Jason Schwartz, tax partner & digital assets co-head @ Fried Frank. Art appreciatoor. Tweets are not advice. https://t.co/yS0B5UMBAv
Mar 13 • 34 tweets • 6 min read
ON DUNAs AND BORGs
In an effort to imitate tax law, cryptolaw introduced two new acronyms over the last week:
- DUNAs, or decentralized unincorporated nonprofit associations; and
- BORGs, or cybernetic organizations.
Some US tax musings on both, a 🧵(1/34)...
2/ DUNAs. The DUNA, conceived by @milesjennings (of @a16zcrypto) and tax lawyer @CowrieLLC, gives DAOs with > 100 members the ability to contract, sue, and pay taxes (i.e., legal personhood) while according members limited liability.
Wyoming adopted a DUNA law effective 7/1/24.
Feb 5 • 31 tweets • 6 min read
ARE DAOs TAX ENTITIES?!
I was early to publicly explore the concern that many DAOs may be tax entities. But now I’m seeing lots of tax people simply assume all DAOs are tax entities without engaging with the tech or the law or offering counterarguments.
A 🧵(1/31)…
2/ DEFINING THE QUESTION. There are really 2 questions we should be asking:
a. (When) are governance tokens looked thru?
b. (When) are they equity in a deemed entity?
These are different questions, but in either case a “yes” answer could be devastating.
Aug 27, 2023 • 32 tweets • 6 min read
PROPOSED TAX REGS THREATEN US BLOCKCHAIN ACCESS
Yesterday the IRS proposed crypto broker reporting regs.
If finalized in their current form, the regs would require websites like those for @Uniswap, @opensea, and @etherscan, & many block builders, to geoblock US people.
A🧵...
2/ BACKGROUND. Section 6045 of the tax code requires brokers to provide customers and the IRS with 1099s showing the customer's name and address, proceeds from the sale, and basis of assets sold, and to "backup withhold" on customers who don't provide certain identifying info.
Jul 31, 2023 • 13 tweets • 3 min read
IRS: "STAKING REWARDS ARE INCOME"
Today the IRS issued Revenue Ruling 2023-14 confirming its view that consensus-layer staking rewards are taxed at FMV when the staker has dominion and control over them (i.e., the ability to sell them). A brief🧵...
2/ Under Notice 2014-21, mining rewards are subject to tax at ordinary rates when received.
Based on the notice, most tax advisors have assumed consensus-layer staking rewards are similarly taxed.
Today’s ruling confirms that assumption.
Mar 22, 2023 • 6 tweets • 2 min read
1/ Billionaires pay more taxes than teachers, both in absolute $ terms and as a % of recognized income.
But their taxes tend to be low as a % of their UNRECOGNIZED income.
@POTUS and @BernieSanders want to tax unrecognized income (a "mark to market" tax).
2/ APPEAL. There's some appeal to MTM taxes. Wealth appreciation is "income" per Haig-Simons. The rich can borrow against their wealth without triggering tax. And when they die, their assets generally get a free basis step-up, so no one pays tax on asset appreciation.
Mar 21, 2023 • 7 tweets • 2 min read
1/ Today, the IRS issued guidance and requested comments on the treatment of NFTs as "collectibles" for US tax purposes. 🧵
irs.gov/pub/irs-drop/n…2/ Collectibles generally can't be held in an IRA, and are subject to a 28% maximum long-term capital gains rate instead of 20%. So you generally don't want your NFT to be a collectible.
Nov 22, 2022 • 8 tweets • 2 min read
REGULATION OF NONCUSTODIAL FRONT-ENDS 🧵
1/ SBF caught lots of flak in October for suggesting that noncustodial front-ends be subject to a licensing regime (excerpt below).
It's worth revisiting his suggestion, since it's likely to remain a flashpoint in policy discussions.
