fiat currencies is a taxable event, with tax due on the amount of gain between the purchase and sale prices.
The political world trys to take control of everything.
Bitcoin, the original cryptocurrency, was launched in 2009. Today, there are thousands of cryptocurrencies with a total value of about $2 trillion. The surge in their prices earlier this year minted tens of thousands of cryptocurrency millionaires—at least on paper. Cryptocurrencies might turn out to be a massive speculative bubble that ends up hurting many naive investors.
It's amazing how they've appreciated over the years. Nobody would've predicted how crypto would evolve in the modern day
The crypto market has really expanded beyond our expectations
Ethereum, the second-largest cryptocurrency by market cap, is known for being one of the most profitable coins to mine. This thriving community has its unique blockchain network with smart contracts that developers can execute.
There are many cryptocurrencies. At Coinbase, you can learn about some of these crypto projects while earning a few tokens.
American cryptographer Nick Szabo first shared the concept of smart contracts in 1994—fifteen years before Bitcoin’s birth. Fast-forward to today; they have become very popular in the cryptocurrency and blockchain space.
However I do feel like crypto currencies would be harder to swindle than actual money. They exist on the block chain and are a lot more secure.
Because of the growth in popularity that Ethereum has seen (this is obvious from visiting any crypto exchange platform out there), the question 'what is a smart contract?' has become one of the most-asked questions in the crypto space just lately.
It's wrong that billion dollar corporations are swindling our funds day in and day out like its a normal thing to do. Someone needs to look into this.
If you happen to have huge amounts of ETH coins, you should make sure to keep them in secure cryptocurrency wallets. The recommended options include Ledger Nano S, Coinbase and Trezor Model T.
This type of investment in crypto is when you expect its price to increase over time — usually an investment that must be maintained for a minimum of 6 months to 1 year. In some cases, long-term crypto investors plan on holding their investments for decades.
The long term is my field of concern, my $2500 invested 2020 yield me triple gain in 7 months, 2021 Ethereum helped boost my portfolio boom.
What other secure wallets can I use please?
Among stablecoins, Tether takes the top spot. All stable coins tie their value to another asset. For Tether, that asset is the U.S. dollar. In theory, Tether is like a “crypto-dollar” that should similarly maintain its value as physical U.S. dollars do.
As it is in fiat form
1USDT = 1U S Dollar
Luno
Coinbase is a secure platform you can store, trade digital assets.
Good
I never cease to be part of the bigger gains ; with patience it always works for me in the long run.
How does cryptocurrency gain value? Like any currency, cryptocurrencies gain their value based on the scale of community involvement. Cryptocurrency gains value if the demand for it is higher than the supply. When a cryptocurrency is useful, people want to own more of it, driving up the demand.
So basic economics then
Fascinating 🤔
More easier
As demand rises market boom! , don't be left out.
Even though it's a highly volatile asset, cryptocurrency can help investors build wealth, especially if they invest in digital coins over the long-term by investing now.
In light of this, the more buys the more the investment appreciate and in a safe note, early investors worry less with bigger expectations.
👍
Crypto investment really ease it all
Blockchain technology comes with freedom to earn as much as you can, no limitations.
Any earnings you make from mining cryptocurrency are reported as income.
The value of any cryptocurrency you receive in payment for goods or services must be reported as income.
In all of these cases, the value of the cryptocurrency is based on its value in U.S. dollars at the time of the transaction.
I quite understand this fact.
Absolutely.
Bank Compliance, FATCA, CRS, AEOI, KYC, and AML procedures lead to more closing of bank accounts than openings.
Blockchain/Cryptocurrency investment is a two way form that benefits all parties involved.
Investing in cryptocurrencies should be second to having a solid financial plan that includes emergency savings and solid retirement planning, and now is the time because the industry is expanding everyday.
When Bitcoin climbed $1M
In traditional finance, swapping currencies is expensive and time consuming. And it isn't easy or secure for individuals to loan out their liquid assets to strangers on the other side of the world. But smart contracts make both of those scenarios, and a vast variety of others, possible.
Crypto brings the power of wealth abreast.
Smart contracts running on Ethereum’s decentralized blockchain allow developers to build complex applications that should run exactly as programmed without downtime, censorship, fraud, or third-party interference.