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The Treasury Department and IRS announced on March 21, 2020 that the federal income tax filing due date has been extended by Presidential signature of the Families First Coronavirus Response Act (H.R. 6201).

The due date of April 15, 2020 has been postponed to July 15, 2020.

The IRS has now made official the March 20 announcement by the Treasury Secretary, that postpones until July 15, 2020, the filing date for 2019 federal income tax returns and 2020 federal income tax estimates that would otherwise be due on April 15, 2020.

Any person with a Federal income tax payment or a Federal income tax return due April 15, 2020 is an “Affected Taxpayer.” The term “person” includes an individual, a trust, estate, partnership, association, company or corporation, as provided in  Code Sec. 7701(a)(1).

For an Affected Taxpayer, the due date for filing Federal income tax returns and making Federal income tax payments due April 15, 2020, is automatically postponed to July 15, 2020. Affected Taxpayers do not have to file Forms 4868 or 7004 to obtain this relief.

The relief provided is available solely with respect to Federal income tax payments (including payments of tax on self-employment income) and Federal income tax returns due on April 15, 2020, in respect of an Affected Taxpayer’s 2019 tax year, and Federal estimated income tax payments (including payments of tax on self-employment income) due on April 15, 2020, for an Affected Taxpayer’s 2020 tax year.

No extension is provided in the Notice for the payment or deposit of any other type of Federal tax or for the filing of any Federal information return. As a result of the postponement of the due date for filing Federal income tax returns and making Federal income tax payments from April 15, 2020, to July 15, 2020, the period beginning on April 15, 2020, and ending on July 15, 2020, will be disregarded in the calculation of any interest, penalty, or addition to tax for failure to file the Federal income tax returns or to pay the Federal income taxes postponed by this notice. Interest, penalties, and additions to tax with respect to such postponed Federal income tax filings and payments will begin to accrue on July 16, 2020.

No limit on amount of payment that can be postponed.  Notice 2020-17 put limits on the amount of tax payments that could be postponed from April 15 until July 15.

 

References.  For extension of tax-related deadlines for taxpayers affected by disasters, see FTC 2d/FIN ¶ S-8502; United States Tax Reporter ¶ 75,08A4.  Thomson Reuters

The Internal Revenue Service (IRS) has issued new guidance for taxpayers engaging in transactions involving cryptocurrency.  The recent IRS Revenue Ruling 2019-24 focuses on the tax treatment of a cryptocurrency hard fork.  In addition, the FAQs on Virtual Currency Transactions address several topics and how to determine the fair market value.

The guidance in the recent Revenue Ruling addresses two questions:

• Does a taxpayer have gross income under §61 of the Internal Revenue Code as a result of a hard fork of a cryptocurrency the taxpayer owns if the taxpayer does not receive units of a new cryptocurrency?
• Does a taxpayer have gross income under §61 as a result of an airdrop of a new cryptocurrency following a hard fork if the taxpayer receives units of new cryptocurrency?

A hard fork occurs when cryptocurrency on a distributed ledger undergoes a shift.  A hard fork may result in the creation of a new cryptocurrency.  Following a hard fork, transactions involving the new cryptocurrency are recorded on the new distributed ledger, and transactions involving the former cryptocurrency continue to be recorded in the prior distributed ledger.

The Revenue Ruling makes it clear that a taxpayer does not have gross income as a result of a hard fork if the taxpayer does not receive units of a new cryptocurrency. The Revenue Ruling also makes clear that a taxpayer does have gross income – characterized as ordinary income – if the taxpayer receives units of new cryptocurrency as the result of an airdrop following a hard fork.  In contrast, when a soft fork occurs (when a distributed ledger undergoes a shift that does not result in the creation of a new cryptocurrency), the soft fork will not result in income.

In the case of virtual currency, if the taxpayer doesn’t have control over the asset, meaning the currency is not immediately credited to the taxpayer’s account at the cryptocurrency exchange, a tax issue may arise. If the taxpayer later acquires the ability to transfer, sell, exchange, or otherwise dispose of the cryptocurrency, the taxpayer is treated as receiving the cryptocurrency at that time.

Finally, the FAQs make clear that taxpayers are required to maintain excellent records to establish positions taken on tax returns. This is always true, no matter whether you’re dealing with cryptocurrency, cash, or diamonds. You should maintain records documenting receipts, sales, exchanges, or other dispositions of virtual currency and the fair market value of the virtual currency.

The need for record-keeping is particularly acute since the IRS is targeting non-compliance through a variety of efforts, ranging from taxpayer education to audits to criminal investigations.  In July of this year, the IRS began mailing letters to taxpayers who may have failed to report or misreported transactions involving virtual currency. Those taxpayers may be liable for tax, penalties, and interest. In some cases, taxpayers could be subject to criminal prosecution.

Spicer Jeffries’ tax department is available if you have questions regarding cryptocurrency and related tax regulations.

Investment performance tables and charts are an excellent way to track and showcase the success of your managed accounts and/or fund. Having a performance examination done on your monthly, annual and cumulative returns and comparing them to your benchmark provides valuable assurance to investors and an invaluable marketing tool for raising capital. There are several different levels of attestation service, each offering different advantages based on each specific client’s needs. Which level of service would serve your specific needs best? Please read on to learn how Spicer Jeffries LLP can help you.

“Agreed Upon Procedures” (AUP) Engagements

When all you need is internal assurance that an independent accountant has looked over your performance table, recalculated the returns, and agreed the data to the source documents, an AUP is the quickest and most cost effective way to get this done. The final report outlines the specific procedures performed and the results obtained.

Performance Examinations

Done in accordance with AICPA attestation standards, this is essentially an audit of your returns and culminates in a report in which we give a formal opinion on whether the performance table and accompanying disclosures are fairly stated. The exam includes confirming the source account statements with the brokers and involves a higher level of procedures over the source data, methods, and returns than an AUP typically covers. The exam provides assurance that industry standard criteria and accounting methods are used in calculating and presenting the returns, which explained in the footnotes. Performance examinations are invaluable for marketing purposes, especially for launching and raising additional capital for funds.

GIPS Verifications and Examinations

Global Investment Performance Standards, or GIPS® is a set of standards developed by the CFA Institute. GIPS is the widely recognized as the gold standard when it comes to investment performance reporting. In order to claim compliance with GIPS, the entire firm must comply with its structural, reporting, and procedural requirements on a firm-wide basis currently and for a minimum number of previous years. Specific GIPS-compliant presentations of returns must follow standards governing how investment returns are calculated and reported which are more detailed compared to typical performance reporting. GIPS standards are the most robust set of investment performance standards in the marketplace and compliance with them demonstrates a sustained level of commitment over the long term.

GIPS engagements are conducted on two different levels. The first level, called a “verification” is performed for the firm as a whole. The second level, called an “examination” is performed on a specific presentation of a composite. Typically, both levels are performed, but the examination is optional and can only be performed either after or concurrently with a verification. GIPS requirements for verifications and examinations are structurally similar to AICPA audit standards. Given that we are certified public accountants specialized in serving the securities industry, we offer a unique advantage in performing this service.

Don’t hesitate to contact us immediately to schedule a one-on-one call with our service professionals to discuss your needs and specific situation. It is our pleasure to answer your questions and bring the confidence and trust that you and your investors deserve.

Spicer Jeffries’ tax department prepares tax documents for individuals and entities across the United States, in the Cayman Islands, and around the globe.  Our client base spans numerous business segments and Spicer Jeffries understands that our client’s businesses and private financial decisions have a direct correlation to their tax liability.  Our in-depth understanding of your business allows us to offer ideas and implement the necessary planning that may result in significant tax savings.

Spicer Jeffries’ partners have been involved with newly launched hedge and commodity funds, both registered and unregistered, as well as private equity funds and mutual funds, since the mid- 1980s. With years of previous accounting work experiences between them, and a bold decision to focus efforts on the securities industry, Spicer’s founding partners learned early on what it takes to launch a fund successfully and the many different challenges that a new fund manager may encounter. Now, after nearly four decades of working in the securities industry and servicing hundreds of hedge and commodity funds, Spicer Jeffries LLP has developed its highly focused “Emerging Manager Solution” program for new fund managers. We believe this program offers individuals a true advantage in the initial stages of the fund and its development and will only boost a new fund’s chances of success.

After almost ten years of servicing hedge and commodity fund clients, Spicer’s founding partners were able to recognize a recurring stumbling block to success for new fund managers. Having focused their efforts on working with hedge and commodity fund clients, particularly new emerging funds, it became clear that the key service providers chosen have a great effect to
the overall success of the new manager. This seems particularly true for service providers covering the areas of legal, administrative, prime brokerage and audit and tax services. Spicer Jeffries believes that these service providers must have significant experience with the type of fund being launched in order that they not only assist in the near term but also the long term. As part of the “Emerging Manager Solution,” Spicer works with all of our new fund managers in selecting the right service providers that properly fit the new manager’s unique situation.

Spicer Jeffries also realized that in the specific area of audit and tax services, those new fund managers that exhibited cost control from the initial days of the fund had a much greater ability to succeed than others that did not. As a result, Spicer’s partners decided it necessary to develop a refined program focused directly at new fund managers. The “Emerging Manager Solution”
was created by taking our long history of working with funds and developing processes, procedures and technology to deliver a cost efficient solution for the emerging manager while still bringing significant expertise and great service to our fund clients.

The primary areas of focus in the “Emerging Manager Solution” cover the following: a fund’s formation and organization, its fee structure, how to choose the proper service providers, addressing regulatory issues, fund compliance, and marketing the fund to new investors.