High Net Worth Webinar Series - The Business of Digital Assets & Blockchain
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The document discusses a webinar focused on growing wealth and preserving legacy through digital assets and blockchain, with emphasis on the workings of Bitcoin and cryptocurrency. It covers various aspects including decentralized models, investment opportunities, tax implications, and IRS enforcement efforts related to virtual currencies. Additionally, it highlights different methods for making money with crypto assets and strategies for tax savings.
High Net Worth Webinar Series - The Business of Digital Assets & Blockchain
- 1. October 13, 2021 High Net Worth Webinar Series Growing Wealth & Preserving Your Legacy The Business of Digital Assets & Blockchain
- 2. Our Presenters Partner & High Net Worth Practice Leader Patrick Daly Partner, Forensic, Litigation& Valuation Services Mark DiMichael
- 3. 05 06 07 08 01 02 03 04 28 05 06 11 18 3 B i tco i n & C r yp to Assets Tech n olo gy Qu esti o ns B u si n ess Tax Agenda
- 4. into Bitcoin & Crypto Assets • Origins • Eliminating (or reducing) Third Parties • Terminology • How Bitcoin Works 5
- 6. De-Centralized Model (The Blockchain Model) Miner #3 (with a copy of the Blockchain) Miner #1 (with a copy of the Blockchain) Third Party Bank / BrokerageAccount / Exchange Depositor #2 Mary $2,000 Depositor #3 Rosie $12,000 Private Key Private Key Depositor #1 Scott $5,000 Private Key Miner #2 (with a copy of the Blockchain) Address #1 2.4 BTC Address #2 85.433 BTC Address #3 0.659 BTC
- 8. into Storage • Wallet with Backup Seed o Software Wallet o Hardware Wallet o Paper Wallet • Exchanges or Custodian 10
- 10. • Decentralization (“removes a single point of failure”) • Store of Value - Scarce (Limited Supply) • Integration into the Digital Economy • Instantaneous, secure, low fee money transfers around the world oPossibility of Micro-transactions • Globalization • Privacy • Investment income / speculation 12 Why is Cryptocurrency Worth Anything at All
- 11. 13 Representative Companies Accepting Cryptocurrency or Processing Cryptocurrency Payments Overstock.com AT&T Baskin Robbins Wikipedia Buy Buy Baby Lowe’s Home Improvement Cash App Dish Network Express Famous Footwear Sotheby’s Citrin Cooperman Microsoft Miami Dolphis NewEgg.com Nordstrom Office Depot The United Way Paypal Petco Regal Theatres Robinhood Save the Children Sacramento Kings Miami Dolphins American Red Cross DallasMavericks SalvationArmy Apple Pay Twitch TV Hot Topic Bed Bath & Beyond
- 12. •Distributed databases and blockchain in business and data storage applications •Alt-Coins •Initial Coin Offerings •Tokenization of Assets •Smart Contracts 14 Beyond Bitcoin
- 13. • Investing oBuy & Hold oTrading (Day Traders / Algorithmic Trading) • Mining • Staking • Brokerage & Custody Services • Companies that Use Tokens/Crypto Assets in Business Model • DeFi • Non-Fungible Tokens 15 Making Money With Crypto Assets
- 14. • Investing in Funds oHedge funds & private equity funds specializing in digital assets oGrayscale Bitcoin Trust oBitcoin ETF (None currently in the US) • Futures Market – settled in dollars (Chicago Mercantile Exchange) • Companies in Blockchain Industry oCompanies Holding Crypto Assets on Balance Sheet oConsulting Companies Specializing in Blockchain oCompanies Using Blockchain or Tokens in Business Model oMining equipment manufacturers 16 Making Money Without Actually Holding Digital Assets
- 15. into TAX 15 18
- 16. into IRS Enforcement Efforts • John Doe Summons - IRS Coinbase, Kraken, & Poloniex • IRS Chainalysis Research • 10,000 “educational letters” sent out in August 2019 to cryptocurrencyowners • “At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interestin any virtual currency?” • Required Reporting of Transfers Over $10,000 19
- 17. • Defines Convertible Virtual Currency • Application of property rules, rather than currency rules • Discusses oReceipt of virtual currency for goods and services oReceipt of virtual currency for mining oApplicability of capital gains vs. ordinary income treatment on sales oDiscusses reporting requirements (i.e. 1099, W-2, & 1099-K) 20 IRS Revenue Bulletin 2014-16, Notice 2014-21
- 18. IRS Revenue Ruling 2019-24 • Two Concepts that Result in Individuals Receiving Cryptocurrency o Hard Fork o Airdrop • Constructive Receipt • The IRS revenue ruling incorrectly uses the term “airdrop” • Released with an FAQ ohttps://www.irs.gov/individuals/international-taxpayers/frequently-asked- questions-on-virtual-currency-transactions 21
- 19. into Accounting 22 • Very common type of transaction • Buy Bitcoin • Transfer it to another exchange • Trade Bitcoin for another digital asset
- 20. into Binance Transaction Output 23 Date(UTC) Market Type Price Amount Total Fee Fee Coin 2017-12-20 22:15:34 WABI/BTC BUY 0.00009549 305 0.02912445 0.305 WABI 2017-12-20 22:15:36 WABI/BTC BUY 0.00009549 6677 0.63758673 6.677 WABI 2017-12-20 22:15:56 WABI/BTC BUY 0.00009549 2991 0.28561059 2.991 WABI 2017-12-20 22:17:01 WABI/BTC BUY 0.00009549 606 0.05786694 0.606 WABI 2017-12-20 22:17:16 WABI/BTC BUY 0.00009549 65 0.00620685 0.065 WABI 2017-12-20 22:17:26 WABI/BTC BUY 0.00009549 275 0.02625975 0.275 WABI 2017-12-20 22:17:38 WABI/BTC BUY 0.00009549 720 0.0687528 0.72 WABI 2017-12-20 22:18:12 WABI/BTC BUY 0.00009549 120 0.0114588 0.12 WABI 2017-12-20 22:18:35 WABI/BTC BUY 0.00009549 11 0.00105039 0.011 WABI 2017-12-20 22:18:40 WABI/BTC BUY 0.00009549 31 0.00296019 0.031 WABI 2017-12-20 22:18:42 WABI/BTC BUY 0.00009549 159 0.01518291 0.159 WABI 2017-12-20 22:18:50 WABI/BTC BUY 0.00009549 58 0.00553842 0.058 WABI 2017-12-20 22:19:05 WABI/BTC BUY 0.00009549 325 0.03103425 0.325 WABI 2017-12-20 22:19:47 WABI/BTC BUY 0.00009549 1000 0.09549 1 WABI 2017-12-20 22:24:50 WABI/BTC BUY 0.00009549 1616 0.15431184 1.616 WABI 2017-12-20 22:25:57 WABI/BTC BUY 0.00009549 1168 0.11153232 1.168 WABI 2017-12-21 17:01:17 OST/BTC BUY 0.00001994 1340 0.0267196 1.34 OST 2017-12-21 17:07:34 OST/BTC BUY 0.00001994 43897 0.87530618 43.897 OST 2017-12-22 22:43:47 IOTA/BTC BUY 0.00026801 40 0.0107204 0.04 IOTA 2017-12-22 22:43:47 IOTA/BTC BUY 0.00026801 572 0.15330172 0.572 IOTA 2017-12-22 22:43:49 IOTA/BTC BUY 0.00026801 1365 0.36583365 1.365 IOTA 2017-12-22 22:43:54 IOTA/BTC BUY 0.00026801 209 0.05601409 0.209 IOTA 2017-12-22 22:53:09 IOTA/BTC BUY 0.00026801 351 0.09407151 0.351 IOTA 2018-01-09 19:41:08 APPC/BTC BUY 0.000227 6609 1.500243 6.609 APPC 2018-01-09 19:45:10 APPC/BTC BUY 0.0002248 2185 0.491188 2.185 APPC 2018-01-10 05:44:59 XRP/BTC BUY 0.0001312 7576 0.9939712 7.576 XRP 2018-01-10 08:01:51 XRP/BTC BUY 0.000125 5653 0.706625 5.653 XRP
- 21. into Coinbase Pro Transaction Output 24 trade id product side created at size size unit price fee total price/fee/total unit 28971648BTC-USD BUY 2017-12-19T15:54:31.641Z 1.837729BTC 18095.01 83.13429 -33336.9USD 28971649BTC-USD BUY 2017-12-19T15:54:31.641Z 0.358902BTC 18095.01 16.23582 -6510.56USD 28971650BTC-USD BUY 2017-12-19T15:54:31.641Z 0.307555BTC 18095.01 13.91303 -5579.12USD 28971651BTC-USD BUY 2017-12-19T15:54:31.641Z 0.2BTC 18095.01 9.047505 -3628.05USD 28971652BTC-USD BUY 2017-12-19T15:54:31.641Z 0.011BTC 18095.01 0.497613 -199.543USD 28971653BTC-USD BUY 2017-12-19T15:54:31.641Z 0.041117BTC 18095.01 1.860023 -745.869USD 29375324BTC-USD BUY 2017-12-21T14:39:36.536Z 0.188578BTC 16455 0 -3103.06USD 29375327BTC-USD BUY 2017-12-21T14:39:39.644Z 0.811422BTC 16455 0 -13351.9USD 29930070BTC-USD BUY 2017-12-22T21:51:03.518Z 0.726257BTC 14600 0 -10603.4USD 29930074BTC-USD BUY 2017-12-22T21:51:05.215Z 1.273743BTC 14600 0 -18596.6USD 32221506BTC-USD BUY 2018-01-05T23:06:54.220Z 0.5902BTC 16945 0 -10000.9USD 32539104BTC-USD BUY 2018-01-08T09:57:17.060Z 0.5BTC 15300 0 -7650USD 32569083BTC-USD BUY 2018-01-08T14:50:19.473Z 2BTC 14400 0 -28800USD 32644989BTC-USD BUY 2018-01-08T23:49:09.806Z 7.05E-05BTC 14998.46 0.002643 -1.05988USD 32706860BTC-USD BUY 2018-01-09T13:36:30.598Z 0.2449BTC 14500 0 -3551.05USD 23776499ETH-USD BUY 2017-12-31T00:13:39.869Z 7.5531ETH 705 0 -5324.94USD
- 22. into KuCoin Deposit & Withdrawal Output 25 Deposit ID Time Coins Amount Address BlockChain Record Status Type 5abb1ee4ce5a463eeed77d 3/27/2018 6:37BTC 0.000198 In-station transfer Succeeded Deposit 5a481193ba3a4621f4dd 12/30/2017 17:22BTC 0.605749 view transaction Succeeded Deposit 5b2d60a222ef2c7dad 6/22/2018 16:48TEL 7679293 view transaction Succeeded Deposit 5a60f82222e1e964fa4a0 1/18/2018 14:40TEL 7679793 view transaction Succeeded Deposit 1/8/2018 13:46BTC 0.60524914fRfhSVc26GYftFGpnjJ4nzPCXBweM8Hz view transaction Succeeded Withdrawal 6/22/2018 16:56ETH 16.870140xdd6236d8553dec99d42aad2bb2d34bba165bfe1a view transaction Succeeded Withdrawal 2/7/2018 14:25TEL 76792930x263BddA85894b0693f8BbC141D0d870d19b45e2b view transaction Succeeded Withdrawal
- 23. into Tricks for Saving on Taxes •Loss harvesting •Wash Sale Rules •Donations of Appreciated Property 26
- 24. Questions? 28
- 25. Thank You For Participating ! Thank you. “Citrin Cooperman” is the brand under which Citrin Cooperman & Company, LLP, a licensed independent CPA firm, and Citrin Cooperman Advisors LLC serve clients’ business needs. The two firms operate as separate legal entities in an alternative practice structure. Citrin Cooperman is an independent member of Moore North America, which is itself a regional member of Moore Global Network Limited (MGNL).