Taxation of Ethereum Mining (and Other Cryptocurrencies)

Taxation of Ethereum Mining and Other Cryptocurrencies

A recent resurgence in cryptocurrency mining, particularly that of Ethereum, has sparked a new wave of questions regarding the taxability of the mining proceeds. Mining refers to the computational processes performed by computer hardware to validate all of the transactions on Ethereum’s blockchain. Miners are crucial to the integrity, maintenance, and continuation of the blockchain. As a reward for the mining services participants receive units of cryptocurrency. Taxpayers who receive Ethereum and other cryptocurrencies in such a way are subject to income tax. Whenever a Taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income.

Example:

  • A Taxpayer successfully mines 0.10 Ethereum on June 15, 2017.
  • On June 15, 2017 the conversion rate between USD and Ethereum was $344.00 for 1.0 Ethereum.
  • The Taxpayer would have to include $34.40 as ordinary gross income.

The implications extend beyond gross income as Taxpayers can create scenarios under which the income is also subject to self-employment income. In these scenarios Taxpayers’ activities rise to that of a trade or business. Planning opportunities exist for Taxpayers to minimize the tax implications of mining with reasonable expenses, depreciation, and other cost recovery methods.

For more information, or if you have any questions about this or any other tax matter, please contact your Wilkin & Guttenplan advisor or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

An Introduction to Blockchain Technology and Digital Currency Taxation

An Introduction to Blockchain Technology and Digital Currency Taxation

The benefits of blockchain technology have been described as potentially revolutionary and may eventually impact virtually every industry. At its core, a blockchain is a decentralized, shared database that serves as a digital record of transactions. The decentralized nature of a blockchain means that it is immune from manipulation and therefore allows for transactions to occur without third-party verification. The hope is that this will drastically reduce transaction costs across industries.

The origin of blockchain technology dates to 2008 with the advent of the digital currency (also referred to as cryptocurrency), Bitcoin. Presently, there are approximately 900 different digital currencies which can be obtained in various ways, most commonly through a computing process called “mining” or by purchase on a digital currency exchange.

IRS Notice 2014-21 clearly defines digital currency as property for federal tax purposes. Therefore, for those who have participated in the digital currency market must take care to account and record keep for their transactions which have the potential to impact income tax liability. For this reason, it is important to discuss with a tax professional the implications of mining and trading digital currency to ensure the appropriate level of compliance in order to avoid the underpayment tax and exposure to penalties.

For more information, or if you have any questions about this or any other tax matter, please contact your Wilkin & Guttenplan advisor or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

New Jersey Executor/Executrix Corpus Commissions

New Jersey Executor Executrix Corpus Commissions

Being named an executor (or executrix) of an estate holds many responsibilities and duties, such as collection, distribution/disposition, safeguarding of estate assets, payment of estate debts, filing of tax returns, and so on. Due to the complexity of these responsibilities, under the New Jersey Statute 3B: 18-14, an executor of an estate is entitled to a corpus commission for their duties. This commission applies to all assets that flow through the probate estate. In other words, assets that have a predefined/named beneficiary (other than the estate), such as life insurance, IRAs, 401(k)s, joint tenants with rights of survivorship or payable on death assets, certain trusts, or other non-probate assets will not be included in the commission calculation.


The corpus commission calculation for New Jersey may be taken against all applicable corpus as follows: 5% of the first $200,000, 3.5% on the excess of $200,000 up to $1,000,000, and 2% on the excess over $1,000,000. An executor has the option to take or decline the corpus commission. If taken, this commission would potentially be a deduction on the estate returns, but must also be included in income on the executor’s personal income tax returns.

For more information, or if you have any questions about this or any other tax matter, please contact your Wilkin & Guttenplan advisor or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

Where Is My Residency?

Where Is My Residency

Thinking of selling the house, pulling up anchor, and sailing the globe this summer? Got a new job and relocating to a new state after you take that three-month tour throughout Europe that you’ve been planning since college? Taking advantage of the summer to move the kids to a new school system in the next state over? Don’t forget to consider the potential state income tax implications!

Even if you sell your home and leave the state, it’s important to note that many states have stringent regulations with regards to the perpetuation of residency. That being said, the sale of your home does not automatically change your residency status, even if you have every intention of moving out of state. Therefore, even after the sale of your home, you may still be a resident for state income tax purposes in the eyes of the jurisdiction that you plan on leaving.

An important key for many state residency issues may be the often overlooked “leave and land” concept. The act of uprooting oneself from one state is not enough to satisfy some state’s stringent regulations; the “leave and land” concept shows that a bona fide replacement domicile in another state or country is required for an individual to no longer be considered a resident of the former state, and therefore no longer subject to that state’s individual income tax. That being said, unless you plan on paying income tax to your former state, be sure to stick that landing!

For more information, or if you have any questions about this or any other tax matter, please contact your Wilkin & Guttenplan advisor or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

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