The infrastructure bill that made it to the President’s desk earlier in the week contained a provision allowing for a new type of tax exempt private activity bond (Section 142(a)) for carbon dioxide capture facilities.

The bill allows for financing facilities and eligible components of facilities that are used for the purpose of capture, treatment and purification, compression, transportation, or on-site storage of carbon dioxide.

The general rule requires such a facility or component to have at least a 65% capture and storage percentage, but permits for an alternative calculation:

`(C) Capture and storage percentage.--

                ``(i) In general.--Subject to clause (ii), the capture 

            and storage percentage shall be an amount, expressed as a 

            percentage, equal to the quotient of--

                    ``(I) the total metric tons of carbon dioxide 

                designed to be annually captured, transported, and 

                injected into--

                        ``(aa) a facility for geologic storage, or

                        ``(bb) an enhanced oil or gas recovery well 

                    followed by geologic storage, divided by

                    ``(II) the total metric tons of carbon dioxide 

                which would otherwise be released into the atmosphere 

                each year as industrial emission of greenhouse gas if 

                the eligible components were not installed in the 

                industrial carbon dioxide facility.

This should provide a boost to carbon sequestration development.

TLDR: Bitcoin (or other cryptocurrency) mining is subject to income tax, typically as ordinary income. Your basis in the coin is the price of the coin at the time it was mined. There are no like-kind exchanges for coins, so selling one coin to buy another is a taxable transaction. Any gains over your basis are capital gains, and may be long term or short term depending on the period of time you held the coin for.

Mining

The Wall Street Journal recently reported the IRS is forcing cryptocurrency exchanges to give up names of customers in order to pursue unpaid taxes on mined and arbitraged coins. This reporting is, for many, likely the first they have heard of a tax on cryptocurrency. While there is no cryptocurrency-specific tax, you should consider mining the equivalent of a part-time independent contractor job for tax purposes – your employer is not taking taxes out of your paycheck, and it is your duty to report your earnings. Similarly, the buying and selling of coins is not dissimilar from the buying and selling of stocks. Taxes on ordinary income and capital gains, respectively, will apply. 

In 2014 the IRS issued IRS Notice 2014-21, which clarified that a taxpayer that mines crypto currency must take the value of the virtual currency as of the date of mining as gross income. A mined coin is a taxable event and thus carries with it income tax implications. Mining must be voluntarily reported as, in general, successfully mined coins are not reported to a taxing authority in the same way income via employment is.

Selling cryptocurrency, even to purchase another coin, gives rise to another taxable event. The difference between your basis in the original currency and what you sell it for will determine whether you have a capital gain or a capital loss. Capital gains can be either short term or long term, depending on the period of time the asset (here, the coin) had been held. Capital gains will be taxed at the capital gains rate, which differs from ordinary income, and capital losses can be used to offset capital gains with some limits and restrictions. 

Deductions can be taken, generally, for costs inherent in mining – things like electricity, equipment, and repairs. 

Care must be taken to keep accurate records and report income earned in mining on-time and precisely. This article is not tax advice and is not legal advice. If you reached this page just searching for information and you don’t have a tax issue, I hope it has been helpful. If you believe yourself to owe taxes, don’t rely on information you find on the internet. Consult a tax attorney. If you have any questions feel free to get in contact. 

If you have specific questions regarding the qualified opportunity zones, please don’t hesitate to get in touch. This “checklist” should not be relied upon, and is not being presented as, legal advice. This is a complex area of tax law and you cannot base your decisions on a cursory overview of the topic, such as this one.

Under the Tax Cuts and Jobs Act (Pub. L. No. 115-97 (2017)), additions were made to the Internal Revenue Code (the “Code”) to provide for tax benefits for investors that invest in Qualified Opportunity Zones (QOZs). These benefits include:

·         Deferred recognition of capital gains for Qualified Opportunity Funds (“QOFs”);

·         Reduction in amount of recognized deferred capital gains by an increase in basis; and

·         Exemptions from taxation of appreciation in QOFs if requirements are met.

In the attached we have outlined some of the pertinent aspects of QOZ regulations and requirements in order to more succinctly present a checklist of requirements for the creation of a real-estate only QOF.

For clarity, we have omitted any reference or analysis to forming and capitalizing a QOF with an eligible gain, as this is outside the scope of this paper series. We have also not outlined the process of offering QOF investments for sale, for the same reason. These will be the subject of future writing series.

Download the Checklist for Real Estate Only Qualified Opportunity Zones

On March 13, 2018 Senators Thomas Kean and James Beach introduced in to the New Jersey Senate, NJ S2297, an act to create the New Jersey Blockchain Initiative Task Force. S2297 was referred to the Senate Budget and Appropriations Committee on September 27 of the same year.

The task force would be created to study whether “State, county, and municipal governments can benefit from a transition to a Blockchain-based system for recordkeeping and service delivery.” The bill expounds upon the ways in which blockchain technology can increase efficiency while reducing overhead and issues of interdepartmental compatibility.

The bill focuses on the advantages of using blockchain for “medical records, land records, banking, and property auctions” but makes no specific mention of potential tax implications such as integration with sales tax point-of-sale (POS) systems or general record keeping. Time will tell if there exists the political will to move the project forward at the government level.

It seems as part of the tax overhaul, the Modi government is looking in to taxing bitcoin and other cryptocurrency. Some time ago the Indian government announced the creation of an interdisciplinary committee to prepare a report and recommend policies for cryptocurrency. 

The impact of the GST on cryptocurrency remains to be seen. The main question will be whether it is deemed a currency -- which would mean indirect taxes don't apply -- or essentially assets being used for bartering. 

The attraction of the latter option appears to be the relative simplicity. Rather than integrating and regulating bitcoin, it would merely be taxed under the new goods and services tax schema. Cryptocurrencies would be traded like gold, on registered exchanges monitored for illegal activity. The line that is being walked appears to be between blanket legalization with the preservation of the anonymity of distributed ledger cryptocurrencies and blanket illegalization, an unpopular option. 

The list of countries in which cryptocurrencies are illegal is not a long one: Bangladesh, Kyrgyzstan, Ecuador, Bolivia, and a few others. If India opted to illegalize cryptocurrencies, it would be the largest market to do so. 

As previously discussed, the Modi government of India is overhauling the country's tax code -- replacing taxes levied on businesses by the central government as well as the individual states with one unified GST.

The GST is a massive tax reform, indeed likely the largest since India gained independent in 1947. India is comprised of 29 states and 7 union territories. Previous to the GST, each state and union territory had an independent tax schema that any would-be national startup would have to contend with. So, placing yourself in the shoes of a national Indian startup, you would need to consider how to pay:

• Union Government Sales Tax
• State Government Sales Tax
• Service Tax
• Value Added Tax
• Custom duty & Octroi
• Excise Duty
• Anti Dumping Duty
• Professional Tax
• Municipal Tax
• Entertainment Tax
• Stamp Duty, Transfer Tax
• Education Cess Surcharge
• Gift Tax
• Wealth Tax
• Toll Tax
• Swachh Bharat Cess (Service tax)
• Krishi Kalyan Cess (Service tax)
• Infrastructure Cess
• Entry Tax

Under the GST, there is one consolidated tax for state and national governments, akin to that found in France, which would subsume most of the above. The GST will be payable at the point of consumption (point of sale, essentially) and, as previously mentioned, falls along a schedule with brackets ranging from 5% to 28%. 

The GST will assist startups in that it will permit entrepreneurs transacting with multiple states to calculate one tax rate for the State-GST and the Central-GST. The transaction costs for a startup in expanding from a single state to multiple, at least at the tax level, are thus substantially reduced. Additionally, unifying the tax system will permit India to explore new technologies, such as blockchain. 

"Now, [the Modi government] is instituting the country’s biggest tax overhaul since independence. On Saturday, a nationwide sales tax replaces the current hodgepodge of business taxes that vary from state to state and are seen as an impediment to growth. It is expected to unify in a single market 1.3 billion people spread over 29 states and seven union territories in India’s $2 trillion economy."

NYTimes

The new tax system, the Goods & Services Tax (GST) is intended to simplify business taxes and spur growth, replacing taxes levied on businesses by the central government as well as the individual states. The GST will be divided in to Central Goods & Services Tax, State Goods & Services Tax and Integrated Goods & Services Tax. A constitutional amendment has already been passed by Parliament and approvals have been ascertained by India's 29 states. The current rate schedule includes 5, 12, 18 and 28% and a host of exceptions, subsuming dozens of brackets in to four. 

Ahead of the roll out, the Indian government developed a technology portal, the GST Network, which is intended to allow business owners to register their companies and pay their taxes online. While the system and the portal is not without its detractors, it does appear to have had at least some positive economic effect. Hyundai and Nissan have announced a decrease in automobile prices to pass on savings under the GST -- 5.9% and 3%, respectively. 

Update 2:43PM: There is a video session in which the Revenue Secretary, Ministry of Finance, Government of India answers questions regarding the GST roll out.