Steak ‘n Shake Accepts Bitcoin Payments, Customers Face Tax Implications

Steak ‘n Shake, a fast-casual chain, has recently started accepting Bitcoin as a form of payment at its locations across the U.S. This move allows customers to purchase items such as burgers, fries, and other beef tallow-fried goodies using the cryptocurrency. However, experts warn that using cryptocurrencies for such purchases has significant tax implications that customers should be aware of.
According to tax experts, any purchase made using Bitcoin or other cryptocurrencies is considered a taxable event. This means that customers who use Bitcoin to buy items at Steak ‘n Shake, no matter how small the purchase, are responsible for reporting these transactions to the Internal Revenue Service (IRS) and paying the appropriate taxes. This includes even minor purchases like a $14 combo meal or a $3 Sprite paid for in Bitcoin. Customers must keep detailed records of their Bitcoin transactions and report them accurately when filing their taxes to avoid potential issues with the IRS.
Bitcoin and other cryptocurrencies are treated as property by the IRS, similar to stocks and bonds. This means that any use of Bitcoin for purchases is considered a taxable transaction. When a taxpayer buys and sells Bitcoin, they must calculate the difference between the purchase price and the current market value to determine the capital gain or loss. This amount is then subject to taxation. For example, if a customer buys $100 worth of Bitcoin and it appreciates to $300, using the full amount to purchase goods results in a $200 capital gain, which is taxable.
There are several methods for calculating taxes on crypto-related transactions. The most common method is "first in, first out," where the first Bitcoin purchased is treated as the first one sold for tax-reporting purposes. This method values taxable transactions using the price at which the oldest tokens in the portfolio were bought. However, taxpayers can choose a method that best suits their financial situation, as long as they stick to it throughout the year. The IRS has been tightening its regulations on crypto transactions, requiring taxpayers to document their cost basis and choose a consistent methodology for reporting.
To assist with calculating taxes, several software options are available to track digital asset transactions and calculate the taxes owed. Additionally, certified accountants who specialize in crypto taxes can provide valuable assistance. The IRS typically does not audit taxpayers for small discrepancies, but with the increasing reporting requirements for centralized exchanges, even small transactions may be reported to the government. Therefore, it is crucial for taxpayers to accurately report all their tax liabilities to avoid potential issues.
Some experts argue that tracking and reporting small transactions, such as a $20 Steak ‘n Shake dinner, is unnecessary and burdensome. Coinbase has been advocating for a de minimis exemption for cryptocurrency microtransactions, which would exempt small transactions from reporting requirements. However, this exemption has not yet been implemented, and crypto holders are still responsible for reporting all transactions, regardless of size. One way to avoid taxable events when purchasing goods and services with crypto is to use stablecoins, which have a fixed value pegged to the U.S. dollar. However, converting Bitcoin or other cryptocurrencies to stablecoins is still a taxable transaction.

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