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

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

November 2, 2019 What is Cryptocurrency? Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com 2 28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422 10/30/2019 2

November 2, 2019 Terminology A. Bitcoin E. Air Drop B. Blockchain F. Key C. Distributed Ledger G. Wallet D. Hard Fork Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com 3 28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422 10/30/2019 3

November 2, 2019 Why Do I Care? Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com 4 28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422 10/30/2019 4

November 2, 2019 Currency or Property? Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com 5 28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422 10/30/2019 5

November 2, 2019 Currency or Property • Arguments for Currency – Circulates – Accepted as payment for goods – Used and accepted as a medium of exchange – IRS definition of virtual currency Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com 6 28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422 10/30/2019 6

November 2, 2019 Currency or Property • 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 Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com 7 28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422 10/30/2019 7

November 2, 2019 IRS Activity 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 Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com 8 28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422 10/30/2019 8

November 2, 2019 IRS Activity 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 Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com 9 28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422 10/30/2019 9

November 2, 2019 IRS Investigations A. Tax compliance risks B. Tax evasion • Letters to 10,000 taxpayers • Coinbase subpoena C. Audit procedures – Large Business & International Division Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com 10 28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422 10/30/2019 10

November 2, 2019 IRS Investigations D. Increased training for revenue agents and revenue officers E. New Question on Schedule 1 of Form 1040: At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency? Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com 11 28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422 10/30/2019 11

November 2, 2019 IRS Investigations 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 Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com 12 28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422 10/30/2019 12

November 2, 2019 Estate Planning – Cryptocurrencies • Disclosure • Access – private key • Quadriga case • Sale by Fiduciary of Estate Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com 13 28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422 10/30/2019 13

November 2, 2019 Estate Planning – Digital Assets Examples: • Website • Domain name • Social media • You Tube Channel • Financial records Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com 14 28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422 10/30/2019 14

November 2, 2019 Estate Planning – Digital Assets Fiduciary Access to Digital Assets Act (FADAA) • Digital executor • Online option tools • Third party service providers • Ownership by entity Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com 15 28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422 10/30/2019 15

November 2, 2019 Cryptocurrency in Retirement Plan • Allowable • Too risky? Maddin, Hauser, Roth & Heller, P.C. – maddinhauser.com 16 28400 Northwestern Hwy., Southfield, MI 48034 | p (248) 354-4030 | f (248) 354-1422 10/30/2019 16