Are you a business owner thinking about accepting Bitcoin as an acceptable form of payment? If so, it certainly makes sense considering the cryptocurrency’s amazing growth since it was launched in 2009 with its very first transaction.
Consider these statistics highlighting its growth:
- In 2010, 1,000 bitcoins could only buy you a single pizza, that’s how low the currency’s value was at that time.
- In 2009, Norwegian graduate student Kristoffer Koch bought 5,000 bitcoins for approximately $27 US dollars. By 2013, that initial $27 investment had grown in value to approximately $886,000, a return of 3,281,500% in only four years.
- If you bought $1,000 worth of Bitcoin in 2010, they would be worth approximately $35 million dollars today.
- As of August 2017, Bitcoin’s value moved past $4000 US dollars for the first time, based on the promise of even faster transaction times than before.
As you can see, Bitcoin’s value is accelerating at a tremendous pace and shows no major signs of stopping, so the growth potential is enormous. If you are thinking about getting into this market yourself by accepting payments for your goods or services, Anderson partner and noted tax attorney Toby Mathis breaks down the tax implications of using Bitcoin for transactions you conduct in the video below.
Most importantly, he discusses why you need to think about Bitcoin as property, not currency when understanding how to account for transactions with it and make sure you handle them correctly with regards to tax filings. Long-term capital gains, short-term capital gains, and basis are all factors that you’ll have to deal with, just as if you were handling standard real estate transactions. Any mistakes could lead to an IRS audit, which no one wants to deal with ever.
Click on the video below to learn more.
If you have any further questions about how to handle Bitcoin transactions for your business or questions related to your business’ tax, bookkeeping, or asset protection needs, then schedule a FREE Strategy Session with one of our expert Advisors. Click here to schedule your session today.