TL;DR Breakdown
- PayPal, Coinbase and Winklevoss Capital invest in TaxBit
- The crypto startup is looking to ameliorate issues that concern crypto taxation
A crypto start-up, TaxBit – whose focus is on taxation – just announced that some of the top institutions in crypto are investing in the company.
According to the announcement, the investing companies are PayPal, Coinbase Ventures, and Winklevoss Capital. The company would be allowing users to automate their tax reportings.
In the United States, crypto-assets are recognized as an asset, and as such, they can be taxed for transacting the digital coins. This means that every time a company or a user spends, holds, or trades cryptocurrencies, they have triggered a taxable event.
However, confusion arises when it comes to crypto activities like staking, mining, and airdrops. TaxBit, regardless of this confusion, helps the users understand what their tax obligations are to the authorities. It also helps them properly combat the issue of underreporting tax returns, which is commonplace in the industry before.
Before receiving new investment from PayPal and Coinbase, the crypto start-up was already enjoying Winklevoss Capital’s support. The total investment of the three companies remains unknown at the time of writing. Additionally, the firm already has Gemini and BlockFi has some of its clients.
TaxBit could be the first of Digital Currency Taxation Automator
Like we stated earlier, every time a user transacts crypto-assets, they are most likely triggering a taxable event.
And with the numbers of transactions a trader might be involved in on a daily basis, it can be quite an uphill task for them to accurately come up with the right taxation.
As such, Scott Melker, a crypto trader had highlighted this difficulty in a tweet earlier this month where he alluded that his “accountant hates him today.”
The Internal Revenue Service (IRS) has also shown that it is getting more serious with this issue of crypto taxation this year.
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