Return on Investment (ROI)

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Return on Investment

A Method of Comparing Investment Opportunities

Any investment has the potential for rewards and risk. Regardless if you are a small investor of a large bank’s portfolio manager, how one approaches the task of evaluating potential opportunities can make the biggest impact on the success of that individual or fund. Today we are going to examine one of the most commonly used ways to quickly assess Return on Investment (ROI) in order to examine its performance as well as compare to similar business models.

What is ‘Return On Investment?

Return on Investment is a performance measure that is used to evaluate how efficient an investment is, or for efficiency comparisons of numerous investments. ROI measures how much return you will receive on an investment relative to the cost of the investment.

To work out the return on investment as a percentage or ratio, you divide the return or benefit of an investment by the cost of the investment.

The formula is as follows:

ROI= (Gain from Investment- Cost of Investment) / Cost of investment

In this case, ‘Gain from investment’ means the proceeds that have been obtained from selling the investment in question.

Because ROI is expressed as a percentage, it allows for easy comparison against returns from other investments, which means you can measure a range of types of investments against each other.

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Keeping Your Bitcoin and other Cryptocurrency Taxes Current

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Taxes, everything Cryptocurrencies like Bitcoin and Ethereum stand against. A centralized tax on a deregulated currency sounds oxymoronic to the ears. Despite this, I get asked about the new taxes the United States Internal Revenue Service recently announced and can understand the confusion. The truth is that tax and cryptocurrency are nothing new and the IRS has had a Frequently Asked Questions about cryptocurrency since 2014. Since these are relatively new laws, it is much less complicated than to backtrack and find what rules are current.

The Federal government recognizes virtual currency as property and is treated as such. As far your own Bitcoin spending and crypto-based taxable responsibilities are concerned, the IRS expects you to treat it as any other domestic property exchanged for goods or services, and or, sold for loss or profit. Before you get ready to file your tax returns as normal, there are some critical distinctions that the IRS has made about reporting investment income activity the selling of virtual currency in regards to this 2014 IRS Notice.

In general, the sale or exchange of convertible virtual currency, or the use of convertible virtual currency to pay for goods or services in a real-world economy transaction, has tax consequences that may result in a tax liability. This notice addresses only the U.S. federal tax consequences of transactions in, or transactions that use, convertible virtual currency, and the term “virtual currency” as used in Section 4 refers only to convertible virtual currency. No inference should be drawn with respect to virtual currencies not described in this notice.

The IRS expects you to keep accurate investing records. So if you are one of the thousands of people who joined the cryptocurrency community within the past three years, Uncle Sam expects you to amend your previous year’s return for the last three years, or from two years to the date of final payment on that year’s tax liability.  To do this, just file Form 1040X, Amended Tax Return, along with the corrected or additional documents you did not originally file with your return. If you think that this may be a big bother over nothing, maybe I should remind you of this.

Most people are finally asking questions about virtual currency tax liabilities because of the profits made from the recent swelling of Bitcoin and Ethereuem market caps. The Federal Government knows that these markets are stabilizing at these historic highs, giving early investors ample opportunity to convert those extremely high returns to U.S. Dollars. As Fortune reported, Through an Investigation and federal summons and ugly lawsuits with the exchange Coinbase, the IRS found out that less 1,000 people were actually following through on their crypto-tax responsibilities.

IRS agent David Utzke reveals additional information about how the agency is conducting the investigation. Specifically, Utzke explains he ran a computer analysis against the IRS’s repository of hundreds of millions of tax records, and found fewer than a thousand people filed a Form 8949 to account for a “property description likely related to bitcoin.

Fortune.com – Jeff John Roberts -” Only 802 People Told the IRS About Bitcoin”

Mar 19, 2017
Regardless of the outcome of the IRS’s probe into Coinbase or other cryptocurrency exchanges, the intent of government seems to point at more transparency in cryptocurrency transactions as well as building cases against tax evaders and money launderers. In one sense, these actions may lead to a more trusted outlook on bitcoin from tradition investors as the eventual death of the historic bull market looms, but that remains to be seen. While we wait for the outcome of the battle for centralized control over deregulated markets, the best we can do is keep accurate records and stayed informed. Coinbase offers its users a tool to help comply with IRS reporting regulations by exporting all transactions. The exhange also goes so far to give taxpayers the link to to the above-sourced notice from 2014, in this article. So one can logicly assume that these laws are current.
It breaks down to this. If you pay someone in virtual currency or receive income based on a convertible virtual currency, meaning trades like a currency on an exchange like, Coinbase, Kraken, etc. you should report the item accordingly as a capital gain or loss on a form Schedule D, or in the case of income from non-employee compensation, Forms and Associated Taxes for Independent Contractors.  Many Independent and Third-Party Contractors are adapting virtual currencies to either pay for labor or allow customers to tip for services or to pay for in-app purchases. I feel these, tax laws will be necessary to know for both small business owners and freelance contract labor as I am of the personal opinion that tradition brick and mortar retailers will have to adopt these virtual currencies to curve the overall decline in physical sales lost to online transactions.
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2016 Filing Status And Income

As with most investment income, profits from selling or converting virtual currency or stock held less than a year are considered short-term and typically taxed at the taxpayer’s Ordinary Tax Rate *see above.  In the Case of Long-Term holdings, or more than one-year, The levy on the sell-for-profit of cryptocurrency is  10% to 15%, unless the filer is classified a High-Income Taxpayer, then the tax becomes 25% to 28%

Please remember that this is not investment or tax advice. You should check with your own tax professional in regards to converting between other virtual currencies or the Treasury Department and IRS, who understand that taxpayers may have questions. The appropriate contact information for an IRS opinion on this topic is, Notice.Comments@irscounsel.treas.gov. Taxpayers should include “Notice 2014-21” in the subject line. OR alternatively:

Internal Revenue Service Attn: CC:PA:LPD:PR (Notice 2014-21)

Room 5203 P.O. Box 7604

Ben Franklin Station Washington, D.C. 20044

Thank you for reading, I plan to follow this up with another installment soon, soon please follow this blog and leave your questions in the comments section below. If you feel like this has helped you and you would like to support this blog.

Bitcoin: 1Q5v1vUT9YXMB9aWz85HfYrpBeGywH3bxk.

Ethereum: 0x13cF24A3636568Bd0f15CFDdDEaE3D8d6261aeb2

Follow me on Twitter.  @a_m_faulkner

and check our cryptocurrency discussion group on facebook.

Happy Mining, Good Luck Trading Everyone.  

-AMF 

 

Update: Demonsaw 3.0.5 Goes Live

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A new release for community has hit the demonsaw.com downloads section.

Here are the latest updates since 3.0 went was launched at DEFCON 24:

[3.0.2]
* queue unauthorized packets then emoty queue once re-authenticated with xfr router
* transfer routers should not be overwritten when refreshing with msg router (keep in memory and replace only). msg router sends back all xfr routers to clients (not just success ones)
* transfer service unauthorized will drop transfer request (to restart). Re-queue and/or don’t restart, just re-group & handshake? Add to post-auth queue and then process upon successful re-connect?
* restart of client should NOT restart transfer routers (allow transfers to continue)
* turn yellow if you have 0 xfr routers
* use transfer router as long as not error status
* max/min transfer routers that are used in transfer? (1 – 8)
* transfer router open fail should abort? Or.. use TTL and fail when we run out of retries?
* right click download, Stop doesn’t appear cross rows (if yes/no)
* fix browse sort crash bug
* wrap all service/acceptor handlers in exception handling
* TwoFish crashes on linux??? (Just use AES for session?)
* 5 sec progress update change from green to blue
* removed early socket close function calls (should fix router crashes)
* return 501 if router uses non AES for session
* router socket->close() – let destructor do it
* porn’s weird file parse issue – i think an exception is thrown tbh
* Only allow folder browsing if folder size > 0
* alpha 1 sets button at 255 alpha?
* auto rejoin client to router if going from 0 -> 1 or 1 -> 0 shares
* minus button remove all (download, upload, etc.)

[3.0.3]
* Stack crash was occurring on Linux due to 4K worker thread stacks
* Increased stack size to 256K
* Added twofish algorithm back
* tooltip for dock widget
* Added tooltips back
* Updated retry to 1 sec (100 ms was DDOSing the router?)
* retry is set to 0-1 sec now…
* Add retries to services & acceptors
* Remove unnecessary error messages
* Unable to write needs to eventually time out?
* retry should be 8
* bring over random retry code from message acceptor to clients (0 – 1000)
* tunnel sockets to 1

[3.0.4]
* Restart ignores previous queued events
* unable to write still doesn’t timeout – it does, just takes 1 min
* playing while downloading corrupted file, resume fixed?
* 1 tunneled socket

[3.0.5]
* 1 thread for message routers
* Display “Upgrade Now” message in chat when incompatible router found

John McAfee Addresses Alleged Fraud From DEF CON 24

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There will be much more to follow, but for now here is an excerpt from my interview with John McAfee an hour before the Demonsaw 3.0 launch party. In this sample, he is addressing claims of alleged unethical behavior.

 

“What we are doing, if anybody can look at anything we are doing on Demonsaw or (Sentinel MG) or all of the other products that we are putting together and find anything about them that isn’t real then feel free to show me…

We have our prototypes, we have some of the brightest minds in the industry developing them and our team is top notch.

So are we all fraudulent? Is Nolan and myself, and the brains behind the artificial intelligence of the most successful video game of all time, Grand Theft Auto… What? Are we all fraudulently grouping together?

Look at how absurd that is.”

John McAfee, proposed CEO MGT 8/5/2016 Bally’s Poker Room, Las Vegas at Defcon 24