Business & Corporate Articles

Why Diverse Perspectives Matter: Lessons from the FinTech Frontier

For certified tax law specialists in California such as myself, it is imperative to stay up to date and at the forefront of emerging tax issues. One major emerging sector is cryptocurrency, which brings new questions and issues along with the potential opportunities. 

In speaking about the taxation of cryptocurrencies at the Business & Corporate Sections’ program on FinTech I was able to get a wider perspective on the space in general. I knew that the sector was risky for people to enter from a financial perspective, but I learned from Jerome Walker’s discussion that the regulatory landscape makes the sector possibly the riskiest out there. If someone is trying to start a business that specializes in handling cryptocurrencies there could be a host of banking and securities regulations that can make it much more difficult than anticipated. Regarding the business aspects, Capitan David Lam made me more aware of potentially how many of these cryptocurrencies are possible scams, and that strong research or even visiting the physical office is needed before investing in a project.

This broader perspective is considerably helpful for certified tax law specialists to provide clients with more well-rounded advice regarding their potential plans in the sector, in addition to providing advice on the taxation aspects of cryptocurrencies. The IRS has provided some guidance to taxpayers that deal with cryptocurrencies, but the agency has left plenty of gray areas and pitfalls for people who do not plan their actions and positions. Uncertainties still abound regarding valuation, accounting, like-kind exchange, foreign account and asset reporting, air drops, and miner collectives. In helping clients navigate these uncertainties, certified tax law specialists should prepare for all scenarios and discuss the likelihood of potential actions that the IRS can take in the future.

Efficiently handling the tax implications of previous years is important, but we should make sure that clients are put in the best position possible for the future as well. The FinTech event was a great chance to see what other issues my clients should be aware of when they are dealing with cryptocurrencies.

— Michael Dallo is a certified tax law specialist in California, tax research professor at the University of San Diego, and principal attorney and CEO of Dallo Law Group. 

**This article is for information purposes only and does not contain or convey legal advice.  The information herein should not be relied upon in regard to any particular facts or circumstances without first consulting an attorney. Any views expressed are those of the author only and not of the SDCBA or its Business & Corporate Law Section.**