When the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) announced its rules for Bitcoin and other “cryptocurrencies” a little over a year ago, observers knew it was only a matter of time before the IRS would follow suit with its own guidance on how to treat virtual currencies for tax purposes. This past Tuesday the Service finally did so, releasing Notice 2014-21 which clarifies the Service’s position on how to properly report transactions involving Bitcoin and other virtual currencies, effectively killing any chance of Bitcoin’s widespread adoption as a substitute for official currency in the US.
Earlier today the US Department of Justice announced that it has reached a deferred prosecution agreement with Toyota Motor Corporation regarding the “unintended acceleration” issues that owners of certain models claim to have experienced back in 2009 and 2010. The announcement is of little note; as with most announcements of its kind it represents a chance for the DOJ to publicize itself and it is understandably a bit over-eager to praise the victory for safety. The agreement itself, however, is interesting as Toyota has agreed to treat the $1.2 billion settlement amount as a penalty paid to the US government, including for tax purposes. The upshot is that Toyota will not be able to take a tax deduction or credit for paying the settlement. Continue reading