JPM Coin

JPM Coin

As cryptocurrency continues to gain momentum in the world, more and more people adopt it as a normal way to make transactions. Recently, banks have been jumping on the train. For example, JP Morgan recently unveiled its new JPM coin. The point of their new coin is to make transactions between them and companies easier, more secure, and fast.

“We successfully tested the movement of money between a client account and a JPMorgan account using the new technology,” Umar Farooq, head of digital treasury services and blockchain, said in the presentation. “We believe that JPM Coin can yield significant benefits for blockchain applications by reducing clients’ counterparty and settlement risk, decreasing capital requirements and enabling instant value transfer.”

The coin is tethered to the value of the US dollar and is thus a “safe” coin to use. Basically, companies can pay money in exchange for the coin and then send the coin to JPM in return for money. The coin is in a testing stage right now and will be used with some of their larger institutional clients. The potential implications of a huge multinational bank such as JPM embracing cryptocurrency could be enormously widespread among B2B (business-to-business) crypto transactions. So, now is the time to get into this space if you’re a business owner or employee. However, with new technology like cryptocurrency comes new taxation challenges. Keep reading to learn how each business type interacts with cryptocurrency.

 

Why Should You, As a Business Owner Use Cryptocurrency?

There are many reasons to use cryptocurrency in a business. For example, there are substantially lower fees for accepting payments as cryptocurrency does not pass through any banks or payment software like PayPal or Square. Also, cryptocurrency allows for instant transfers of money and every sale is final so there is no worry about customers falling through on payment. Adding a cryptocurrency payment option can also encourage younger people who want to pay without the hassle of using money or who have been inspired to try new tech to adopt your product or service instead of one of your competitors who may not do this.

However, it is important to remember that using cryptocurrency means that there will be a different process of filing your business’s taxes. This process may be similar to how it works for an individual in some cases and in other cases, it remains yet to be seen how the IRS treats the tax laws.

 

How to File Crypto Taxes as Business

If you accept cryptocurrency as a business be sure that you know how to file your taxes on your crypto transactions. The way a business files their taxes will vary depending on the type of business: ie. sole proprietorship, partnership, LLC or a Corporation. First we will discuss the basics of each type of business and then get into how they handle their capital gains taxes, which is the same as crypto tax in most ways.

Sole Proprietorship, Partnership and LLC: these all function similarly when it comes to taxes, so they are grouped for simplicity’s sake. Basically, these business types are taxed in the same way an individual is taxed. That means that these business types will file their cryptocurrency taxes as like-property using capital gains and losses. If you want to learn more about how to file as an individual check out this crypto tax article.

Secondly, there are C-corporations – these are substantially more difficult to understand and there is not a lot of good research out there as to how they interact with cryptocurrency as far as taxation goes. Essentially, cryptocurrency is still taxed as a property or a capital asset for corporations, which means that there are brackets for taxation based on time held (short term vs. long term) to decide how much the taxation will be. However, sometimes this is not true.

There is a lot of conflicting information out there. Most long-term capital gains are taxed under the 0%, 15%, 20% rate schedule, some capital gains are taxed differently. For example, corporate capital gains are taxed as ordinary income and pay the corporate rate of 35 percent. There is a lot of confusion about how taxes are filed for corporations right now and we encourage the IRS to release new legislation surrounding this area.

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