When the IRS announced that it would begin to recognize bitcoins for tax purposes, it provided both recognition for the digital currency as well as a potential accounting nightmare. On one hand, the IRS ruling legitimized bitcoins and other digital currencies as assets similar to stocks and bonds. But, the IRS also created a situation of which bitcoin users would need to mark to market prices of bitcoin when they were received/mined and spent. The result is that officially according to the IRS, if someone purchased one bitcoin at $500 and used it to buy mining equipment at TigerDirect after it rose to $650 a month later, they would be on the hook for declaring the $150 as capital gains profit.
For a few purchases here and there, it’s not a big deal. However, for any prolific bitcoin users and miners, the IRS rules required users to account for the price of bitcoins whenever they were received or spent.
Providing a solution, accounting software developers have been quick to create products that integrate with bitcoin wallets and popular marketplaces like Coinbase to offer automatic mark to market calculations acceptable for the IRS rules.
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Joining the ranks of bitcoin tax software developers is Libra which has released its LibraTax service to the public. When launched to public beta in August, Libra CEO Jake Benson stated that “Our primary objective is to have approachable, convenient software that simplifies the end-user experience associated with taxpaying—ultimately saving users precious time and money. We’ve accomplished that without a doubt.” As part of the “convenient software” includes integration with Coinbase and Blockchain wallets.
$500,000 Seed Round
In addition to launching LibraTax, Libra has raised $500,000 in a seed round that includes Liberty City Ventures, Jim Pallotta,and Ben Davenport as investors. First reported by NEWSBTC, Libra will be using the funds to further update their product.
The company will use the funds to further finesse their product, which has received a significant amount of attention from the cryptocurrency community since its announcement earlier this year.
The funding continues strong investment activity in the bitcoin sector, even as prices have fallen well off of their previous highs of the year.