Inside Basis Vol. 8: Hash Basis Turns 1 🎂

Mackenzie Patel
Mackenzie Patel
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March 3, 2024

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Inside Basis Vol. 8: Hash Basis Turns 1 🎂

March 3, 2024

Welcome back to Inside Basis, our monthly newsletter for all things crypto accounting and tax! We skipped the January edition (and I guess we’re late for Feb as well 🤷🏻‍♀️)  since Mackenzie was heads down in tax mode and hiring for a new senior accountant- but we’re back and brimming with fresh ideas, new content and expanded service offerings! Before you ask, we will not be at ETHDenver this week (alas, tax season), but we hope all the bufficorns out there have a fabulous time. 🦄

Hash Basis Beat

What’s new in the Hash Basis universe?

Hash Basis Turns 1 Years Old 🎉

We turned 1 on Feb 15, 2024! The first year of business was incredible and humbling - looking back, it’s amazing to see how much we learned, how many wonderful customer interactions we had and all the crypto accounting & tax work we produced. We are so grateful for everyone that’s been on this journey with us. Year 2 is all about honing our craft, thoughtfully expanding our team, and getting creative with our outside branding.

I recently finished reading the Steve Jobs biography by Walter Isaacson, and even though Jobs was a tech and product wunderkind, his entrepreneurship style is relevant to any kind of business. Concepts like pure attention to detail, timeless marketing, “think different”, and dogged hard work are recipes for a lasting company, which is what we’re trying to build at Hash Basis. Steve was able to associate his brand with brilliant minds in humanity (i.e. Einstein, Bob Dylan, Ghandi), elevating his products from mere hunks of metal to genius enablers. I’m noodling on how to do this for Hash Basis, transforming our services from humdrum bookkeeping and tax prep to something greater, something that inspires and elevates humanity.

Mackenzie’s Accounting Journey on YouTube 👩🏻‍💻

The final video in our three-part series, Mackenzie’s Accounting Journey, is complete! In this final installment, Mackenzie chats about leaving her role at Figment to start Hash Basis. It was a blast recording this episode and reliving the early days of starting the HB firm. There was so much we had to do to get off the ground: figuring out the perfect firm name, reading Partnership Charter, designing a website and our flagship colors, getting insurance…it was a never-ending web of tasks and creative challenges, but it was 100% worth it.

If you or someone you know is considering starting a firm, we highly recommend this series - it documents going from a lowly college student to a business owner, and we hope the series inspires others to do the same!

Other Hash Basis Tidbits 🍿

  • We are still hiring for our senior crypto accountant role! Find our job description here.
    • We’re also looking for another part-time tax preparer to help with filing returns - please reach out if you’re interested! Job description here.
  • Mackenzie is an instructor for Cohort 2 of The Crypto Accounting Academy! If you’re looking to level up your crypto accounting knowledge, you should check this out (Cohort 3 starts in May!)

The Tea on Current Crypto Events

Headliner news to pay attention to for crypto accounting & finance professionals

Solana Phone Reaches 60,000 Pre-Orders 🤳🏻

We normally chat about accounting and tax happenings in this section, but we wanted to give the Solana phone some love. Their “Chapter 2” phone crossed 60,000 pre-orders in early Feb, marking an interesting development in the crypto phone industry. Of course, we aped into a pre-order since the price was reasonable ($450) compared to the $1,000+ fee for the latest iPhone. Solana mobiles are expected to ship in 2025 and contains crypto-native features like an integrated Solana wallet and DApp store. Sol to the moon?

If you’re looking for some wholesome history, read up on Sol Price, the defacto father of Costco.

Are Individuals Reporting Their Crypto? 👀

Shoutout to Shehan for compiling these stats! The IRS releases data on responses to various questions on Form 1040, the individual income tax return. For both 2021 and 2020, less than 5% of those who filed 1040s checked the box for disposing of virtual currency (4.4% for 2021 and 1.4% for 2020). It’s hard to reconcile those stats against the survey that Coinbase conducted which suggested 20% of Americans own crypto. Either everyone is just hodling or there’s rampant misreporting going on. 🤷🏻‍♀️

Basis Bytes

Practical tips & tricks for all the crypto accountants out there

R&D Tax Credit for Crypto Startups 🌈

Since we’re deep in tax season, we wanted to highlight the R&D tax credit (section 41 of the IRC) which may be applicable for crypto startups. The IRS wants to encourage innovations and discovery by giving companies a credit they can use to offset any taxable income or payroll taxes. “Research” activities include developing new software, so lots of crypto startups in the US may be eligible for this benefit (note: this is a different but interrelated concept to Section 174 research expenses which are required to be capitalized and amortized over 5 or 15 years).

There’s a basic 4 part test to see if you qualify for the R&D tax credit. Your business activities must:

  • Have a business purpose
  • Be technological in nature (engineering, computer science, life sciences, etc)
  • Eliminate uncertainty
  • Undergo a process of experimentation

From there, eligible expenses (i.e. employee wages, contract wages, supplies) can contribute to the credit, subject to limitations. Make sure to document all your R&D activities thoroughly in case your credit gets audited - adequate support includes job descriptions, calendar logs, Jira tickets, performance reviews, product docs and specs, etc. Once the credit is calculated, it goes on Form 6765!

Here at Hash Basis, we recently started offering R&D tax credit services for crypto startups, so reach out to us if you need help in this area. 🙌🏻

Thank you for reading our latest newsletter! We wish everyone a happy ETHDenver and tax season. 🤗

Mackenzie Patel

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