Do Your Clients Need a Bitcoin Tax Accountant?

Certified Public Accountant
Gary M. Kaplan, C.P.A., P.A.
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Are you educated in the complex issues of being a Bitcoin tax accountant? Many of your clients are trading in this and other virtual currencies and in need of good accounting advice. This has in turn led to questions about a practice known as triple-entry accounting. This primer can help you begin your education on this new tax issue. 

What Every Bitcoin Tax Accountant Needs to Know About Virtual Currency

Many people who trade in virtual currencies assume that these will not be taxed. This, however, is changing. The IRS has waged successful battles against several virtual currencies to get them to release their records. More successful lawsuits will likely come in the future. The result is that clients who have not claimed Bitcoin profits will soon have to do so, and pay their taxes plus hefty penalties. In general, virtual currencies are treated like stocks by tax agencies. This is generally the best approach for a Bitcoin tax accountant to take until the IRS has clarified. 

How Triple-Entry Accounting Affects You

Most accountants are familiar with double-entry accounting, as this is heavily tested both in college and on CPA exams. Triple-entry accounting takes these principles a step further. Double-entry accounting takes both profits and losses into account as well as real changes in a person's wealth. Triple-entry takes this a step further, looking at profits, losses, and likely future outcomes. 

The IRS is not currently demanding triple-entry accounting. However, this is a very real future possibility. Although clients do not have cash in hand for future profits, the reality is that a profitable stock is more valuable than one that will not be profitable in the future. Modern algorithms make it possible to calculate this potential future value, which may add an additional layer of complexity for accountants dealing with clients who trade virtual currencies.

Bitcoin and Virtual Currencies: What Clients Need to Know

At the present time, triple-entry accounting is not necessary to file taxes whether your clients trade in Bitcoin or not. What is important, however, is that accountants directly ask clients about their involvement with virtual currency trading. Many are not aware of the lawsuits against these companies and wrongly believe that their trading will not affect their tax picture. This is an opportunity to educate your clients and to help them to prepare for a future with new forms of currency and the resulting new laws.

Accountant need to educate themselves about Bitcoin, virtual currency, and the ways that these are changing American finance. It is indeed revolutionary to trade in a currency that has no physical equivalent. Many people are getting in on the ground floor and stand to make a huge amount of profit. How this profit is taxed will be uncharted territory. Although the IRS currently treats Bitcoin as a stock for all intents and purposes, this is likely to change. Quality accounting services will help your clients to weather this and other changes to modern finance laws.

About gkaplancpa

Gary M. Kaplan, MAcc, MST, C.P.A.

Gary Kaplan’s desire for excellence shows in his training, experience and service he provides as a top rated Boca Raton CPA. He completed his undergraduate degree at Nova Southeastern University. He went on to earn both his Masters in Accounting at Nova Southeastern University and his Masters in the Science of Taxation at Florida International University. Gary has been practicing as a Certified Public Accountant since 1997, attaining his expertise in all aspects of accounting, business and personal tax and strategic planning. He listens to each client and helps them achieve their own, unique goals. Gary values educating others and giving back to his community: he has served as an Adjunct Professor of Accounting at Florida Atlantic University, and gives accounting presentations at St. Thomas University School of Law. In 2013, Gary Kaplan received his certification for retirement planning and is now a Certified Specialist in Retirement Planning™ (CSRP).

Gary is licensed to practice in Florida, Maryland, Utah, New York and Washington D.C. He has gained a reputation as a professional who provides quality work, value and personal attention to his clients.


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