Create a plan for the client to transfer property

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Reference no: EM13981166

Question: "Foreign Tax Currency and Transfer of Property to Foreign Corporations" Please respond to the following:

Go to the IRS Website, located at https://www.irs.gov, to search and read Notice 2014-21 (IRS Virtual Currency Guidance).

Based on your review of Notice 2014-21, identify two (2) tax consequences that may result from dealing in convertible virtual currency then provide one (1) scenario to support the potential tax consequences.

Imagine you are a CPA representing a client preparing for the formation of a foreign corporation. Create a plan for the client to transfer property into the foreign corporation that will generate the least tax consequences. Explain the main reasons why you believe your plan would be effective.

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The two tax consequences that may result from dealing in convertible virtual currency are as follows: 1. As per the provisions of internal revenue service, the convertible virtual currency is treated as property for the tax purposes in United States and thus transacting in virtual currency will lead to tax liability. 2. The tax payer will lead to taxable gain if the fair market value of the property received in exchange is greater than the adjusted basis of the convertible virtual currency.

Reference no: EM13981166

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