President Trump is eager to claim credit for Apple’s moves, but it’s a bit more complicated.

THE TICKER

President Trump took a bold announcement by Apple on Wednesday and made an even bolder claim about it. 

The electronics giant touted a massive new investment in the U.S. economy, pledging to contribute $350 billion to it over the next five years, with $30 billion of that sum coming in the form of capital spending, including for a new campus. And the tech company said it will create 20,000 new jobs in the United States. The president seized on the news as validation of the Republican tax package:

The issue: It’s not clear how much the new tax regime contributed to Apple’s decision, if at all. 

In a 1,093-word statement detailing the move, the company noted it is handing the Treasury a $38 billion one-time payment. That meets a requirement under the new law that corporations pay previously deferred taxes on their foreign profits. The law set up that provision as a sort of compromise: Companies are being forced to fork over a portion of those overseas stashes to Uncle Sam, but they are being charged a deeply discounted rate (15.5 percent for cash and 8 percent for less liquid assets.) Apple says it is counting the $38 billion it’s paying toward the $350 billion total it advertised Wednesday.

The law gives companies the flexibility to spread what they owe under the levy over five years. But the payment is mandatory — and not, as Trump suggested in his tweet, itself a vote of confidence in the brightening business climate at home.

Beyond that, the company doesn’t chalk up anything else in its announcement to the tax law. The Wall Street Journal’s Tripp Mickle does a careful job parsing the company’s statement: 

The company previously said it planned $16 billion in capital expenditures world-wide in the fiscal year that ends this September, up from $14.9 billion the previous year. However, Apple doesn’t break out its spending in the U.S., making it difficult to gauge how much of the $30 billion over five years it announced Wednesday is new.

Toni Sacconaghi, an analyst with Sanford C. Bernstein & Co., said Apple’s plans are in line with Trump administration goals, but that it isn’t clear how much of the commitments are new. And he said the company could deliver on those commitments with existing cash flow — without needing to tap cash holdings.

“It’s a nice number and puts a foot forward in line with where the administration wants to go with adding jobs and building in the U.S.,” he said. But he added, “It’s not clear these investments were impacted in any way by tax reform.”

Separately, Bloomberg News’s Mark Gurman reported Wednesday, the company is awarding most of its employees worldwide a $2,500 bonus in stock grants in the months ahead. For that, beneficiaries can thank the tax cuts. 

But the announcement of Apple’s multibillion-dollar investments carried significantly more weight for Trump and other Republicans eager to find signs the tax package is supplying a big boost of momentum to broader economic growth. Another entrant in the parade of companies handing out bonuses may be nice. What the GOP would prefer, however, is evidence that corporate giants are plowing their windfalls into the kind of spending that will trickle down to workers. 

“Certainly higher wages and bonuses are good news,” Tax Foundation senior analyst Scott Greenberg says. “But if the tax bill is going to have a large economic effect, it’s likely going to take some time to show up, because will take some time for companies to respond to the incentives offered by the new tax provisions.” And, he cautioned, “it’s difficult to separate causality from companies looking for gestures of public goodwill.”

Apple isn’t likely to fact-check Trump’s claims.

The announcement appeared designed to win the company some good-citizen points, with Apple CEO Tim Cook declaring in a statement that his company “could only have happened in America, and we are proud to build on our long history of support for the US economy.”

Recall that the tech titan came in for special abuse from Trump during the 2016 campaign. The candidate promised to make Apple “start building their damn computers and things in this country instead of in other countries,” at one point urged a boycott of Apple products, and said he would “come down so hard” on Cook that “his head would be spinning all of the way back to Silicon Valley.”

But Apple isn’t the only corporate giant that has been coy about pledging to use its tax gains for investments and wage hikes rather than, say, stock buybacks and dividend payments.

A CNBC survey of the 100 biggest companies by market cap found only nine with “specific plans to use some of the money saved from the corporate tax cuts to boost worker pay or invest in facilities or charitable causes.”

In other news, the sun rose today. Can we say for sure it would have but for the corporate tax cut?

MARKET MOVERS

— DOW 26,000. CNBC’s Fred Imbert: “Stocks traded higher on Wednesday following the release of stronger-than-expected quarterly results from some of the biggest U.S. companies. The Dow Jones industrial average rose 322.79 points, closing above 26,000 for the first time. The index first broke above the milestone mark on Tuesday. The S&P 500 gained 0.9 percent to finish at 2,802.56, with staples and tech rising more than 1 percent. The index also posted a record close.Tech stocks got a boost from Apple, which erased losses after announcing plans to repatriate billions in overseas cash. The stock closed 1.7 percent higher. The Nasdaq composite rose 1 percent to finish at 7,298.28, a record.”

It broke the record in record time. CNN Money’s Matt Egan: “The latest rush to buy stocks left the average up almost 8,000 points since… Trump’s 2016 election.The rally on Wednesday gave the Dow its best percentage gain since November. And it showed that the upward trend remains intact despite a big reversal the day before… But the velocity of the rally is raising eyebrows. It took just seven trading days for the Dow to climb from 25,000 to 26,000. While that is just a 4% advance, it’s part of a broader surge that has carried the Dow 42% during the Trump era. And the market rise has come with virtually no breaks.”

U.S. Industrial Production Rose 0.9% in December

U.S. industrial production rose sharply in December, boosted by gains in utilities output as cold weather swept across the nation and increased demand for heating.

WSJ

MONEY ON THE HILL

Shutdown showdown. The Post’s Mike DeBonis, Ed O’Keefe, and Erica Werner: “Bitter divisions in both parties threatened Wednesday to derail Congress’s effort to keep the federal government fully operating past the end of the week. The shutdown threat emerged on two fronts: Republican defense hawks in the House said a short-term spending plan the party introduced late Tuesday did not devote enough money to the military. Meanwhile, Democrats, whose support would be critical for passage in the Senate, began lining up in opposition amid pressure from immigration activists to use the budget talks as leverage to legalize many young immigrants known as ‘dreamers.’ By Wednesday evening, the short-term bill was on the cusp of failure…

House Republicans unveiled a bill Tuesday that would extend funding for four weeks, allowing time for further negotiations toward deals on long-term spending and immigration. To entice Democrats, GOP leaders attached a six-year extension of the popular Children’s Health Insurance Program, as well as the delay of two unpopular health-care taxes. But few, if any, Democrats have been swayed by the overture.”

Tax bill fails to crack majority. Politico’s Toby Eckert: “Support for the Republican tax plan has ticked up slightly since [Trump] signed it into law, but it still hasn’t drawn the backing of a majority of voters, according to a new POLITICO/Morning Consult poll.

The GOP’s top selling point for the plan recently — a spate of employee bonuses and wage increases — was a wash in the poll. The tracking poll, conducted Jan. 11-16, found that a 45 percent plurality of voters backed the plan based on what they knew about it, up from 42 percent in a similar poll before the legislation was enacted on Dec. 22. Opposition in the new poll came in at 34 percent, down from 39 percent. Twenty percent of respondents were undecided, up from 18 percent. After respondents were told about the major provisions of the bill, support rose to 47 percent, opposition remained at 34 percent.”

ICI reverses itself on fund rules. Politico’s Zachary Warmbrodt: “A prominent investment industry group is lobbying to keep in place major money market mutual fund regulations that it resisted only a few years ago. The issue will come to a head this week as the House Financial Services Committee votes on bipartisan legislation that would roll back regulations intended to prevent the kind of investor runs on money market funds that exacerbated the 2008 financial crisis. The Investment Company Institute, which represents money managers, did not support many of the safeguards the SEC enacted in 2014 but told senior lawmakers in a letter Friday that it now opposes the House bill that would defang the rules.”

GOP Senator to Block Two Trump Nominees Over Trade Concerns

A GOP senator with concerns about President Trump’s trade policy said Wednesday he would block two of the president’s nominees, saying the Trump administration hasn’t been responsive to his concerns on the issue.

WSJ

TRUMP TRACKER

Trump threatens NAFTA. Reuters’s Jeff Mason and David Lawder: “Trump on Wednesday said that terminating the North American Free Trade Agreement would result in the ‘best deal’ to revamp the 24-year-old trade pact with Canada and Mexico in favor of U.S. interests. Lawmakers as well as agricultural and industrial groups have warned Trump not to quit NAFTA, but he said that may be the outcome.

‘We’re renegotiating NAFTA now. We’ll see what happens. I may terminate NAFTA,’ Trump said in an interview with Reuters. ‘A lot of people are going to be unhappy if I terminate NAFTA. A lot of people don’t realize how good it would be to terminate NAFTA because the way you’re going to make the best deal is to terminate NAFTA. But people would like to see me not do that,’ he said. Trump’s comments come less than a week before trade negotiators from the United States, Canada and Mexico meet in Montreal for the sixth of seven scheduled rounds of negotiations to update NAFTA.”

Considers big “fine” against China. More from Reuters: “Trump and his economic adviser Gary Cohn said China had forced U.S. companies to transfer their intellectual property to China as a cost of doing business there. The United States has started a trade investigation into the issue, and Cohn said the United States Trade Representative would be making recommendations about it soon. ‘We have a very big intellectual property potential fine going, which is going to come out soon,’ Trump said in the interview. While Trump did not specify what he meant by a ‘fine’ against China, the 1974 trade law that authorized an investigation into China’s alleged theft of U.S. intellectual property allows him to impose retaliatory tariffs on Chinese goods or other trade sanctions until China changes its policies.”

Fed overhaul hits snags. The Post’s Heather Long: “In less than three weeks, the Federal Reserve, which is widely credited with playing a major role in leading the United States out of the Great Recession, will be under new leadership. Current Fed chair Janet L. Yellen is leaving, and Jerome Powell is President Trump’s nominee to take her place. But Trump’s efforts to remake the Federal Reserve will soon face key tests. The first hurdle will be the Senate. All of Trump’s appointees to the Fed require Senate approval, which has been slow in coming. Trump nominated Powell on Nov. 2, but the Senate didn’t act on his appointment before the end of the year, forcing the president to renominate Powell in 2018… Trump has made his priorities clear for a Powell-led Fed: He wants the stock market to keep soaring and the economy to grow faster. To make that happen, Trump would like interest rates to stay low and fewer restrictions on Wall Street banks. But Powell has been clear to stress the Fed’s independence — from Congress and the White House — in public appearances since his nomination.”

Powell says he’ll hold Deutsche Banke accountable. Bloomberg’s Jesse Hamilton: “Donald Trump’s pick to run the Federal Reserve, responding to a key lawmaker’s concerns over the president’s ties to Deutsche Bank AG, said the agency will hold the German lender to the same standards as the rest of the industry. Fed Governor Jerome Powell answered a letter from Senate Banking Committee member Chris Van Hollen ahead of the panel’s vote on his nomination to become chairman, telling the Maryland Democrat that he’s committed to supervising banks “in an independent manner.” Powell’s nomination was advanced by the committee on Wednesday, with Van Hollen voting in favor.”

Replacing Dudley. Reuters’s Jonathan Spicer: “Unions and groups advocating for retirees, teachers, housing, and workers’ benefits are among those visiting the ornate conference rooms of the Federal Reserve Bank of New York to lobby for a less conventional candidate to serve as its next president. New York Fed directors leading the search for a successor to chief William Dudley, seen as the second most influential policymaker at the U.S. central bank, invited the guests to last week’s meeting to seek their advice. According to attendees and others familiar with the search, the directors are close to a “long list” of candidates and appear set to begin formal interviews within weeks. Until then, directors Sara Horowitz and Glenn Hutchins are taking steps intended to head off any criticisms of opacity and lack of diversity that, in recent years, have stung presidential searches at other district Fed banks. The afternoon meeting with 11 advocacy groups last week marked what one attendee called an unprecedented gesture of public outreach.”

RUSSIA WATCH: 

Bannon agrees to Mueller interview. The Post’s Roz Helderman and Karoun Demirjian: “Former top White House adviser and Trump campaign strategist Stephen K. Bannon has agreed to an interview for special counsel Robert S. Mueller III’s Russia investigation likely to take place later this month, but his lawyer is pushing back against House investigators’ demands for an audience Thursday afternoon, arguing there is ‘no conceivable way’ Bannon will be ready for an interview on the panel’s terms. House Intelligence Committee members K. Michael Conaway (R-Tex.), who is leading the Russia investigation, and Adam B. Schiff (D-Calif.), the panel’s ranking member, sent a letter Wednesday to Bannon’s lawyer, William Burck, insisting that Bannon return to Capitol Hill on Thursday at 2 p.m. to comply with a subpoena they issued Tuesday after Bannon refused to answer questions, citing orders from the White House.”

Probe could collide with midterms. Politico’s Darren Sameulsohn: “Robert Mueller’s Russia probe isn’t ending any time soon, and that’s bad news for President Donald Trump and congressional Republicans already bracing for a possible 2018 Democratic midterm wave. While many Republicans insist the Trump-Russia saga is overblown, they worry headlines about federal indictments, high profile trials—and a potential blockbuster meeting between Mueller and Trump himself—could obscure their positive message ahead of November elections and threaten their House and Senate majorities. In an ominous development for Republicans, a federal judge overseeing the upcoming trial of former Trump campaign manager Paul Manafort and his deputy Rick Gates rejected Mueller’s request to begin in May and instead outlined a scheduled start as soon as September or October — peak election season.”

Wonkblog

Eric Trump’s 401(k) is up by 35 percent, but half of American families don’t even have one

“I didn’t think retirement was possible, and now it is,” he told Hannity.

Christopher Ingraham

POCKET CHANGE

Goldman’s losing money. NYT’s Emily Flitter: “Goldman Sachs used to seem invincible. In the fourth quarter, it lost money. The Wall Street firm on Wednesday reported its first quarterly loss since 2011. It was the result of a one-time $4.4 billion charge stemming from the new tax law. But even ignoring that unusual event, Goldman’s weak core results showed how far the firm has fallen. The bank’s per-share earnings and revenue were both higher compared with a year earlier without the tax charge. But the results announced on Wednesday also revealed a decline in Goldman’s trading might, which has been drained by a potent combination of placid markets and quiet clients. Revenue in its business of buying and selling bonds, commodities and currencies — historically an engine of Goldman’s results — sank to $1 billion in the fourth quarter, half of what it was during the same period in 2016. For the year, net revenue in that business fell 30 percent. The drop sent Goldman’s shares down 3 percent on Wednesday.”

CRYPTO BITS: 

Treasury sees a threat. Bloomberg’s Saleha Mohsin: “The U.S. Treasury views virtual currencies such as Bitcoin as an “evolving threat” and is examining dealers to make sure they aren’t being used to finance illegal activities, the undersecretary for terrorism and financial intelligence said. Treasury is working with the Internal Revenue Service examiners to review 100 registered digital currency providers as well as others that have not registered, Sigal Mandelker said in prepared testimony to the Senate Banking Committee on Wednesday. The department is also working with the Justice Department to pursue money laundering cases.”

Bitcoin falls below $10,000. CNN Money’s Nathaniel Meyersohn: “Bitcoin keeps tumbling. The price of the volatile digital currency briefly dipped below $10,000 around 7 a.m. ET on Wednesday, its lowest level since late November, according to data from CoinDesk.com. Bitcoin has dropped nearly 30% this week and has lost almost half of its $19,343 peak value on December 16. Bitcoin approached its record as it launched on futures exchanges in the United States. But it has since fallen sharply. Other popular cryptocurrencies ethereum and ripple also have posted double-digit losses. One virtual currency exchange, Bitconnect, dived 93% late Monday. It’s unclear why bitcoin has had a rough week. Cryptocurrency is a murky market with frequent swings.”

Ripple founder loses $44 billion. CNBC’s Evelyn Cheng: “The digital currency plunge has wiped billions from the paper fortune of a cryptocurrency billionaire in just a few weeks. Ripple’s XRP coin has fallen 74 percent from an all-time high of $3.84 hit on Jan. 4, erasing $44 billion from the holdings of Chris Larsen, co-founder and executive chairman of Ripple. With XRP trading near $1 Wednesday, Larsen now holds the equivalent of just $15.8 billion, according to CNBC calculations using figures from Forbes. Citing sources at Ripple, Forbes said earlier this month that Larsen has 5.19 billion of XRP and a 17 percent stake in the start-up. Ripple holds 61.3 billion of the 100 billion XRP coins in existence. At XRP’s peak on Jan. 4, Larsen was worth $59.9 billion. That made him one of the five richest people in the U.S. and wealthier than Google’s founders, based on Forbes’ rich list.”

Stock market endangered? CNBC’s Stephanie Landsman: “A sustained sell-off in the cryptocurrency market will hit the stock market where it hurts, one major Wall Street firm warns. It’s a scenario investors are underestimating, according to Wells Fargo Securities’ Christopher Harvey. ‘We see a lot of froth in that market. If and when it comes out, it will spill over to equities,’ the firm’s head of equity strategy said Tuesday… ‘I don’t think people are really ready for that.'”

Goldman’s No. 2 Allegedly Swindled Out of $1.2 Million of Wine by Assistant

A former personal assistant to Goldman Sachs Group Inc. Co-President David Solomon faces federal charges that he stole more than $1.2 million of rare wine from his boss.

Bloomberg

BlackRock Lets Its Hair Down by Offering Unlimited Time Off

BlackRock Inc., taking a page from Silicon Valley where ping-pong tables and on-site gyms are common perks, is offering unlimited time off.

Bloomberg

THE REGULATORS

Fannie, Freddie regulator: Take them private. Bloomberg’s Joe Light: “Fannie Mae and Freddie Mac’s regulator is throwing its voice into the debate about what to do with the two companies at the center of the U.S. mortgage system. In a proposal obtained by Bloomberg News, Federal Housing Finance Agency Director Mel Watt wrote that he and agency staff believe the mortgage market should be supported by shareholder-owned utilities with regulated rates of return and an explicit government guarantee of mortgage bonds. Watt sent the document, titled ‘Federal Housing Finance Agency Perspectives on Housing Finance Reform’ along with a letter dated Tuesday to Senate Banking Chairman Michael Crapo, an Idaho Republican, and Senator Sherrod Brown of Ohio, the panel’s top Democrat. By sharing the perspectives now, ‘we seek to provide our views independently and transparently to those who have requested them while continuing to provide technical assistance to the committee and its members on other proposals that may be introduced,’ Watt wrote.”

Mulvaney moves to overhaul CFPB. LA Times’s Jim Puzzanghera: “On Wednesday, Mulvaney announced he was launching a review of the entire operation of the consumer watchdog agency created in the wake of the 2008 financial crisis. The bureau has provided Americans with billions of dollars in refunds and debt relief, often at banks’ expense. Republicans and many financial firms have complained that it has been too aggressive… The bureau said it would formally request public input about whether it is ‘fulfilling its proper and appropriate functions to best protect consumers.’ It will seek comment on its enforcement of consumer protection laws, drafting of regulations, oversight of financial firms, monitoring of the marketplace and public education. The first function to be examined: how the bureau demands information from financial firms during investigations.”

Asks financial firms for complaints. The Hill’s Sylvan Lane: The CFPB “is asking the firms its regulates to submit complaints about the agency’s core actions. The CFPB announced Wednesday that the agency will ask ‘for evidence to ensure the bureau is fulfilling its proper and appropriate functions to best protect consumers.’ The request is the latest step forward in acting Director Mick Mulvaney’s effort to draw back the bureau’s aggressive regulatory and enforcement actions. Mulvaney said in a Wednesday statement that it’s ‘natural for the Bureau to critically examine its policies and practices to ensure they align with the Bureau’s statutory mandate.'”

Cordray blasts. More from The Hill: “The former director of the… CFPB blasted his successor in a series of tweets Wednesday for attempting to unwind the agency’s rule on payday lending. Richard Cordray, the bureau’s first director, panned the CFPB’s plans as ‘truly shameful action by the interim pseudo-leaders’ of the bureau.” … ‘Let’s see the case be made, with full debate, on whether the zealots and toadies can justify repealing a rule to protect consumers against extortionate payday loans,’ Cordray continued.”

Hoenig criticizes banking bill. Reuters’s Pete Schroeder: “A top official at a leading U.S. bank regulator is airing concerns about a Senate bill that would ease banking rules, saying parts of it could “significantly weaken” critical protections. Thomas Hoenig, the vice chair of the Federal Deposit Insurance Corporation, warned lawmakers that efforts to ease new rules around leverage and proprietary trading could encourage banks to take on excessive amounts of risk, and put the stability of the financial system at risk. Hoenig said he was broadly supportive of the bill primarily aimed at easing rules for smaller banks, crafted by Republicans and moderate Democrats on the Senate Banking Committee, but has concerns about a pair of key sections. In particular, Hoenig warned Congress’s attempts to relax burdens around the Volcker Rule and the supplementary leverage ratio would do more harm than good.”

SCOTUS considers overtime rule. Washington Examiner’s Sean Higgins: “Looking under the hood and figuring out what is wrong is a popular cliche, but on Wednesday, the Supreme Court examined whether the workers who actually do that should be guaranteed overtime pay. The justices heard oral arguments in Encino Motorcars v. Navarro, a case involving whether the Fair Labor Standards Act’s overtime rules extend to “service advisers” at auto dealerships. It is the second time it has heard the case. Service advisers are the dealership employees who tell customers what repairs or other work their cars need. Congress exempted them from the overtime regulation in 1966, but in 2011, the Obama administration changed the rule and said service advisers should be able to claim overtime pay.”

New late trading method gets SEC ok. Bloomberg’s Annie Massa: “Cboe Global Markets Inc. got regulators’ permission to challenge its chief rivals in U.S. equities, the New York Stock Exchange and Nasdaq Stock Market, during their crucial end-of-day auctions. The U.S. Securities and Exchange Commission will let the company begin Cboe Market Close, which the company says is a lower-cost way to carry out certain closing trades that may otherwise be completed at markets owned by NYSE Group and Nasdaq Inc. NYSE and Nasdaq had argued against approval, saying Cboe’s offering could tarnish the critical role played by auctions that set closing levels for thousands of U.S. stocks. NYSE and Nasdaq both stand to lose volume from any mechanism threatening their closing auctions. Cboe countered that their concerns were overblown, since some brokers already provide a similar function for customers. The SEC came down in favor of Cboe, according to a filing Wednesday.”

CHART TOPPER

From Axios’s Chris Canipe and Steve LeVine: “Manufacturing jobs are up sharply from the recession:”

DAYBOOK

Today

  • The American Enterprise Institute holds an event on “New thinking about poverty and economic mobility.”
  • The Cato Institute Policy Perspectives 2018 hosts a discussion on “A Fiscal Rule to Tame Federal Debt?”

Coming Up

  • The SEC-NYU Dialogue on Securities Markets – Shareholder Engagement will be held in New York on Friday. 

THE FUNNIES

From The Post’s Tom Toles: 

BULL SESSION

Sen. Lindsey Graham tells lawmakers: “Stop the s-show and grow up:” 

Here’s an ongoing list of White House staff, Cabinet members, and federal appointees who quit or were fired under Trump:

Here’s how tech companies are using algorithms to prevent extremist content:

Stephen Colbert talks about how “Fire and Fury” author Michael Wolff got access to the White House: 

‘Going to become a nightmare’: Some bitcoin investors have been in for rocky tax season

Jim Makos/Flickr)

Sean McAuliffe doesn’t have much background in investing, apart from a few retirement accounts. But within the Christmas, because the cost of bitcoin blew past $8,000 in a several weeks-lengthy rally, the 54-year-old construction manager made the decision to go for it. Like many Americans, he’d read enough about bitcoin on the web to feel confident purchasing a stake within the digital currency and several similar ventures.

McAuliffe’s investment compensated off quickly: Inside a month, the cost of bitcoin had greater than bending to over $19,000. Encouraged, McAuliffe bought more. Now, he figures he executes a minumum of one trade a day and, in writing, makes about $7,000.

“I’ve had some dramatic wins and a few dramatic losses,” he stated within an interview.

But McAuliffe can also be searching ahead to what is a large headache: Doing his taxes as he sells. Although McAuliffe does not plan to exchange his virtual currency back to dollars in the near future, other investors have. And lots of tax professionals have observed an uptick in questions this season.

“It’s likely to be a nightmare for those concerned about doing the best factor,” stated Andrew Schaefer, a federally licensed tax expert in Florida who represents taxpayers prior to the Irs. On the line this season might be many billions in profit and possibly more, Schaefer stated, knowing by the surge of interest in bitcoin. A substantial slice of that may be susceptible to federal and condition taxes according to the number of people offered their assets.

“2016 saw some questions show up,” stated Lisa Greene-Lewis, a lead cpa at TurboTax. “As individuals are doing their taxes [this season], we might see more because more and more people happen to be buying and selling and selling.”

The newest IRS guidance on the matter is from 2014, if this stated taxpayers should treat their virtual currency like property. Under that rule, taxpayers must declare any profit, also referred to as capital gains, or losses they take once they sell bitcoin in a different cost than once they got it. Exactly the same policy pertains to purchases of real-world goods. For instance, suppose you attempted to purchase coffee with bitcoin. That will technically count like a purchase of the bitcoin. You might owe capital gains tax when the bitcoin you compensated in the check out had elevated in value from the moment you initially acquired it. The Government declined to comment with this story, referring to that 2014 guidance.

As the IRS ruling removed up some questions, it elevated others, for example who’d result in tracking each investor’s purchase and purchase prices, and just what methodology would be employed to calculate gains. Another question is how to treat the development of new virtual currencies that emerge as offshoots or “forks” of original copies.

“How do you take into account taxes if you have a fork — could it be [like] a regular split?” requested Jerry Brito, executive director from the Gold coin Center, a think tank for virtual currency issues.

With stock, brokerage firms for example Vanguard and Charles Schwab typically help investors track their gains and losses having a year-finish tax document, Form 1099. But companies for example Gemini that handle virtual currencies, which weren’t around for very lengthy, face more ambiguous reporting obligations, departing it mostly as much as individual investors to crunch the figures themselves. That demands a center for figures as well as an exacting degree of attention. Things get even thornier for U.S. employees who work with bitcoin-related companies and could receive the digital currency as an ingredient of their salary that cash is taxed as regular earnings, not investment earnings.

“I definitely have experienced people use Stand out spreadsheets to exhibit the things they spent to purchase the gold coin, any costs to transform dollars to some kind of cryptocurrency or [whether] they make use of a charge card to purchase them,” stated Zak Yaffe, a clinical student in the College of Washington who bought a mixture of bitcoin and also the digital currencies litecoin and ethereum in September.

Although not everybody helps make the effort, or perhaps is even aware she or he may owe money towards the government, tax experts say. According towards the IRS, from 2013 to 2015 only 800 to 900 people annually declared their bitcoin earnings.

The company has indicated it could go after investors who neglect to report individuals gains. Inside a recent court fight, the government forced Coinbase, among the largest U.S.-based exchanges where consumers can purchase bitcoin for dollars, to supply citizen info on greater than 14,000 customers. The Government didn’t pick out any customer for suspicion within the suit but did express it believed gains from virtual currency “are underreported.”

Coinbase stated inside a blog publish in the time that the ruling would be a partial victory because of its side for the reason that it denied the IRS from being able to access a level broader group of data covering 480,000 customers. In an FAQ page on its website, Coinbase stated it will distribute Form 1099 to investors on its platform who’ve made greater than $20,000 in gains “related to a minimum of 200 transactions inside a twelve months.” The FAQ urges investors to “keep your personal records for the best results increase the report accordingly.”

That covers high-volume traders and large-time players but offers little guidance to average investors, stated McAuliffe, who invested about $3,000 in virtual currencies this past year. “Coinbase sent out — I’ll refer to it as a boilerplate on taxes,” he stated, which contained a hyperlink towards the FAQ. “Did they give out a tax report like you’d get from TD Ameritrade? No. Only, like, a flag of ‘pay your taxes!’ and assistance with statutes to find information about. … It’s all regulated kind of ‘Wild West’ kind of stuff.”

Coinbase declined demands to have an interview. Other exchanges, for example Gemini and Bitstamp, didn’t react to demands to have an interview.

Missing further specifics, many investors have switched to social networking for solutions. Several accountants who moonlight as moderators from the popular Reddit forum referred to as /r/tax say they’ve observed a clear, crisp rise in the amount of bitcoin-related demands for advice.

“I know I have seen an uptick on /r/tax, /r/bitcoin, /r/CryptoCurrency and /r/personalfinance about taxes and bitcoins, in addition to my very own private practice,” stated one moderator, who passes the handle /u/DasHuhn. “In 2016 I’d roughly 5 questions requested about bitcoin, as well as in 2017 I’d most likely 30 approximately.”

The recent questions on Reddit range in sophistication. Some posters appear at first sight just starting to consider buying bitcoin and wish to weigh the benefits and drawbacks. Others make substantial gains from purchasing the currency and therefore are trying to puzzle out the things they owe in taxes. And others need to know whether they can discount the things they invest in buying bitcoin like a business expense. (The solution: This will depend.)

Much more questions are expected as companies for example Coinbase begin delivering out 1099s.

Reddit users are usually the main thing on technology, the moderators stated, to see this type of dramatic rise in bitcoin discussions around the social platform isn’t that surprising. However, many retail investors who don’t frequent the website are actually visiting grips using the tax effects of the bets.

There’s “going to become a big wake-up call within the next couple of months,” Schaefer stated. “There’s mother-and-pop investors asking about this now. I’ve described how cryptocurrency activly works to my grandma and grandpa.”

Bitcoin tumbles nearly 30 % in volatile buying and selling

Coinbase, among the largest bitcoin exchanges within the U.S., announced that it needed to temporarily halt buying and selling on its platform because of high traffic. The service stated it had been trying to restore availability.

Nature swings likely introduced a pounding heart to a few of the novice traders who’ve rushed to take advantage of bitcoins incredible run.

“Cryptocurrency may be the wild west of financial systems and those that have lately become enamored using the gambling facet of cryptocurrency are learning their first lesson, that is they’re volatile and dangerous,” stated Ross Gerber, the main executive of Gerber Kawasaki, an abundance and investment management firm in Santa Monica.

This season alone, Bitcoin has risen greater than 1,000 percent. Some companies, wishing to get around the bitcoin mania, have altered their names to incorporate the term blockchain, we’ve got the technology that undergirds the virtual currency. On Thursday, the beverage company Lengthy Island Iced Tea stated it’s renaming itself Lengthy Blockchain. It’s stock price tripled right after. Another company, in great britan, appended blockchain to the name in October and saw its stock cost rise nearly 400 percent.

Earlier this year, the cryptocurrency became a member of the financial world’s mainstream when Chicago-based CME Group and also the Chicago Board Options Exchange begin buying and selling bitcoin futures, contracts that permit individuals to purchase and sell assets in a pre-determined cost at some stage in the long run. TD Ameritrade, among the largest retail brokerages in the united states, stated it might allow clients to start trading Bitcoin futures around the CBOE now.

It’s unclear what brought towards the dive Friday, but some experts have been highly critical of Bitcoin despite its prominent rise and astounding returns, and possibly due to its well known volatility. UBS has known as Bitcoin a “speculative bubble” and JPMorgan Chase’s Chief executive officer Jamie Dimon has stated that Bitcoin is really a “fraud” that “will not finish well.” And on Thursday, Bank of Japan Governor Haruhiko Kuroda known as Bitcoin’s cost surge “abnormal,” based on Bloomberg.

Highlighting the vulnerability of virtual foreign currency markets, a South Korean company that runs an exchange known as Youbit declared personal bankruptcy now after it lost 17 % of their assets inside a major hack. Which was the 2nd amount of time in eight several weeks the marketplace continues to be breached.

Because it has been doing following past dives, Bitcoin started to rebound Friday mid-day. Coinmarketcap.com stated it had been buying and selling just below $13,000, after noon EST.

Bitcoin buyers should prepare to get rid of all of their money, states regulator

People buying bitcoin should be ready to lose their cash, based on a senior United kingdom regulator.

The cost from the cryptocurrency continues to be soaring in recent days. With this originates many new investors, wishing to earn money in the surging curiosity about the virtual currency.

But others have cautioned the rocketing worth of bitcoin are only able to be temporary, which is stuck inside a bubble. That may eventually arrived at an finish inside a spectacular burst, cautioned Andrew Bailey, mind from the Financial Conduct Authority.

He’s given a “serious warning” that individuals purchasing the cryptocurrency should anticipate to lose their cash.

We all know “relatively little” about how exactly the costs change and thus we ought to expect it to remain volatile as it’s been over recent several weeks, he cautioned. However that volatility may ultimately be the effect of a dramatic plunge, which may leave lots of people committed to the cryptocurrency up front.

“It isn’t a currency, it’s really not controlled in the Bitcoin form,” Mr Bailey stated within an interview for Newsnight. “It is a very volatile commodity when it comes to its prices.

“Should you take a look at what is happening this season, I’d caution people. We all know relatively little by what informs the cost of Bitcoin.

“This is an odd commodity too, because the supply is bound. If you wish to purchase Bitcoin be ready to lose your hard earned money – that could be my serious warning.”

Many have criticised regulators including Mr Bailey’s organisation for failing to maintain bitcoin, and making it combined with little restriction. The cryptocurrency continues to be charged with allowing crooks to flourish since you can use it anonymously and with little oversight, letting it flourish as a means of purchasing drugs and guns around the dark internet, for example.

But he stated that as it is an investment and not just a currency, it did not have to be controlled in the same manner and then any new forces would depend on parliament to determine.

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Japanese business to begin having to pay workers in bitcoin

A Japanese business will start having to pay its workers partly in bitcoin, inside a bid to achieve a much better knowledge of the way the digital currency works, Agence France-Presse reports.

Tech firm GMO Internet stated it’ll repay to 100,000 yen (£660) per month to roughly 4,000 employees via bitcoin from Feb the coming year, based on the agency.

Company spokeswoman Harum Ishii told AFP that employees can choose whether they want part of their salary to become compensated in bitcoin.

“We aspire to improve our very own literacy of virtual currency by really using it”, she stated.

The Tokyo, japan-listed company announced in September it intends to spend more money than $3m on mining bitcoin within the first six several weeks of 2018.

GMO stated at that time it believes bitcoin will participate future “universal currencies” which the virtual currency can create a “borderless economic zone”. 

The organization wasn’t immediately readily available for additional comment when contacted by The Independent on Friday.

The need for bitcoin continues to be sent on the rollercoaster ride of increases and slumps in recent several weeks.

The cryptocurrency, that is attracting a lot of mainstream attention, was worth $17,483 by Friday morning, based on Coinbase exchange.

Its value expires greater than 150 percent over recently and most 2,060 percent within the this past year.

Bitcoin is among numerous digital currencies that exists on the internet and doesn’t have condition regulation.

Blockchain, we’ve got the technology behind the virtual currency, is really a public ledger that stores anonymous records of each and every bitcoin transaction. 

On Thursday, United kingdom overseas territory Gibraltar stated that it’ll introduce the world’s first licence for fintech firms using blockchain from the following month. 

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Considering purchasing bitcoin? The currency might be virtual, however the risk is real.

In the event you purchase bitcoin for retirement? Only if you feel riding a ride with no safety harness may be beneficial.]

Purchasing bitcoin is simply too dangerous for an average joe, states Frederick P. Borg, NASAA president and Alabama Securities Commission director.

Because he speaks round the country, Borg asks folks if they’ve bought bitcoin. He then asks where they were given the cash to take a position, and a few admit to getting used a charge card or perhaps a home equity credit line. These individuals have put themselves inside a risky position.

I requested readers the things they considered the bitcoin craze. M.H. from Maryland stated he invested $2,500 each in bitcoin, ethereum and litecoin a week ago after doing a bit of research.

“I experience how it works, which the currency is just worth what individuals think it’s worth,” he stated. “But I required money using their company investments and made the decision to take a risk, because this is a really portion in our investments.”

Possibly you’ve still got FOMO. If that’s the case, here’s what three certified financial planners — Mark DiGiovanni in Atlanta, Steven Podnos from Cacao Beach, Fla., and Robert Schmansky from Detroit — needed to say after i requested them about virtual currency.

Q: What exactly are you telling clients who are curious about purchasing bitcoin?

DiGiovanni: “I would first ask them to let me know what bitcoin is, how by whom it’s produced, and just how its valuation is decided. When they can’t give complete solutions to those questions, I’d ask why they’d ever risk profit something of that nature.”

Podnos: “I think this bitcoin investment plan is insane. Presumed ‘scarcity’ and newness are attracting attention. The actual ‘asset’ is both nearly impossible to know in order to show anybody. A large warning sign in my opinion.”

Schmansky: “The most significant factor to understand is this isn’t a good investment, it’s a bet. Whenever we gamble, we risk total loss for the risk of a windfall. Consider bitcoin as if you would a lottery ticket. You will be lucky when you get a couple of matching figures and just lose just a little, and there’s hardly any chance you’ll spend having a windfall.”

Q: Who’s the best bitcoin investor?

DiGiovanni: “Someone with far more money than sense.”

Podnos: “No one that’s purchasing it here is relying on not getting a ‘greater fool’ arrive who covers the cost more never ever apart from attracting the following greater fool. I’ve had three calls asking about purchasing bitcoin. I said excitedly everything I had been against it. One requested me to take a position six figures inside it anyway, and that i stated he’d need to do that themself.”

Schmansky: “Of all of the conversations I’ve had with investors, individuals with money don’t begin to see the value.”

Q: Should people borrow to purchase bitcoin?

DiGiovanni: “Borrowing money to purchase bitcoin is stupidity squared.”

Podnos: “They shouldn’t purchase bitcoin whatsoever, significantly less borrow to do this.”

Schmansky: “Absolutely never borrow to purchase bitcoin. Although it may appear just like a decent bet on its good days, it’s a bet that may switch in which you owe your debt and also have nothing of worth to exhibit for this.”

I am not an economic planner. However I will have lots of good sense. Should you can afford to get rid of every cent you invest and never lose any sleep within the loss, do what you would like. However, for those who have a normal job, a home loan, kids to place through college, charge card debt, a pitiful emergency fund along with a lackluster retirement account, have no idea consider buying bitcoin. The currency might be virtual, however the investment risk is extremely real.

Find out more:

Bitcoin is a staggering investment. Is really a crash coming?

The bitcoin hype is weird. But investors might be right.

Bitcoin futures rise as virtual currency hits major exchange

CHICAGO — The very first-ever bitcoin future started buying and selling Sunday because the more and more popular virtual currency made its debut on the major U.S. exchange.

The futures contract that expires in The month of january rose $340 to $15,800 within the first hour and fifteen minutes of buying and selling around the Chicago Board Options Exchange. Anything opened up at $15,460, based on data in the CBOE.

The CBOE futures don’t involve actual bitcoin. They’re securities which will track the cost of bitcoin on Gemini, among the bigger bitcoin exchanges.

The beginning of buying and selling at 5 p.m. CST overwhelmed the CBOE website. “Due to high-traffic on the website, people to world wide web.cboe.com might find that it’s performing slower than normal and could at occasions be temporarily unavailable,” the exchange stated inside a statement. However it stated the buying and selling within the futures was not disrupted.

Another large futures exchange, the Chicago Mercantile Exchange, will begin buying and selling its very own futures on 12 ,. 18 and can make use of a composite of countless bitcoin prices across a number of exchanges.

The cost of the bitcoin has soared since beginning the entire year below $1,000, hitting an optimum in excess of $16,858 12 ,. 7 around the bitcoin exchange Coindesk. By 6:25 p.m. CST, it had been at $15,244 on Coindesk.

Futures are a kind of contract where a buyer along with a seller agree with a cost for the item to become delivered on the certain date later on, and so the name. Futures are for sale to virtually every kind of security but they are including utilized in goods for example wheat, soy, gold, oil, cacao and, as dramatized within the Eddie Murphy and Dan Aykroyd movie “Trading Places,” concentrated frozen orange juice.

The futures signal greater mainstream acceptance of bitcoin but additionally open bitcoin to additional market forces. The futures allows investors to bet that bitcoin’s cost goes lower — an exercise referred to as shorting — which presently is tough to do.

There has been other tries to bring bitcoin investing in to the mainstream. Tyler and Cameron Winklevoss, twin siblings who own considerable amounts of bitcoin, attempted to produce an exchange-traded fund according to bitcoin, but federal regulators denied their application.

Just how much actual investor interest you will see during these bitcoin futures continues to be up in mid-air. Many bigger Wall Street brokerages and clearinghouses, including Goldman Sachs and JPMorgan Chase, are generally not allowing people to trade bitcoin futures or only allowing select clients to do this. Other brokerages are putting limitations on the quantity of margin an investor may use in bitcoin futures, or putting limits around the amount that may be purchased.

Digital currency has already established greater than its great amount of critics on Wall Street. JPMorgan Chase Chief executive officer Jamie Dimon has known as bitcoin “a fraud.” Thomas Peterffy, chairman from the broker-dealer Interactive Brokers Group, expressed deep concerns concerning the buying and selling of bitcoin futures recently, saying “there isn’t any fundamental grounds for valuation of Bitcoin along with other cryptocurrencies, plus they may assume any cost in one day to another.”

Peterffy noted when bitcoin futures were buying and selling in those days, underneath the CBOE’s rules individuals futures likely would experience repeated buying and selling halts because 10 % or 20 % moves in bitcoin prices haven’t been unusual in recent several weeks.

Bitcoin may be the world’s most widely used virtual currency. Such currencies aren’t associated with a financial institution or government and permit users to invest money anonymously. They’re essentially lines laptop or computer code which are digitally signed every time they’re traded.

A debate is raging around the merits of these currencies. Some say they serve just to facilitate money washing and illicit, anonymous payments. Others say they may be useful ways of payment, for example in emergency situations where national currencies have collapsed.

Copyright 2017 The Connected Press. All legal rights reserved. These components might not be printed, broadcast, re-written or reassigned.

Bitcoin cost soars above $11,000 as central bankers aim to calm fears

Bitcoin capped $11,000 on Wednesday, under 24 hrs after hitting $10,000 the very first time, as central bankers on sides from the Atlantic searched for to help ease fears that the potential bubble within the cryptocurrency was a menace to the worldwide economy.

Digital currency ongoing on its record-breaking streak, rising to $11,150 just like analysts were digesting this news it had managed to get through $10,000. However, after that it fell back below $10,500, again highlighting its volatility.

Bitcoin has risen tenfold in value to date this season, the biggest gain of asset classes, prompting sceptics to declare it a vintage speculative bubble that may burst, such as the dotcom boom and also the US sub-prime housing crash that triggered the global financial trouble.

Q&A

What’s bitcoin and it is it a poor investment?

Bitcoin may be the first, and also the greatest, “cryptocurrency” – a decentralised tradable digital asset. It could be a bad investment may be the $97bn question (literally, since this is the current worth of all bitcoins around). Bitcoin are only able to be utilized for a medium of exchange as well as in practice continues to be much more essential for the dark economy of computer has for many legitimate uses. The possible lack of any central authority makes bitcoin remarkably resilient to censorship, corruption – or regulation. Which means it’s attracted a variety of backers, from libertarian monetarists who enjoy the thought of a currency without any inflation with no central bank, to drug dealers who choose the truth that it’s difficult (although not impossible) to follow a bitcoin transaction to an actual person.

“The madness of crowds is extensively recorded, but it’s quite something to behold within the flesh. It’s hard to maintain this – bitcoin just travelled beyond the $11,000 mark, bouncing $200 in barely 5 minutes before you take another big leg greater,” stated Neil Wilson, senior market analyst at ETX Captial.

“It’s up greater than 14% today alone and also the year-to-date chart is just staggering. There aren’t any fundamentals or technicals that specify this apart from it as being a massive speculative bubble.”

The rapid development in the worth and recognition from the virtual currency, which emerged as a direct consequence from the economic crisis and enables individuals to bypass banks and traditional payment methods to cover products or services, has forced central banks, financial regulators and institutions to think about how you can respond.

Bank of England with financial stability, stated bitcoin was they canrrrt pose a danger towards the global economy.

He told BBC Radio 5 Live: “This isn’t a currency within the recognized sense. There isn’t any central bank that stands behind it. For me personally it’s a lot more just like a commodity.

“This isn’t in a size where it’s a macroeconomic risk towards the global economy, however when costs are moving like this, my view could be investors have to do their homework.”

Over in america, William Dudley, obama and leader from the Fed Bank of recent You are able to, stated bitcoin is “more of the speculative activity” than the usual currency.

“I could be pretty cautionary about this. I believe that it is not really a stable store of worth,Inches he stated in an event in Nj. “I could be, at this time, pretty sceptical of bitcoin,” he added.

Dudley echoed Cunliffe’s point the bitcoin continues to be relatively small. “Bitcoin is small in accordance with the quantity of payment transactions which are performed within the U . s . States.”

Commenting on the concept that the Given may potentially offer it own digital currencies, he stated: “I think at this time it’s really very premature to become speaking concerning the Fed offering digital currencies, but it’s something we’re beginning to consider.”

Banks along with other banking institutions happen to be worried about bitcoin’s early associations with money washing an internet-based crime, and contains not been adopted by government.

The JP Morgan leader, Jamie Dimon, has described bitcoin as “worse than tulips”, in mention of the a famous market bubble in the 1600s. Speaking in September, Dimon stated digital currency would be a fraud that will ultimately inflate, adding it had been only fit to be used by drug dealers, murderers and individuals residing in places for example North Korea.

However, based on reports a week ago, JP Morgan is thinking about whether or not to help its very own clients bet around the cost of bitcoin through suggested futures contracts to become provided by CME Group. The financial institution would collect charges for supplying this type of service.

Dennis de Jong, the md in the online currency broker UFX, stated the need for the cryptocurrency was prone to rise further.

“Until bitcoin turns into a generally used payment source, it’s very possible that could hit $15,000 and beyond according to its current desirability,” he stated. “If bitcoin falls into wider circulation, and becomes recognized into more conventional funds and exchanges, we will probably visit a normalisation of their value.”

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Bitcoin value crashes greater than $2,000 among rollercoaster day’s buying and selling

Bitcoin fell as little as $9,000 after losing greater than a fifth of their value getting hit an exciting-time a lot of $11,395 on Wednesday.

The cryptocurrency dropped 8 per cent amid a rollercoaster ride on Thursday hitting $9,000 – an autumn in excess of $2,000 within 24 hrs. In volatile buying and selling, after that it selected as much as around $9,500.

Numerous bitcoin exchanges have observed outages within the last week because they have unsuccessful to maintain demand. Coinbase stated it had been adding around 50,000 new users each day.

Regardless of the latest fall, bitcoin continues to be up almost 900 percent this season as speculation mounts the cryptocurrency might be accepted by mainstream investors.

Greater than 100 new cryptocurrency hedge funds happen to be placed in recent several weeks and Nasdaq and CME Group have both announced intends to provide futures contracts according to bitcoin.

There have been more Google looks for “bitcoin” compared to “Trump” previously week even though the united states president continues to be firmly the main attraction over his 

On Wednesday, the ecu Central Bank stated banking institutions should accelerate the development of instant payments, whereby cash is received immediately and night and day, to counter the allure of digital currencies for example bitcoin.

Yves Mersch, part of the ECB’s executive board, was dismissive of those digital tokens but he advised commercial banks to supply an alternate.

“Banks have to implement instant payments as quickly as possible and supply an alternate narrative towards the ongoing public debate around the alleged innovation introduced by virtual currency schemes,” he told a celebration in Rome.

Some central banks for example Sweden’s are thinking about presenting their very own digital currency.

Read our bitcoin explainer here

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