In the late 20th century the internet ushered in a new technological age transforming society. With this digital transformation, technologies have made a huge leap forward and our society has become internet dependent. As more people journey online and effectively create a digital society, there are questions which arise and need to be answered. Is there value to what people are creating online, how that value is determined, and what the tax implications are? This paper will explain and define what digital assets and currencies are and how to determine whether they have a fair market value.

1. By: Bradley Perry and Michael Robins

2. Overview
What are Digital Assets?
Digital Currency Systems
Fair Value and Basis
Digital Currencies
Government Attention
Tax Implications
Conclusion

3. What Are Digital Assets?

4. What Happens When You Sell Your
Business
 Tangible Assets
 Intangible Assets
 Amortization
 Transfer Tax Consequences

5. Digital Contracts
 eSign
 Terms of Service
 Measuring Gains/Losses
 Estate Tax

6. Digital Currency Systems

7. Fair Market Value
 Difficult to Determine
 Cost Based Recognition
 Market Value Determinations
 Gains on Profit

8. 12 Months of Bitcoin as of October 22nd, 2014

9. What Does Bitcoin
Look Like?

10. Digital Currency
 History
 eGold
 Satoshi Nakamoto
 Bitcoin
Mining
 Exchanges
Wallets

11. Why Bitcoin?
 Anonymity
 Peer-to-Peer
 No Central Authority

12.  Illegal Activities
 Hacking Issues
 Internet Use Only
 Tax Evasion
Would Destabilize Economies

13. Government Attention
 Fraud Risk to Consumers and Investors
Money Laundering and Other Crimes
 Funding of Terrorist Activities

14. United States
U.S. Government Accountability Office
 Taxpayer Advocate (I.R.S.)
Homeland Security

15. Who Actually Accepts Bitcoin

16. Tax Consequences of Digital Currency
 Revenue Procedure Says it is Property
 Is it Eligible for Foreign Tax Credit?
 Estate Tax Consequences
 Reporting Issues
 State Income Tax Issues

17. Notice 2014-21, 2014-16 IRB
 Recognizing Gains or Losses
 Establishing Basis
Employment Tax Consequences

18. Foreign Tax Credits
 Europe
 Australia
 Ecuador and Iceland
 Canada

19. Estate Tax Consequences
 Property Included in Gross Estate
 Establishing Fair Market Value
 How is it Transferred to Beneficiaries

20. Reporting Issues
 Notice says if paid for services, is
Compensation
 Form 1099-B, W-2 and Schedule D

21. State Income Tax Issues
 Is it Subject to State Income Tax?
 41 Businesses in Michigan now accepting

22. Conclusion
 Future of Digital Assets and Currencies
 Widely Recognized

23. Questions
 Bradley Perry
 bradley.paul.perry@gmail.com
 Mike Robins
 michaelbrobins@yahoo.com

24. Additional Resources
 Bitcoin – Open Source P2P Money
https://bitcoin.org/en/
 CoinDesk
http://www.coindesk.com/price/
 Life on Bitcoin
http://lifeonbitcoin.com/
 CoinMap
http://coinmap.org/
 Bitpay
https://bitpay.com/
 CoinBase
https://www.coinbase.com/clients
 Bitcoin Girl
http://bitcoingirl.org/