The recent rise of Bitcoin and digital assets has created significant new opportunities and challenges for investors. This emerging asset class is transforming both the technology and finance industries. In this session, you will learn about Bitcoin, its progeny, the emerging use cases for digital assets, and how investors are getting involved.

1. October 13, 2021
High Net Worth Webinar Series
Growing Wealth & Preserving Your
Legacy
The Business of Digital Assets
& Blockchain

2. Our Presenters
Partner & High Net Worth
Practice Leader
Patrick Daly
Partner, Forensic, Litigation& Valuation
Services
Mark DiMichael

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B i tco i n & C r yp to Assets
Tech n olo gy
Qu esti o ns
B u si n ess
Tax
Agenda

4. into
Bitcoin & Crypto Assets
• Origins
• Eliminating (or reducing) Third Parties
• Terminology
• How Bitcoin Works
5

5. into
TECHNOLOGY
5
6

6. De-Centralized Model (The Blockchain Model)
Miner #3 (with a
copy of the
Blockchain)
Miner #1 (with a
copy of the
Blockchain)
Third Party Bank /
BrokerageAccount /
Exchange
Depositor #2
Mary
$2,000
Depositor #3
Rosie
$12,000
Private Key Private Key
Depositor #1
Scott
$5,000
Private Key
Miner #2 (with a
copy of the
Blockchain)
Address #1
2.4 BTC
Address #2
85.433 BTC
Address #3
0.659 BTC

7. into
Blockchain Example
8

8. into
Storage
• Wallet with Backup Seed
o Software Wallet
o Hardware Wallet
o Paper Wallet
• Exchanges or Custodian
10

9. into
BUSINESS
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10. • Decentralization (“removes a single point of failure”)
• Store of Value - Scarce (Limited Supply)
• Integration into the Digital Economy
• Instantaneous, secure, low fee money transfers around the world
oPossibility of Micro-transactions
• Globalization
• Privacy
• Investment income / speculation
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Why is Cryptocurrency Worth
Anything at All

11. 13
Representative Companies Accepting
Cryptocurrency or Processing
Cryptocurrency Payments
Overstock.com AT&T Baskin Robbins Wikipedia
Buy Buy Baby Lowe’s Home
Improvement
Cash App Dish Network
Express Famous Footwear Sotheby’s Citrin Cooperman
Microsoft Miami Dolphis NewEgg.com Nordstrom
Office Depot The United Way Paypal Petco
Regal Theatres Robinhood Save the Children Sacramento Kings
Miami Dolphins American Red Cross DallasMavericks SalvationArmy
Apple Pay Twitch TV Hot Topic Bed Bath & Beyond

12. •Distributed databases and blockchain in business and
data storage applications
•Alt-Coins
•Initial Coin Offerings
•Tokenization of Assets
•Smart Contracts
14
Beyond Bitcoin

13. • Investing
oBuy & Hold
oTrading (Day Traders / Algorithmic Trading)
• Mining
• Staking
• Brokerage & Custody Services
• Companies that Use Tokens/Crypto Assets in Business Model
• DeFi
• Non-Fungible Tokens
15
Making Money With Crypto Assets

14. • Investing in Funds
oHedge funds & private equity funds specializing in digital assets
oGrayscale Bitcoin Trust
oBitcoin ETF (None currently in the US)
• Futures Market – settled in dollars (Chicago Mercantile Exchange)
• Companies in Blockchain Industry
oCompanies Holding Crypto Assets on Balance Sheet
oConsulting Companies Specializing in Blockchain
oCompanies Using Blockchain or Tokens in Business Model
oMining equipment manufacturers
16
Making Money Without Actually
Holding Digital Assets

15. into
TAX
15
18

16. into
IRS Enforcement Efforts
• John Doe Summons - IRS Coinbase, Kraken, & Poloniex
• IRS Chainalysis Research
• 10,000 “educational letters” sent out in August 2019 to
cryptocurrencyowners
• “At any time during 2020, did you receive, sell, send,
exchange, or otherwise acquire any financial interestin any
virtual currency?”
• Required Reporting of Transfers Over $10,000
19

17. • Defines Convertible Virtual Currency
• Application of property rules, rather than currency rules
• Discusses
oReceipt of virtual currency for goods and services
oReceipt of virtual currency for mining
oApplicability of capital gains vs. ordinary income treatment on sales
oDiscusses reporting requirements (i.e. 1099, W-2, & 1099-K)
20
IRS Revenue Bulletin 2014-16,
Notice 2014-21

18. IRS Revenue Ruling 2019-24
• Two Concepts that Result in Individuals Receiving Cryptocurrency
o Hard Fork
o Airdrop
• Constructive Receipt
• The IRS revenue ruling incorrectly uses the term “airdrop”
• Released with an FAQ
ohttps://www.irs.gov/individuals/international-taxpayers/frequently-asked-
questions-on-virtual-currency-transactions
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19. into
Accounting
22
• Very common type of transaction
• Buy Bitcoin
• Transfer it to another exchange
• Trade Bitcoin for another digital asset

20. into
Binance Transaction Output
23
Date(UTC) Market Type Price Amount Total Fee Fee Coin
2017-12-20 22:15:34 WABI/BTC BUY 0.00009549 305 0.02912445 0.305 WABI
2017-12-20 22:15:36 WABI/BTC BUY 0.00009549 6677 0.63758673 6.677 WABI
2017-12-20 22:15:56 WABI/BTC BUY 0.00009549 2991 0.28561059 2.991 WABI
2017-12-20 22:17:01 WABI/BTC BUY 0.00009549 606 0.05786694 0.606 WABI
2017-12-20 22:17:16 WABI/BTC BUY 0.00009549 65 0.00620685 0.065 WABI
2017-12-20 22:17:26 WABI/BTC BUY 0.00009549 275 0.02625975 0.275 WABI
2017-12-20 22:17:38 WABI/BTC BUY 0.00009549 720 0.0687528 0.72 WABI
2017-12-20 22:18:12 WABI/BTC BUY 0.00009549 120 0.0114588 0.12 WABI
2017-12-20 22:18:35 WABI/BTC BUY 0.00009549 11 0.00105039 0.011 WABI
2017-12-20 22:18:40 WABI/BTC BUY 0.00009549 31 0.00296019 0.031 WABI
2017-12-20 22:18:42 WABI/BTC BUY 0.00009549 159 0.01518291 0.159 WABI
2017-12-20 22:18:50 WABI/BTC BUY 0.00009549 58 0.00553842 0.058 WABI
2017-12-20 22:19:05 WABI/BTC BUY 0.00009549 325 0.03103425 0.325 WABI
2017-12-20 22:19:47 WABI/BTC BUY 0.00009549 1000 0.09549 1 WABI
2017-12-20 22:24:50 WABI/BTC BUY 0.00009549 1616 0.15431184 1.616 WABI
2017-12-20 22:25:57 WABI/BTC BUY 0.00009549 1168 0.11153232 1.168 WABI
2017-12-21 17:01:17 OST/BTC BUY 0.00001994 1340 0.0267196 1.34 OST
2017-12-21 17:07:34 OST/BTC BUY 0.00001994 43897 0.87530618 43.897 OST
2017-12-22 22:43:47 IOTA/BTC BUY 0.00026801 40 0.0107204 0.04 IOTA
2017-12-22 22:43:47 IOTA/BTC BUY 0.00026801 572 0.15330172 0.572 IOTA
2017-12-22 22:43:49 IOTA/BTC BUY 0.00026801 1365 0.36583365 1.365 IOTA
2017-12-22 22:43:54 IOTA/BTC BUY 0.00026801 209 0.05601409 0.209 IOTA
2017-12-22 22:53:09 IOTA/BTC BUY 0.00026801 351 0.09407151 0.351 IOTA
2018-01-09 19:41:08 APPC/BTC BUY 0.000227 6609 1.500243 6.609 APPC
2018-01-09 19:45:10 APPC/BTC BUY 0.0002248 2185 0.491188 2.185 APPC
2018-01-10 05:44:59 XRP/BTC BUY 0.0001312 7576 0.9939712 7.576 XRP
2018-01-10 08:01:51 XRP/BTC BUY 0.000125 5653 0.706625 5.653 XRP

21. into
Coinbase Pro Transaction Output
24
trade id product side created at size size unit price fee total price/fee/total unit
28971648BTC-USD BUY 2017-12-19T15:54:31.641Z 1.837729BTC 18095.01 83.13429 -33336.9USD
28971649BTC-USD BUY 2017-12-19T15:54:31.641Z 0.358902BTC 18095.01 16.23582 -6510.56USD
28971650BTC-USD BUY 2017-12-19T15:54:31.641Z 0.307555BTC 18095.01 13.91303 -5579.12USD
28971651BTC-USD BUY 2017-12-19T15:54:31.641Z 0.2BTC 18095.01 9.047505 -3628.05USD
28971652BTC-USD BUY 2017-12-19T15:54:31.641Z 0.011BTC 18095.01 0.497613 -199.543USD
28971653BTC-USD BUY 2017-12-19T15:54:31.641Z 0.041117BTC 18095.01 1.860023 -745.869USD
29375324BTC-USD BUY 2017-12-21T14:39:36.536Z 0.188578BTC 16455 0 -3103.06USD
29375327BTC-USD BUY 2017-12-21T14:39:39.644Z 0.811422BTC 16455 0 -13351.9USD
29930070BTC-USD BUY 2017-12-22T21:51:03.518Z 0.726257BTC 14600 0 -10603.4USD
29930074BTC-USD BUY 2017-12-22T21:51:05.215Z 1.273743BTC 14600 0 -18596.6USD
32221506BTC-USD BUY 2018-01-05T23:06:54.220Z 0.5902BTC 16945 0 -10000.9USD
32539104BTC-USD BUY 2018-01-08T09:57:17.060Z 0.5BTC 15300 0 -7650USD
32569083BTC-USD BUY 2018-01-08T14:50:19.473Z 2BTC 14400 0 -28800USD
32644989BTC-USD BUY 2018-01-08T23:49:09.806Z 7.05E-05BTC 14998.46 0.002643 -1.05988USD
32706860BTC-USD BUY 2018-01-09T13:36:30.598Z 0.2449BTC 14500 0 -3551.05USD
23776499ETH-USD BUY 2017-12-31T00:13:39.869Z 7.5531ETH 705 0 -5324.94USD

22. into
KuCoin Deposit & Withdrawal
Output
25
Deposit ID Time Coins Amount Address BlockChain Record Status Type
5abb1ee4ce5a463eeed77d 3/27/2018 6:37BTC 0.000198 In-station transfer Succeeded Deposit
5a481193ba3a4621f4dd 12/30/2017 17:22BTC 0.605749 view transaction Succeeded Deposit
5b2d60a222ef2c7dad 6/22/2018 16:48TEL 7679293 view transaction Succeeded Deposit
5a60f82222e1e964fa4a0 1/18/2018 14:40TEL 7679793 view transaction Succeeded Deposit
1/8/2018 13:46BTC 0.60524914fRfhSVc26GYftFGpnjJ4nzPCXBweM8Hz view transaction Succeeded Withdrawal
6/22/2018 16:56ETH 16.870140xdd6236d8553dec99d42aad2bb2d34bba165bfe1a view transaction Succeeded Withdrawal
2/7/2018 14:25TEL 76792930x263BddA85894b0693f8BbC141D0d870d19b45e2b view transaction Succeeded Withdrawal

23. into
Tricks for Saving on Taxes
•Loss harvesting
•Wash Sale Rules
•Donations of Appreciated Property
26

24. Questions?
28

25. Thank You
For Participating !
Thank you.
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Advisors LLC serve clients’ business needs. The two firms operate as separate legal entities in an alternative practice structure. Citrin
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