As financial technology ("FinTech") and cannabis businesses develop, these emerging industries create a host of tax issues for investors, the businesses and vendors. There is little guidance from the IRS and even less guidance from state and local tax authorities creating potential tax risks and/ or opportunities that are critical for companies, investors and vendors to be aware and have sufficient information to effectively manage. However, most businesses lack the internal resources to make informed decisions, and many firms lack the experience to provide adequate advisory services on emerging business tax matters.
SimekScott’s state and local tax (SALT) Emerging Business Tax consulting services provides businesses, investors and vendors with a comprehensive approach to understanding their operations, the landscape of state and local tax issues related to Cryptocurrency, cannabis and blockchain technology and the potential state and local tax exposures or opportunities while utilizing a reasonable and holistic approach through:
Business Review: Working with our clients to fully understand their business, US operations and objectives.
Determination: Assessing and reviewing corporate structuring, operational flow, operational stage, and asset value.
Emerging Business Tax Risk Assessment: Assessing and reporting areas where cryptocurrency, cannabis or blockchain operations are at risk for state and local tax assessments.
Compliance: Provide solutions to state and local compliance requirements in regards to the emerging business operations.
Tax planning: Determining the best prospective practices to monitor and manage tax obligations in an efficient and cost effective manner.
| CRYPTOCURRENCY
Cryptocurrency is a digital currency formed on the basis of cryptography, or by definition, “the art of solving or writing codes" and is the use of tokens based on the distributed ledger technology. They are seen as a tool or resource on a blockchain network and anything dealing with buying, selling, investing, trading, microtipping, or other monetary aspects deals with a blockchain token.
State taxation of Cannabis is complex from determining whether the state permits both recreational or medical use and reviewing the numerous sales tax implications to current IRS guidance and court rulings stating that selling or growing cannabis is considered trafficking and expenses related to such activities are disallowed for federal purposes all the while creating confusing and complicated state and local tax issues. Contact SimekScott to discuss.
Download our Cryptocurrency tax services.
| CANNABIS
The number one tax issue in the cannabis business is the impact of IRC 280E. Prior to the enactment of the new tax law, GOP political advocates called for the repeal of IRC 280E, much to the delight of the cannabis industry. However, under the Tax Cuts and Jobs Act (“The Act”) otherwise known as PL-115-97, enacted on December 22, 2017, However, IRC 280E was not repealed.
State taxation of Cannabis is complex from determining whether the state permits both recreational or medical use and reviewing the numerous sales tax implications to current IRS guidance and court rulings stating that selling or growing cannabis is considered trafficking and expenses related to such activities are disallowed for federal purposes all the while creating confusing and complicated state and local tax issues. Contact SimekScott to discuss.
Download our Cannabis summary.
| BLOCKCHAIN
A blockchain is a distributed ledger technology that forms a “chain of blocks.” Each block includes information and data that are bundled together and verified. These blocks are then validated and strung onto the chain of transactions and information in previous blocks. These blocks of transactions are permanently recorded in the distributed ledger that is the blockchain.
State taxation of Blockchain transactions is complex from determining whether the state permits both recreational or medical use and reviewing the numerous sales tax implications to current IRS guidance and court rulings stating that selling or growing cannabis is considered trafficking and expenses related to such activities are disallowed for federal purposes all the while creating confusing and complicated state and local tax issues. Contact SimekScott to discuss.
Download our Blockchain tax summary.