Information System - Tax Implications of Bitcoins Questions

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nobxuyrq

Business Finance

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Prepare a short answer response to three of these questions. You may type in your answer right after each question here in this document. Each answer should be 200 – 500 words. Your response ideally should add to the discussion and not simply repeat the information previously posted. Provide the URL of any sites or documents used to answer the question.

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Question: Prepare a short answer response to three of these questions. You may type in your answer right after each question here in this document. Each answer should be 200 – 500 words. Your response ideally should add to the discussion and not simply repeat the information previously posted. Provide the URL of any sites or documents used to answer the question. 1. What does the IRS think about bitcoins? What are the tax implications of bitcoins? 2. What does a business have to consider if they accept bitcoins? Focus on both accounting and non-accounting implications. 3. What does an individual have to consider if he/she trades with bitcoins? Focus on accounting and non-accounting implications. 4. What are the legal issues related to bitcoins? What laws may be impacted by bitcoins? 5. Do you think bitcoin or another cyber currency will replace existing traditional currency? Why or why not? 6. What happened regarding the failed MT GOX bitcoin exchange? Do you think this will happen again?
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Explanation & Answer

Attached.

Information System - Outline
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III.

IRS treatment of bitcoins
Legal issues related to bitcoins
Reasons why cyber currency will not replace fiat money


Running head: INFORMATION SYSTEMS

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Information Systems
Name
Institution

INFORMATION SYSTEMS

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Information Systems

A. What does the IRS think about bitcoins? What are the tax implications of bitcoins?
IRS is responsible for the tax collection; however, a lot of people do not understand the
position of tax implications when it comes to cryptocurrency. Some of the people believe that
traders involving themselves in bitcoin mining and airdrops are subject to paying taxes while
others refute the idea. Generally, there is a great misunderstanding of the tax principles. On the
side of Internal Revenue Service, bitcoins and cryptocurrencies are a property. From that
understanding, property according to IRS means that any profit from the transactions are subject
to capital and therefore they gain tax. A trader may see paying bitcoin dues as very
straightforward however the challenge comes in if the trader bought the points at a different price
to which he sold them because it will now bring in the problem of the capital gains.
Over the past years, IRS has put forward that bitcoin was on its radar and have released
notices reminding the traders t...


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