Steak 'n Shake Now Accepts Bitcoin: Tax Implications Explained
Caution advises when purchasing burgers with Bitcoin due to potential tax implications, as per experts' warning.
Steak 'n Shake, the fast-casual burger chain, has recently started accepting Bitcoin as a form of payment. However, using cryptocurrencies to purchase goods and services has tax implications for U.S. taxpayers.
Starting today, customers can buy burgers, fries, and other menu items at Steak 'n Shake locations using Bitcoin. But, it's crucial to keep receipts, as even small crypto-denominated transactions like a $14 combo meal are taxable events.
Tax experts consulted by Decrypt explain that the Internal Revenue Service (IRS) requires U.S. taxpayers to report their crypto-denominated purchases, no matter how minuscule, come April. This means that Bitcoin users planning to indulge in Steak 'n Shake's offerings, such as cheeseburgers or milkshakes, should keep track of their purchases and plan to pay taxes on each one.
Bitcoin and other cryptocurrencies are considered property by the IRS, not currency. According to Lawrence Zltakin, Vice President of Tax at Coinbase, this means that any use of Bitcoin for any purpose is treated as a taxable transaction. This includes something as small as a $3 Sprite bought with Bitcoin.
When taxpayers buy and sell Bitcoin (or any other cryptocurrency), they must calculate the difference between the purchase price and the current market value. This difference is the capital gain or loss, and taxpayers must pay a percentage of this amount to the IRS.
There are several methods for calculating taxes on crypto-related transactions, including purchases made with digital assets. The standard method, known as "first in, first out," treats the first Bitcoin (or other tokens) owned as the first ones sold for tax purposes.
The IRS generally does not audit tax payers for small discrepancies, such as omissions of small taxable events like a $15 fast-food purchase denominated in Bitcoin. However, the federal agency may tighten the belt on all cryptocurrency-related matters in the future.
In the meantime, taxpayers should keep records of all Bitcoin transactions and seek assistance from certified accounts specializing in cryptocurrency taxes. Several software options are available to help track digital assets transactions and calculate taxes owed for the year.
Edited by James Rubin
- Steak 'n Shake now accepts Ethereum, joining Bitcoin, as a form of digital asset payment for their offerings.
- The IRS considers cryptocurrencies like Bitcoin and Ethereum as property, not currency, making any use of them a taxable event, even for a small purchase like a token Sprite.
- Taxpayers must report their crypto-denominated purchases, including the use of Ethereum for buying Steak 'n Shake's cheeseburgers or milkshakes, come April.
- When taxpayers buy, sell, or use Ethereum (or any other cryptocurrency), they must calculate the capital gain or loss based on the difference between the purchase price and the current market value.
- The "first in, first out" method, treated as the first Bitcoin (or other tokens) owned as the first ones sold for tax purposes, is commonly used for calculating taxes on crypto-related transactions, including purchases made with digital assets like Ethereum.
- As the use of cryptocurrencies in personal-finance and technology continues to grow, it's essential for taxpayers to keep records of all Ethereum transactions and seek assistance from certified accountants specializing in cryptocurrency taxes.
- The IRS may tighten regulations on all cryptocurrency matters in the future, so it's imperative to be diligent with record-keeping and consider using software options to help track digital assets transactions and calculate taxes owed for the year, such as Stablecoins in financial markets like Decentralized Finance (DeFi).
