HELP! MY CLIENT HAS CRYPTOMANIA Robert D. Kaplow, Esq. Maddin, - - PowerPoint PPT Presentation

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HELP! MY CLIENT HAS CRYPTOMANIA Robert D. Kaplow, Esq. Maddin, - - PowerPoint PPT Presentation

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November 2, 2019 HELP! MY CLIENT HAS CRYPTOMANIA Robert D. Kaplow, Esq. Maddin, Hauser, Roth & Heller, P.C. maddinhauser.com 28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422 10/30/2019 1

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November 2, 2019

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Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com

28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422

HELP! – MY CLIENT HAS CRYPTOMANIA

Robert D. Kaplow, Esq.

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Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com

28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422

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What is Cryptocurrency?

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Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com

28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422

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  • A. Bitcoin
  • B. Blockchain
  • C. Distributed Ledger
  • D. Hard Fork
  • E. Air Drop
  • F. Key
  • G. Wallet

Terminology

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Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com

28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422

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Why Do I Care?

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Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com

28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422

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Currency or Property?

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Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com

28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422

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  • Arguments for Currency

– Circulates – Accepted as payment for goods – Used and accepted as a medium of exchange – IRS definition of virtual currency

Currency or Property

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Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com

28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422

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  • Effects of Property Designations

– Gain or loss on use – capital or ordinary – No like kind exchange – Miner of bitcoins – self-employment income – Investor versus trader

  • SEC
  • Commodity

Currency or Property

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Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com

28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422

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  • A. IRS Notice 2014-21, March 25, 2014
  • B. Employees paid in bitcoins – include

FMV of bitcoins in income

  • C. Normal information reporting

and withholding requirements

  • D. Payor must file Form 1099-MISC

if over $600

  • E. Purchase of goods using cryptocurrency
  • Basis – gain or loss

IRS Activity

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Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com

28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422

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F. IRS News Release IR-2018-71, March 23, 2018

  • G. Revenue Ruling 2019-24, October 9, 2019
  • 1. Tax treatment of hard forks and air drops
  • 2. Examples:
  • Hard fork without air drop
  • Hard fork followed by air drop
  • H. Frequently Asked Questions – issued

October 9, 2019

  • Expanded on provisions of IRS Notice 2014-21

IRS Activity

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Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com

28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422

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  • A. Tax compliance risks
  • B. Tax evasion
  • Letters to 10,000 taxpayers
  • Coinbase subpoena
  • C. Audit procedures – Large

Business & International Division

IRS Investigations

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Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com

28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422

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  • D. Increased training for revenue

agents and revenue officers

  • E. New Question on Schedule 1
  • f Form 1040:

At any time during 2019, did you receive, sell, send, exchange or

  • therwise acquire any financial

interest in any virtual currency?

IRS Investigations

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Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com

28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422

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F. Congress Numerous bills pending to regulate virtual currencies on these topics:

  • Crime Prevention & Detection
  • National Security and Terrorism
  • Regulatory Certainty
  • Consumer Protection
  • U.S. Competitiveness &

Economic Prosperity

  • Taxation

IRS Investigations

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Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com

28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422

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  • Disclosure
  • Access – private key
  • Quadriga case
  • Sale by Fiduciary
  • f Estate

Estate Planning – Cryptocurrencies

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Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com

28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422

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Examples:

  • Website
  • Domain name
  • Social media
  • You Tube Channel
  • Financial records

Estate Planning – Digital Assets

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Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com

28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422

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Fiduciary Access to Digital Assets Act (FADAA)

  • Digital executor
  • Online option tools
  • Third party service providers
  • Ownership by entity

Estate Planning – Digital Assets

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Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com

28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422

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  • Allowable
  • Too risky?

Cryptocurrency in Retirement Plan