Bitcoin wiki Dwolla

Coming to a technology client in the near future,if it hasn’t happened already,will be revenue and expenses paid in Dwollas or some the form of cyber currency like Bitcoins. Dwollas are a simplified ACH transaction and translate dollar for dollar with a much lower merchant fee deducted from the vendor’s funds. The Bitcoin,on the other hand,is one of several new cyber currencies. There is a great deal to investigate about Bitcoin’s origin five years ago and their investment value. However the purpose of this article is to focus on how to recognize them on financial statements and tax returns at the right value.

The Bitcoin wiki explains a Bitcoin transaction as such:

“When a customer makes a payment,you might simply issue a credit to their account. Ideally,you want to enter it in a way that suggests you received a payment. You could consider entering it as a “discount”,but you may want to consider whether this inappropriately disguises the nature of the transaction. If on the other hand,you’re giving “discounts” for Bitcoins,but then you are selling the Bitcoins for currency and then counting that as income,then chances are good that your calculation of income is making up for it. Ask your accountant.

“As for how to decide what a Bitcoin transaction is worth…the IRS,as far as we know,has never issued a guide mentioning how to value Bitcoin transactions. But they probably have rules and guidelines on how to value transactions made in foreign currency or ‘cash equivalents’. We imagine the accounting would be similar.”

Since the Bitcoin wiki is depending on accountants,it will help to know the fundamentals of helping clients account for Bitcoin receipts and payments.