Starbucks locations are gearing up for Bakkt's integration, Bakkt , which affords the renowned coffee shop's patrons the option to use bitcoin when purchasing their preferred caffeinated drinks. bitcoin yet, tax implications could pose a significant hurdle to the smooth operation of this crypto payment method.
The reality of extensive cryptocurrency adoption in the retail sector largely hinges on the speed at which people can spend these digital currencies as effortlessly as traditional money.
Meanwhile, numerous retailers have begun accepting bitcoin along with other digital currencies, but widespread adoption is still pending, as most establishments accepting businesses accepting crypto cryptocurrencies as alternative payment options tend to be smaller or medium-sized businesses.
However, this scenario may evolve significantly since Starbucks recently acquired a substantial stake in Bakkt, though they are not actually investing cash within this crypto platform.
Bakkt's Plans to Offer Cryptocurrency Payment Options to Starbucks Patrons
As reported by The Block, Starbucks are now underway to develop a special application and card enabling the popular coffee brand to become Bakkt's premier merchant on their platform.
Initially, only U.S.-based customers will have the benefit of using bitcoin to foot their Starbucks coffee bills.
The equity was issued post the formalization of the Starbucks-Bakkt partnership, which would entail bitcoin payments. However, the partnership announcement was delayed pending a decision by the CFTC.
https://twitter.com/mdudas/status/1102566322175660032
Although the Starbucks-Bakkt alliance made bitcoin a viable payment at Starbucks, the coffee chain does not accept bitcoin directly; payments in BTC are converted to USD facilitated through Bakkt's technology.
This payment mechanism's major drawback involves the mandatory tax documentation for Starbucks coffee purchases made in bitcoin, a fact noted by several Twitter users. Crypto fans must calculate capital gains on each coffee cup bought with BTC.
Remember, should Starbucks ever officially start accepting bitcoin payments, you'll need to account for capital gains on every coffee purchase. https://t.co/nMZLGJTfc4 We are trying to change that
— Neeraj K Agrawal (@NeerajKA) March 5, 2019
Even as Starbucks steps into broader bitcoin adoption, customers eager to use bitcoin may encounter complications due to tax reporting .
Should You Go Through the Hassle of Paying with Bitcoin (BTC) for Your Coffee?
The IRS provided cryptocurrency guidance back in 2014, clearly stating that virtual currencies should be regarded as properties and thus, general tax principles on property apply to cryptocurrency transactions.
Every time coffee is bought with bitcoin, the transaction requires comparing bitcoin's purchase-time price to the filing time price to determine capital gains or losses.
While tax filings can account for capital losses, purchases also involve reporting any capital gains associated with BTC coffee transactions, which might be overwhelming for an average crypto afiicionado longing for a caffeine fix.
2Comments
Disregarding IRS directives, if you possess bitcoin, you don't need to report each transaction. Reality shows individuals are already exchanging bitcoin for services free from IRS scrutiny.
The answer is – no. It is not worth it.
Bitcoin's price unpredictability means one participant often faces a disadvantage in these exchanges.
For transactions like these, stability in coin value is essential.