IRS Wants Piece of the Bitcoin Action

The IRS has ruled that bitcoin and other cryptocurrencies are considered property, not currency, for tax purposes.

That means that consumers should be reporting capital gains if they used bitcoin to make an investment and then cashed out, CNBC reported. Considering the value of the bitcoin has surged this year, it’s not an unlikely scenario.

However, don’t look for a Form 1099 from whatever exchange you traded on. The responsibility to pay taxes on gains lies with the taxpayers.

“If you make a transaction, the onus will be on you to report it,” Samuel Boyd, senior vice president of Capital Asset Management Group, told CNBC. “Those transactions generate either short-term capital gains or losses or long-term capital gains or losses.”

A U.S. District Court in California in November ordered Coinbase, a popular platform for buying and selling cryptocurrencies, to turn over identifying information on 14,000 accounts. The court case stemmed from an IRS finding that for each year from 2013 to 2015, only about 800 taxpayers claimed bitcoin gains. During that time, the cryptocurrency rose dramatically from about $13 to more than $450. One bitcoin is now worth more than $11,000.

The IRS originally asked for information on more than a million accounts. Then the agency narrowed its request, asking only for accounts that conducted bitcoin transactions – either exchanging bitcoin for dollars, or sending or receiving coins from another bitcoin user – worth $20,000 or more.

If you held it for one year or less, it is a considered a short-term gain and is taxed as ordinary income. Depending on your tax bracket for 2017, that could range from a tax rate of 10% to 39.6%. After owning it for more than one year, it is taxed as a long-term gain. Taxable rates on those gains range from 0% to 20%.

“I’ve told clients who own it that it’s up to them to track their cost basis, their holding period and their sale price,” Boyd said. “It might seem innocuous and veiled and like no one will follow up, but records of those transactions are available.”

Fortune reported, “The IRS dispute with Coinbase is likely to be just the opening salvo in a prolonged effort by the federal government to ensure digital currency speculators pay their taxes.”

Survey Finds Only 11% of Organizations Are Ready for Digital Disruption

According to an AFP MindShift survey, a poll of 279 finance and treasury professionals found that just 11% believe their organization is “fully prepared” or “very prepared” for these new technologies like artificial intelligence, blockchain and robotic process automation.

“The benefits of new technology for finance and treasury are clear: increased productivity, reduced costs and better decision-making,” says Jim Kaitz, president and CEO of the Association for Financial Professionals. “However, the challenges are just as clear: lack of control over technology, cybersecurity, company-wide consistency, maintaining employee skills and the potential loss of jobs.”

In addition to the on-site survey, AFP MindShift released a whitepaper, “Emerging Technologies and the Finance Function: Prepare for Disruption.”

“When finance and treasury roles consider applying emerging technologies, such as robotics process automation and AI, to their processes, there are a number of attractive capabilities that can potentially transform the way they operate and enable their business to be more competitive,” says Leslie Chacko, director, Marsh & McLennan Companies Global Risk Center. “However, there are serious challenges and considerations in governance, talent strategy, cyber risk, and more that have to be very carefully considered. That said, ignoring these technologies isn’t an option.”

Deloitte Survey: Cognitive Adoption Resulting in Economic Benefits

The report, “Bullish on the Business Value of Cognitive: 2017 Deloitte State of Cognitive Survey,” released by Deloitte shows that early adopters of artificial intelligence and cognitive technologies are reporting strong opportunities for economic gains and job creation.

“There is a concern that ‘the rise of the machines’ will replace human workers, but we should look at how people and machines can work in collaboration as co-bots,” says Deloitte CEO Cathy Engelbert. “The ability to leverage new technologies to retool our workforce will ultimately lead to new opportunities to build high value skills for our workers.”

Contrary to public sentiment, 69% of respondents expect minimal to no job loss within the next three years.

“Organizations today that want to create a cognitive advantage should reimagine when, why and how humans and machines work together to achieve better outcomes,” says Ryan Renner, principal, Deloitte Consulting, and Deloitte’s cognitive advantage leader. “Cognitive technologies are disrupting how organizations conduct tasks, make decisions and complete interactions internally; and with their customers. The true value is created by knowing how to apply the technologies most effectively within the context of your business, marketplace, corporate culture and industry.”

Eighty-three percent of respondents report moderate to substantial economic benefits from AI and cognitive technologies. According to the report, organizations that claimed the greatest economic benefits feel that cognitive should be used for transformational change versus incremental improvements.

More than 1 in 3 (37%) companies have invested $5 million or more in AI and cognitive technologies.

  • 73% are exploring mature cognitive technologies such as robotic process automation
  • 70% explore statistical machine learning
  • 49% employ deep learning neural networks

“Cognitive technologies are still maturing, but our study shows that early adopters are experiencing benefits, especially those that have jumped in with both feet,” says Jeff Loucks, executive director Deloitte services, Deloitte center for technology, media and telecommunications. “The more experienced companies are, the more likely they are to see gains. That should provide an incentive for others to get started.”

View the full survey report here.

Friedman Launches New Cybersecurity Service, CyZen

New York-based Friedman LLP (FY16 net revenue of $94 million) has launched a new service, CyZen. This will consist of a five-person team of cybersecurity advisors that provides clients cybersecurity support against the growing risk of cyber threats.

The CyZen team will safeguard individuals and companies in both the public and private sectors spanning a broad range of industries. CyZen offers clients cutting-edge cybersecurity through a customizable suite of services, including assessment, testing, remediation and monitoring.

Jacob Lehmann, managing director of CyZen, has more than 10 years of experience spearheading proactive, innovative and custom-tailored solutions that help safeguard clients from cybersecurity risks. His engagements span small and medium businesses and high net-worth individuals to big enterprise-level engagements and start-ups across broad spectrum of industries including, technology, banking, finance and real estate.

William Mendez, director of Friedman CyZen, has more than 10 years of experience strategizing and executing innovative cybersecurity solutions for entities ranging from small and medium-sized businesses to large corporations in the finance, real estate, nonprofit, education and energy sectors.

Sean Johnstone is a senior specialist who focuses on penetration tests and vulnerability assessments in the cybersecurity space. He has led cybersecurity awareness training for northeast clients.

William Keppler is a senior specialist with more than five years of experience in the cybersecurity space. He has conducted ethical hacking, software security, web application security, programming and vulnerability research.

Eric Freeman is a senior specialist focusing on building tailored solutions to help defend endpoints and networks from advanced threats.

P&N Launches Cybersecurity Solution for Businesses

Baton Rouge, La.-based Postlethwaite & Netterville (FY17 net revenue of $58.3 million) announced the release of CYBERVEIL security solution, a full suite of cybersecurity and forensic services. CYBERVEIL helps clients identify, protect, monitor and respond to cyber threats.

CYBERVEIL provides clients with a full-scope, fully customizable approach to 24/7 cyber monitoring and protection. It is ideal for organizations that have suffered a data breach, companies lacking IT staff with specific cybersecurity expertise, or those concerned their IT security programs are not as sophisticated as the ever-evolving cyber threats.

“Cybersecurity is one of the greatest risks to our clients, and with more than fifteen years of focusing on information security and data protection, this solution evolved based on our clients’ needs and regulatory environments. We believe it’s a clearer path for clients needing specific expertise in cybersecurity and risk management,” says Michael Richmond, director of technology services.v

Cybersecurity Tips from ‘Shark Tank’

The Association of International Certified Professional Accountants held a webcast with Robert Herjavec, a leading star of ABC’s ‘Shark Tank’ and founder and CEO of the Herjavec Group, a global information security company.

In the recorded webcast, found here, Herjavec gave some tips for cybersecurity for all businesses.

Focus on detection and response. “If you look at some of the recent, large-scale breaches, the blame from consumers and regulators isn’t so much on the fact that you got breached,” Herjavec says. “The blame is, did you have the right systems and controls in place to mitigate that risk and that loss.”

Guard against malware and phishing attacks. It’s common for hackers to impersonate banks in an email and ask for account numbers and personal identification numbers (PINs). “A bank or financial institution will never ask you for your PIN … via email,” Herjavec says. “But if you look at the modern phishing attacks, they look like your bank statements.”

The cloud can provide some protection. Herjavec said the cloud can provide some important security infrastructure. “It doesn’t absolve you of the risk of that data,” says Herjavec. When using the cloud, small businesses still need to understand their own data issues and how to safely connect with their suppliers. Asking cloud providers where and how data will be stored, whether data will be encrypted, whether data you delete will be removed entirely from the cloud, and what the provider’s security procedures entail can lead to a more secure scenario in the cloud.

Protect the core functions. At its core, every business provides some value, whether it’s dry cleaning, whether it’s dog grooming, that core value has to continue to function no matter what the risk is.

View the full webcast here.

Baker Tilly Adds Ross to National Cybersecurity Specialization

David Ross

David Ross

Chicago-based Baker Tilly Virchow Krause (FY17 net revenue of $546.6 million) welcomed David Ross to its cybersecurity and information technology risk services practice. Ross joins the firm’s Washington, D.C., office as a principal. He has more than 25 years of experience serving clients in the pharmaceutical, health care, scientific research, energy and information technology industries.

“David’s innovation and thought leadership will drive creative solutions with positive results for our clients. He enhances our ability to help clients safeguard information so they can remain focused on mission-critical objectives,” says Raina Rose Tagle, national practice leader for risk, internal audit and cybersecurity.

Ross specializes in cybersecurity strategy, innovation strategy and execution, business transformation and driving entrepreneurial initiatives, including successful new business creation, new market penetration and forging new business models across a variety of industry verticals

“Baker Tilly’s focus on specialization is what sets the firm apart,” says Ross. “The firm’s continued investment in critical client services like cybersecurity and IT risk uniquely position us to provide superior, tailored solutions to our clients.”

Sikich Partners with Solomon Cloud Solutions

Naperville, Ill.-based Sikich LLP (FY16 net revenue of $146.5 million) announced that it will partner with Solomon Cloud Solutions to provide consulting services and support to its Dynamics SL customers. Solomon Cloud Solutions has more than 35 years of experience with enterprise resource planning solutions.

“Our customers will benefit from Solomon Cloud Solutions’ mature and in-depth knowledge of Microsoft Dynamics SL,” says Mike Suglich, partner in Sikich’s technology practice. “At the same time, Sikich will continue to help customers identify and implement the best long-term ERP solutions for their businesses, including the latest Microsoft Dynamics 365 products.”

Sikich’s technology practice offers leading technology solutions in partnership with both Microsoft and Oracle NetSuite. A Microsoft Cloud service provider, Sikich has expertise in technology implementations and provides customized support across industries, including manufacturing and distribution, energy, and professional services.

Solomon Cloud Solutions is a software engineering company specializing in software development and consulting. Solomon Software was developed to provide advanced accounting functionality for small and medium-sized businesses and project-driven organizations.

AICPA and Wall Street Blockchain Alliance Announce Collaboration

The AICPA and Wall Street Blockchain Alliance (WSBA), a nonprofit trade association promoting the comprehensive adoption of blockchain technology across global markets, announced plans to work together to define the impact of blockchain technology for the accounting profession.

As part of this collaboration, the AICPA will administer the WSBA’s working group on tax and accounting, a focal point for advocacy and education on blockchain adoption within the profession. Other existing WSBA working groups include research and innovation, legal, and technology and product. The working group model is designed to provide a forum for experts to share information, guide advocacy and technical efforts and create broader educational opportunities to address issues arising from the adoption of blockchain, distributed ledgers and smart contract technologies.

“The accounting profession is built on confirmation and verification, and that’s what blockchain is all about,” says AICPA president and CEO Barry Melancon. “This technology can have a profound impact on accounting and finance going forward, and it’s important we make sure that its adoption proceeds in a way that’s in the best interest of the public and our financial markets.”

“Blockchain is one of several innovations that are reshaping the accounting profession,” says Erik Asgeirsson, president and CEO of CPA.com. “Our role with the WSBA working group is to guide and speed the use of blockchain technology as it applies to the core areas of an accounting practice.”

KPMG Launches Ignite, Portfolio of AI Capabilities

New York-based KPMG (FY16 gross revenue of $8.6 billion) has launched Ignite, a portfolio of artificial intelligence capabilities that are designed to enhance and automate the decisions and processes their clients use to go digital.

“Artificial intelligence, combined with advanced data and analytics and robotic process automation are enabling a new generation of intelligent automation that is changing the nature of work and quality of services,” says Cliff Justice, principal and leader of intelligent automation.

KPMG Ignite features:

  • KPMG-built accelerators – patterns and tools that enable rapid AI solution development and delivery. These accelerators can reduce implementation time by integrating with existing IT infrastructure without the need for developing new methodologies and templates.
  • A set of frameworks and methods that describe and guide how KPMG professionals approach client-specific AI solutions and make them repeatable.
  • An intelligent automation lab.
  • Ongoing testing, prototype development and innovation on emerging AI tools and approaches.

“The promise of AI requires more than just technology. Its power must be grounded on a foundation of trusted analytics, access to unique and reliable data, and deep-rooted domain knowledge in order to drive new insights and strategies,” says Brad Fisher, U.S. leader of data and analytics. “KPMG Ignite fills a critical void in the marketplace for businesses that aim to meet the competitive challenges of the future, particularly those who wish to expand and serve customers more efficiently.”

Visit KPMG Ignite for more information.