Bitcoin and the Definition of Foreign Currency

The IRS recently dealt a blow to Bitcoin enthusiasts by ruling that Bitcoin and other similar currencies should be treated as property-and not foreign currency-for income tax purposes. As a result, those who use bitcoins to purchase goods or services must report gain or loss on each transaction if the bitcoins have changed value between the time they were acquired and spent. Treating Bitcoin as a foreign currency would have permitted individuals to take advantage of the $200 personal-use exemption and required taxpayers to adopt a formulaic system for tracking the basis of commingled bitcoins. The IRS \u27s decision seems correct as a matter of positive law, but laws can always be changed. In this Article I consider whether Bitcoin should be treated as a foreign currency for income tax purposes. I conclude that tax authorities should adopt a foreign currency definition that excludes bitcoin and similar currencies because (1) a broad definition could create significant administrative and line-drawing problem , and (2) the government has little interest in promoting alternate currencies. Nor should authorities extend the personal-use exemption to virtual currencies. In contrast, authorities should extend the basis rules applicable to foreign currency to virtual currencies to prevent taxpayers from using the basis rules to improperly reduce their tax obligations

Common Sense Recommendations for the Application of Tax Law to Digital Assets

In response to the Joint Committee on Taxation’s July 2023 request for comments on application of various Internal Revenue Code sections on digital assets, we propose a consistent set of rules to apply current law to digital assets. We highlight that the underlying economics and characteristics of transactions should be the primary concern for the application of rules and the valuation of digital assets. We believe any digital asset rules should (1) treat classes of digital assets with unique characteristics differently based on their economics, (2) minimize incentives for users to engage in tax-motivated structuring of transactions, and (3) allow the Internal Revenue Service authority to react to and regulate new classes of digital assets as they are created. We do not believe that the unique features of digital assets are a challenge to applying current law or warrant special tax preferred treatment

Bitcoin and the Definition of Foreign Currency

The IRS recently dealt a blow to Bitcoin enthusiasts by ruling that Bitcoin and other similar currencies should be treated as property-and not foreign currency-for income tax purposes. As a result, those who use bitcoins to purchase goods or services must report gain or loss on each transaction if the bitcoins have changed value between the time they were acquired and spent. Treating Bitcoin as a foreign currency would have permitted individuals to take advantage of the $200 personal-use exemption and required taxpayers to adopt a formulaic system for tracking the basis of commingled bitcoins. The IRS \u27s decision seems correct as a matter of positive law, but laws can always be changed. In this Article I consider whether Bitcoin should be treated as a foreign currency for income tax purposes. I conclude that tax authorities should adopt a foreign currency definition that excludes bitcoin and similar currencies because (1) a broad definition could create significant administrative and line-drawing problem , and (2) the government has little interest in promoting alternate currencies. Nor should authorities extend the personal-use exemption to virtual currencies. In contrast, authorities should extend the basis rules applicable to foreign currency to virtual currencies to prevent taxpayers from using the basis rules to improperly reduce their tax obligations

Charity with Chinese Characteristics

Over the past 30 years, scholars and activists have called on the Chinese government to ease the registration and oversight rules for non-governmental organizations (NGOs) and to increase funding for such organizations by, among other things, broadening the charitable deduction. While China has made significant progress in this regard, the government continues to throw up roadblocks for NGOs, suggesting that it has not fully embraced this path.This Article considers the extent to which the justifications for a broad charitable deduction adduced in the West make sense in China. The goal is to develop a normative basis for the deduction consistent with Chinese values and interests that Chinese authorities would find compelling. This Article also considers the extent to which China's political and social culture may affect efforts to foster an autonomous civil society through a broad charitable deduction. I conclude that even if China were to adopt Western-style laws governing NGOs and provide for a broad charitable deduction, China's culture would shape both how government officials implement the laws and how the Chinese people respond to them, resulting in a distinct system of charity with Chinese characteristics