Tax Issues for Cryptocurrency Investment Vehicles: U.S. Tax Law, Reporting, PTP Rules, ECI, Safe Harbors, and More

An encore presentation.

Recording of a 90-minute premium CLE/CPE video webinar with Q&A

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Conducted on Tuesday, June 21, 2022

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Course Materials

This CLE/CPE course will provide tax and other interested professionals with an in-depth analysis of key tax considerations and challenges for digital asset investment vehicles and hedge funds investing in cryptocurrency and other digital assets. The panel will discuss U.S. tax rules and obstacles for fund managers and investors, reporting requirements, publicly traded partnership rules, trading safe harbor rules, ECI, and other fundamental issues applicable to the taxation of investment vehicles investing in digital assets.

Description

Interest and investments in cryptocurrency from individual and institutional investors have intensified over the last two years. Fund managers and investors must adhere to the current U.S. tax regime and reporting requirements while also considering ever-changing regulations for digital asset transactions.

Many investment vehicles investing in cryptocurrency or other digital assets are structured similarly to traditional hedge or private equity funds; however, additional tax issues and rules regarding digital assets can result in adverse tax implications unless the investor and its adviser implement effective planning methods.

IRS Notice 2014-21 specifies that convertible virtual currency is treated as property for federal tax purposes and not as foreign currency subject to foreign currency gain or loss rules. In addition, the recently enacted Infrastructure Investment and Jobs Act significantly expands tax information reporting for cryptocurrency asset exchanges and custodians and an information reporting requirement for those accepting payments in cryptocurrency.

Tax professionals must identify key tax issues for digital asset investment vehicles, such as (1) the characterization of cryptocurrency, (2) the tax treatment of contributions and distributions of cryptocurrency by partnerships, (3) reporting requirements, (4) the treatment of cryptocurrency transactions as effectively connected income, (5) publicly traded partnership rules, and (6) available safe harbors.

Listen as our panel discusses U.S. tax rules and obstacles for fund managers and investors, reporting requirements, publicly traded partnership rules, trading safe harbor rules, ECI, and other vital issues applicable to the taxation of investment vehicles investing in digital assets.

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Outline

  1. Applicable U.S. tax rules

  2. IRS tax treatment of digital asset transactions

  3. Tax objectives for U.S. and foreign investors

  4. Characterization, reporting, and other compliance issues

  5. Fund structuring issues and options

Benefits

The panel will discuss these and other key issues:

  • What are the competing tax preferences of fund investors that practitioners must juggle when structuring investment funds?
  • What is the IRS' position on the tax treatment of cryptocurrency and other digital assets?
  • How do U.S. tax rules impact tax planning when structuring private investment funds intending to either invest in digital assets or to accept digital assets as investments?
  • What are the fund structuring issues and options for structuring digital asset investment vehicles?

An encore presentation.

Faculty

Gelernter, Josh
Josh Gelernter

Director
Aprio

Mr. Gelernter's specialties are international tax services, primarily reorganizations and restructurings.

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Mullin, Mark
Mark E. Mullin

Attorney
Shartsis Friese

Mr. Mullin is an associate in Shartsis Friese LLP’s Family Wealth Planning and Tax Groups. His practice uniquely...  |  Read More

Van Loo, Jonathan
Jonathan (Jon) Van Loo

Partner
Belcher Smolen & Van Loo

Mr. Van Loo is a tax lawyer who focuses his practice on achieving the optimal result for his clients in a variety of...  |  Read More

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Strafford will process CLE credit for one person on each recording. CPE credit is not available on recordings. All formats include course handouts.

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