Professionals have a major piece of advice for those who traded cryptocurrency for the first time last year: Take your tax prep seriously.
The IRS has been zooming in on cryptocurrency reporting with increasing interest in recent years. And the last thing you want is to lose money and time reconciling your tax liability, says Douglas Boneparth, a New York City-based certified financial planner.
The IRS treats virtual currencies as property, which means they’re taxed similarly to stocks. If all you did was purchase cryptocurrency with U.S. dollars, and those assets have been sitting untouched in an exchange or your cryptocurrency wallet, you shouldn’t need to worry about reporting to the IRS this year.
Reporting is required when certain events come into play, most commonly:
Trading one cryptocurrency for another.
Selling cryptocurrency for fiat dollars (government-issued currency).
Using cryptocurrency to buy goods or services (e.g., paying for a cup of coffee with cryptocurrency).
A critical distinction to make is that triggering a taxable event doesn’t necessarily mean you’ll owe taxes, says Andrew Gordon, an Illinois-based certified public accountant and tax attorney. Just because you have to report a transaction doesn’t mean you’ll end up owing the IRS for it.
How cryptocurrency is taxed
Anytime you sell an asset for a profit, your resulting gain may be subject to capital gains taxation. To determine your exact gain or loss, you’ll need the date you acquired the cryptocurrency; the date you sold, exchanged or otherwise disposed of it; and the cost basis (the amount you paid plus transaction fees).
Gains are then taxed at either the short- or long-term rate, depending on how long you held the asset. Short-term gains for assets held less than a year are taxed as ordinary income, while long-term gains for assets held more than a year are generally taxed at 0%, 15% or 20%, depending on your taxable income and filing status.
For example, say you purchased $2,000 worth of a cryptocurrency in January 2021 and sold it two months later for $5,000. That $3,000 capital gain would be subject to the short-term capital gains rate.
Once you’ve calculated your gains and losses on Form 8949, you’ll need to report them on Schedule D of Form 1040.
How to prepare
1. Be honest
If you omit information on your taxes, there’s a risk of penalties, fees and, in severe cases, even tax evasion charges. And with the revision of Form 1040, which now features a direct yes-or-no question on whether you received, sold, exchanged or disposed of cryptocurrency, the IRS is signaling that those who fail to report won’t be able to feign ignorance, Gordon says.
2. Get your records in order
Cryptocurrency exchanges won’t be required to send taxpayers 1099-B forms, also known as tax-reporting summaries, until the 2023 tax year. So the onus is on traders to keep accurate records of their transactions. Many exchanges, such as Coinbase, allow you to download your trading history, which might make it easier for you, tax software or a tax preparer to calculate gains and losses. If you made trades off-exchange, though, you might need to set aside some additional time for digging.
3. Consider using tracking tools
Reporting a single trade on one exchange likely won’t be difficult. But a “typical taxpayer has three to five wallets and exchanges,” according to Shehan Chandrasekera, CPA and head of tax strategy for CoinTracker. This makes it harder to reconcile cost basis across varying platforms. If you’re an active trader, it might make sense to invest in software that can help track your transactions.
4. Hire a professional
If your tax situation is complex, consider working with a cryptocurrency-savvy tax professional. They can guide you through the various accounting strategies the IRS permits for reconciling your gains and losses, and help determine which one makes the most sense for you.
5. Make losses work in your favor
If you didn’t take advantage of tax-minimization strategies last year — such as tax-loss harvesting, gifting or donating — but you realized losses, you still have a chance to lower your tax bill. Just as with stocks, if you sold a currency at a lower value than what you paid for it, you may be able to deduct up to $3,000 of those losses on your taxes.
This article was written by NerdWallet and was originally published by The Associated Press.
The article Traded Cryptocurrency in 2021? Here’s How to Approach Taxes originally appeared on NerdWallet.
Fighting Game fans are excited now that Capcom announced that Street Fighter 6 is coming to PS5, PS4, Xbox Series X/S and PC on June 2, 2023. The game was initially announced in February 2022, but that reveal did not include a specific release date beyond 2023.
The trailer at The Game Awards focused on new mini games and the international setting. In addition to the 18 previously announced fighter, the trailer also confirms that several new fighters — Dee Jay, Manon, Marisa and JP — that will join the game’s roster.
Notably, the June 2 release date for Street Fighter 6 may be a strategic choice for Capcom. June is the very beginning of Q3.
The last installment of the franchise — Street Fighter V — released nearly seven years ago so fans have been eager for another installment. A day before The Game Awards, the game’s June release date was leaked via the PlayStation Store.
Opinions expressed by Entrepreneur contributors are their own.
Entrepreneurship is a daily leap of faith. In times of economic uncertainty, that leap may feel like a dive off a cliff. We are in one of those times. It likely will take months to fully re-adjust to the forces that have pummeled the world’s economy, and to entrepreneurs, months can feel like years.
With the right playbook, entrepreneurs can survive and thrive in whatever economic scenario. Here are five things you can do to propel your business ahead now and through the difficulties of business cycles for years to come.
1. Learn the lessons of more challenging times
A rocky economy presents a unique opportunity to make tough decisions about the business plan. Everything is open to reexamination. How has the market changed? Are your customers facing challenges that create new opportunities for your solutions? How do new conditions change your assumptions, and what actions do you need to take in response?
Critically evaluate your product roadmap. Is this the time to pivot or become more aggressive with your current plans? Prioritize the highest margin features that are achievable in the next twelve months. Push out projects that don’t make that list, and re-assign resources accordingly. Re-assess pricing. Even as inflation tiptoes back from the highest levels in forty years, raw material and transportation costs remain way up. What will impact your customers if you adjust the pricing or add surcharges to offset these costs, at least temporarily?
It’s been a rough year for hiring. Many companies took the talent they could get. If there are employees or gig workers who would fare better in a different job, now is the time to let them go. Make tough-minded corrections that will pay off overall — corrections that might be avoidable in less challenging times.
Venture capitalists are pulling back. In the third quarter, Crunchbase reported that funding for startups in U.S. and Canada fell 50% year-over-year. Valuations are down across the board. If you are fortunate enough to be a later-stage startup that benefited from VC largess in 2021, make your last raise last longer than intended.
Keep your dry powder dry, and put off going for another round until the markets even out. Reemphasize the basics for early-stage companies with less market validation and greater distance between now and a potential exit. Delay all capital expenditures. Leverage the hybrid work model if possible, to reduce rent and other office expenses. Continue with Zoom or Google Meet. Now is not the time to rack up travel costs. Re-negotiate fees and terms with service providers. Seek credit terms with key suppliers, in a word, bootstrap.
3. Talk to customers, in person. Now.
How have the business needs of your customers — whether paying or beta — changed over the last 18 months? Are there benefits to your solution that have more recognized value now? Nearly every business, for example, from corporates to startups, has been forced to re-learn the lessons of supply chain management. Startups that can help their customers make better business decisions based on artificial intelligence (AI), reduce costs by improving inventory management or protect against out-of-stock scenarios by identifying and building relationships with new, more local sources of supply will have an edge.
According to PitchBook, venture capitalists are showing greater interest in portfolio companies “whose satellite, robotics and software tools can do double duty” in military and commercial markets. International conflicts are one reason, of course.
Another is that the defense and military security industries are generally viewed as recession-proof. Our firm routinely encourages portfolio companies to consider non-dilutive funding from the Small Business Administration — grants to support cutting-edge technologies range from $150,000 to more than $1 million.
Navigating the application process isn’t for the faint of heart. A startup must be realistic about the work involved, but in many states, there are resources to help. Besides the funding, severe responses to agency requests for proposals are reviewed and evaluated by technologists. At a minimum, this can be terrific feedback and a great source of industry contacts.
5. Blue-chip cultures attract blue-chip talent
Company culture can be an asset or a liability. An inclusive, rich culture helps key hires say yes. Finding stakeholders that believe what you believe and are aligned with your team’s values significantly improves the odds that they will stick with you in good times or bad.
After months of “great resignation” fever, the over-heated demand for talent may be cooling off. Maybe offers aren’t as fast or grand as they were a year ago. Maybe Twitter won’t be the only advanced technology business to let people go. Regardless, the search for great talent isn’t a faucet that a young company turns off and on. A startup might modulate the timing or the number of hires but stand at the ready to recruit and filter for culture fit.
With the right mindset and intentional approach, an entrepreneur can make 2023 a year to strive and thrive. As Yogi Berra, my favorite baseball player of all time, said, “Swing at the strikes.” In business, like baseball, the right swing can turn even the most challenging pitch into a hit.
Artificial intelligence is taking over almost every industry. The investment and finance industry is no exception. In Deloitte’s 2019 report, the firm reveals that AI is transforming the financial ecosystem to reduce costs and make operations more efficient by providing automated insights and alternative data, analysis and risk management.
Technology such as AI has digitized the finance sector, ranging from payments and remittances to lending. However, asset management is still in the nascent stage of digitization, according to the chief strategy officer and co-founder of Akros Technologies, Jin Chung.
Akros Technologies wants to disrupt the current asset management industry via its AI-driven asset management software platform that mines market data for stocks. Akros just raised $2.3 million from Z Venture Capital, the corporate venture capital wholly owned by Z Holdings, which also owns the Japanese messaging app Line and internet portal Yahoo Japan.
Akros intends to strengthen strategic ties with Z Holdings via strategic investment, the startup said. The latest funding, which brings Akros’s total amount raised to $6.1 million since its 2021 inception, will help Akros to scale its software platform and asset management products and ramp up its users, including local and global financial institutions and fintech companies.
The outfit is already in discussions with potential partners to expand its AI-powered product called portfolio management as a service, or PMaaS, an all-in-one operating system for portfolio management. Chung explained to TechCrunch that PMaaS “enables B2B clients such as financial institutions, fintech startups and robot-advisors to launch their own exchange-traded funds (ETFs) without having to set up ETF teams and infrastructure.”
He added that it expects to secure more than five B2B clients in the first quarter of 2023.
The startup claims that its AI-powered portfolio management platform can reduce “the overall cost structure [of] the traditional fund development,” including management fees and unnecessary fees involved in the investment process, by more than 80%. The outfit aims to maximize the finance management performance of data-driven ETFs and offer a portfolio management solution via the PMaaS for Akros’s users to help them compete with global ETF institutions like Vanguard or JPMorgan.
In August, Contents Technologieslaunched Korean pop music, also known as K-pop, and Korea Entertainment ETF, on the NYSE Arca Exchange under the ticker KPOP, using Akros’s PMaaS solution to develop the ETFs. In addition, Akros listed an AI-driven target income ETF, called Akros Monthly Payout ETF (ticker: MPAY), on the NYSE in May with monthly distributions at an annualized target rate of 7%, according to the startup.
To build a slew of investment strategies that lower the cost of portfolio modeling and generate scores of investment portfolios, Akros applies a generative AI model based on a decision transformer, which predicts future actions through the sequencing model, Chung said, adding the company also employs GPT-3 natural language processing (NLP) to analyze unstructured language data.
Akros plans continuously to enhance its engineering technology by bolstering its business to disrupt the asset management market and attract new partners across the globe, including Japan, Singapore and the U.S., co-founder and chief executive officer Kyle Moon said in a statement.
Founded by CEO Moon, CSO Jin and chief marketing officer Justin Gim, Akros employs seven people.
Co-founders of Akros Technologies: (Left to right) Justin Gim, Kyle Moon and Jin Chung. Image Credits: Akros Technologies
Moon previously worked for Qraft Technologies as head of AI research and CSO and had experience listing four ETFs on NYSE. Before co-founding Akros, Gim had more than nine years of experience in the asset management industry; Chung did research work for Bayesian deep learning in autonomous driving cars at Oxford Robotics Institute.
In March, Akros raised $3.75 million in funding from PeopleFund, a South Korean peer-to-peer lending platform. The company declined to provide its valuation when asked.