Home / Business / Starbucks Accepting Crypto: What Does It Mean for Your Taxes?

Starbucks Accepting Crypto: What Does It Mean for Your Taxes?

Bitcoin, which is undoubtedly the most important coffee business, should be a gain for the cryptocurrency. In the beginning, the vision was to spend coins on a number of farms as the real currency, the life force of the movement.

Bakkt is expected to hit the market later this year, offering merchants a simple crypto-to-fiat solution that allows them to accept cryptocurrency payments without having to deal with them directly. Undoubtedly, this will be rolled out by the market heavyweight and parent company of the New York Stock Exchange, Intercontinental Exchange (ICE), and a partnership with Starbucks, and there is little doubt that Bakkt will make significant progress in pushing cryptocurrency into the masses.

Ten years later, the implementation of This milestone was somewhat anti-climactic. As Bitcoin evolved, they were subject to unclear tax regulations that slowed their use as a daily currency. Currently, the IRS considers cryptocurrencies as proprietary, which means that each sale (trading in securities, trading in other cryptocurrencies or expenses) triggers a chargeable event.

The tax rules alone would be problematic for potential Bakkt customers. It would be impractical to track every payment of a few dollars for a coffee for later calculation of profits / losses as individuals would probably prefer cash or card transactions.

On the Bright Side

However, the outlook for a mass application of Bitcoin is large. Given that the currency appears small in the light of tax regulations, concerns can prevail. It is quite conceivable that an emerging low-precedent network, with which it is comparable, may account for slightly fluctuating dollar exchange rates due to market fluctuations.

The de minimis exemption applied in foreign currencies may be a viable way ̵

1; in simple terms: allows money held in a foreign currency to withhold capital gains tax if the exchange rate of that currency rises slightly before it is issued (below a certain threshold). The idea that this type of exemption can be applied to Bitcoin, which is used to buy goods or services, is endorsed by the Cryptocurrency Advocacy Organization Coin Center, which seeks to train regulators in the field of digital money and promote lobbying The Token Taxonomy Act, originally proposed in December, is gaining momentum. It was drafted by Congressmen Darren Soto (D) and Warren Davidson (R) in late 2018 and would amend both the Securities Act of 1933 and the Securities Exchange Act of 1994 to provide more consistent treatment for block-based tokens and Make cryptocurrencies

As with a possible de minimis exception, equivalent transactions other than cash would be exempt from taxation if they do not exceed $ 600.

Moving Forward

It is important to keep these developments in perspective. A new prudential treatment of cryptocurrencies would be a blessing for the introduction of the mainstream, but the issue is not addressed at the core.

Regardless of exceptions, an audit trail is still of the utmost importance – after all, you still have to prove that your coins have been disposed of in such a way that no taxes are incurred. The easiest way to create a transparent record of transactions is to use software solutions to automate the headache-inducing process of logging, aggregating, and charging at the end of the tax year.

Cryptocurrency is moving toward an explosion of mainstream interest with every passing day. As regulations adapt to acknowledge this, Satoshi Nakamoto's digital promise of the future more than a decade ago is steadily reaching critical mass.

About the authors

Sean Ryan and Perry Woodin, founders of NODE40. NODE40 Balance is a robust cryptocurrency reporting software that integrates directly with key crypto currency exchanges. Members of the blockchain community who trade, trade or mine in digital currency are likely to have triggered a chargeable event and may not know how to duly disclose these transactions to the government.

Source link