Do you have digital assets such as cryptocurrencies (bitcoin, ethereum, and the likes) as part of your investments?
The Canada Revenue Agency (CRA) and the Internal Revenue Service (IRS) have publications on reporting the gains as either business income or capital gains.
Storing it on an exchange or a hard wallet can mean having the needs to create proper accounting records.
Trading for one type of cryptocurrency for another, mining, tax loss harvesting, valuing it as inventory and applicable sales taxes on services rendered are some of the scenarios to consider when it comes to cryptocurrency activities.
As digital assets become more prevalent in the financial statements, these are considered intangible assets with no physical substance. The costs are continuously measured with fair value to identify any impairment. The methodologies and tools available are constantly evolving and regulations are not consistently applied across jurisdictions.
Blockchain provides the public history of the transactions, however the pseudo-anonymous nature will require the understanding of the KYC / AML policies to address compliance. Another factor is to assess the number of transactions and wallets (in house or third party) holding the digital assets.
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