What should a company's finance lead prepare for its crypto taxes?

Why the individual rules don't simply carry over

Most of this module describes the rules for individuals. Companies are taxed under their own rules, and the differences matter.^1,3

UK. HMRC says companies pay Corporation Tax on their profits and gains. If a company's crypto activity is not trading, and is not taxed under another rule, a gain would typically be charged to Corporation Tax as a chargeable gain.¹ The pooling rules are slightly different too.² Both start with a same-day rule. After that, for individuals, a sale is matched with the same token bought in the next 30 days. For a company, a sale is matched with the same token bought in the previous nine days, when the sale comes within ten days of the purchase.^7,2 HMRC adds that a business may face several taxes, and it will look at each case on its own facts.⁶

US. IRS Publication 542 says corporations figure their tax by multiplying taxable income by 21%.³ A corporation can deduct capital losses only up to its capital gains, and carries any excess to other years.³ An individual, by contrast, can deduct up to $3,000 a year of net capital loss from other income.⁸ The digital asset question appears on the US corporate return, Form 1120, as well as on Form 1040.⁹

So a worked example for an individual can mislead a company. That is why Maya uses the rules in this module only to sort events and gather records.⁶

Maya's file

Maya builds one record for every crypto event, using the lists from lesson 5:^9,4

An illustration only: one US-style gain

To check her numbers, Maya works one sale the way the IRS FAQs describe for individuals. This is an illustration of the arithmetic only. It does not say how Brindlecove is taxed.¹⁰

Under the IRS default (oldest first), the 3 ETH come from the 10 February purchase, because the reward ETH arrived later, so each has a $2,505 basis.¹⁰ And the long-term rates in lesson 3 are rates for individuals: Publication 542 says corporations figure their tax by multiplying taxable income by 21%.^8,3

The tax basis in this file is not the same as the carrying amount in a company's accounts: under ASU 2023-08, the US accounting rule that Module 29 covers, crypto assets that meet its tests are measured at fair value each reporting period.^15,10

Questions for the adviser

Maya's last page is a list of questions, each tied to a rule she found.⁶

1. Which US taxes apply to Brindlecove, and could any other country tax it too?^3,6
2. Were the staking rewards income when they arrived, and at what value? The IRS ruling she read is written for cash-method taxpayers.¹⁶
3. Is the airdrop income when received, or only taxed when sold?^17,18
4. Which units does each sale use: chosen units or oldest first? (If it were taxed in the UK, a pool.)^10,7
5. Is the ETH used to pay network fees a disposal each time?¹⁹
6. Do the 2,000 USDC paid to the contractor count as a disposal of USDC?^19,12