Potential Tax Implications of Smart Contracts Discussed in New Article by Analysis Group Consultants
October 25, 2018
As new transaction payment methods enabled by digital technology – such as smart contracts – become more pervasive, they raise complex taxation issues. A new Lawyer Monthly article by Analysis Group Principal Jimmy Royer and Managing Principal Alan G. White discusses some of the multifaceted tax concerns that may arise from a smart contract's underlying transactions, in which cryptocurrency is exchanged for goods or services.
In “Smart Contracts & Their Potential Tax Implications,” the authors share some economic considerations that tax authorities may need to contemplate. These include the possibility for taxation on the changes in the value of the underlying cryptocurrencies; the income generated by fees associated with the transaction; and the sales of the goods or services; as well as identifying what tax jurisdiction may be due a certain tax.