By CCN.com: Big Four accounting firm Ernst & Young (EY) wants to make filing your crypto tax returns easier. To this end, the auditing giant launched the second generation of its EY Blockchain Analyzer, a blockchain analytics tool.
EY rolled out the product at its annual Global Blockchain Summit this week. In a statement, EY says it invested millions of dollars during the past two years to upgrade the Blockchain Analyzer.
EY Wants to Be a Leader in Crypto Tax Services
The company is making the tool available for use by EY teams in 2019 to help clients who hold or trade cryptocurrencies or work in the blockchain industry.
Paul Brody, a blockchain executive at Ernst & Young, says the firm is committed to building an integrated platform that can be used for audit, tax, and transaction monitoring.
Zero-Knowledge Proof Protocol
EY says its Blockchain Analyzer supports tax calculation for crypto-assets by automatically calculating capital gains and losses. Brody says it’s all part of EY’s goal to become a global leader in crypto tax and blockchain services.
“EY Blockchain Analyzer supports analysis of zero-knowledge proof private transactions on the public Ethereum blockchain, as well as the Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, and Litecoin public blockchains.”
“EY Blockchain Analyzer also supports private Ethereum, Quorum and Hyperledger blockchains.”
EY Unveiled Crypto Tax Tool In March
In March 2019, EY unveiled the Crypto-Asset Accounting and Tax (CAAT) program, a crypto tax tool specifically for its clients who invest in cryptocurrencies.
“EY CAAT has the ability to source transaction-level information from virtually all major exchanges.”
“It consolidates data from multiple sources and allows for the automated production of various reports and dashboards, and preparation of IRS tax returns related to crypto-assets.”
“Ernst & Young said it designed its EY Crypto-Asset Accounting and Tax (CAAT) program specifically for its clients who invest in cryptocurrencies.” https://t.co/kr2AabPYqc by @Samantha_Chang
— ErisX_Digital (@ErisX_Digital) March 6, 2019
Lawmakers Urge IRS to Clarify Crypto Tax Rules
The crypto industry’s meteoric growth has caused mass confusion among bitcoin investors, many of whom claim they didn’t know they were required to pay taxes on their capital gains.
In September 2018, a group of U.S. lawmakers asked the Internal Revenue Service to provide updated guidelines on how taxpayers should report profits from their cryptocurrency investments.
In a strongly-worded letter, the lawmakers rebuked the IRS for not providing more clarity even as it aggressively pursued alleged tax evaders.
This Is What You Pay Crypto Taxes On
Not every crypto transaction is taxed. As CCN reported, you are required to report cryptocurrency as income if you did the following:
- Sold bitcoin (or any other crypto).
- Converted bitcoin to fiat currency.
- Used cryptocurrencies to pay for goods or services.
- Received free crypto through a fork or an airdrop.
Your transactions are not taxed if you:
- Bought bitcoin but never sold it.
- Gave crypto as a gift to a friend or family member, and the gift was less than $15,000.
- Purchased crypto with a Self-Directed IRA or Solo 401(k).
Bitcoin Fan John McAfee Won’t Pay Any More Taxes
If you follow these guidelines, then the IRS will probably not hunt you down like they’re doing to bitcoin evangelist John McAfee.
As CCN reported, the IRS is pursuing the software mogul after he admitted that he has not filed a tax return in 8 years. Keep in mind that McAfee — whose net worth once topped $100 million — has paid his share of taxes over the decades.
In January 2019, the defiant McAfee challenged the IRS to come after him, saying he refuses to pay any more taxes because “taxation is theft.”
“Here I am…I have prepared my entire life for this battle. We will not be able to shrug off the yoke of this corrupt and insane government without a struggle.”
We declared our independence from Britain and fought a bloody war to escape burdensome taxes, yet here we are, less than 250 years later, being burdened by income taxes that are more crushing than anythung rhe British dreamed of. Free yourselves people!https://t.co/mYy6z06tHc
— John McAfee (@officialmcafee) January 4, 2019