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Understanding revenue recognition in the context of blockchain transactions is essential for accountants and bookkeepers navigating the complexities of Web3. Specifically, the revenue recognition principle dictates that revenue should be recognized when a performance obligation is satisfied. This means revenue is recorded when the customer gains control of the goods or services provided, as defined in accounting standards.For digital asset accountants and Web3 businesses, this principle is particularly relevant when dealing with staking activities, as it impacts both financial valuation and compliance with tax regulations.What Is Staking and How Does It Generate Rewards? Staking involves allocating cryptocurrency to support blockchain infrastructure, often by operating a validator. Validators earn rewards—typically in the form of native blockchain tokens—for validating transactions. Similar to earning interest, staking rewards incentivize participation in securing the network.However, a critical accounting question arises: When should staking rewards be recognized as revenue? Should they be recorded while still under the custody of the validator, or only after being transferred to a wallet owned by the business? This distinction matters because validators often manage assets for multiple parties.Revenue Recognition for Staking Rewards The IRS has clarified that staking rewards must be reported as income based on their fair market value at the time the taxpayer gains control over them. This means revenue should be recognized when rewards are transferred from the validator to a wallet controlled by the business. Until that point, businesses do not have full control over these rewards, making it inappropriate to recognize them as revenue earlier.Accounting Implications If a business opts to record staking rewards as Accounts Receivable while they remain under validator custody, they must adjust their entries upon transfer.&nbsp;For example:<ul><li>Debit Accounts Receivable and credit Staking Revenue when rewards are earned but not yet transferred.</li><li>Once transferred, additional entries may be needed to account for fair value changes.</li></ul>This approach ensures compliance with both accounting principles and tax regulations while maintaining accurate financial reporting.Why This Matters Properly recognizing staking rewards is not just about compliance—it also affects:<ul><li>Business Valuation: Misstating revenue can distort financial health and mislead stakeholders.</li><li>Tax Reporting: Incorrect timing of income recognition may lead to penalties or audits.</li><li>Asset Valuation: Staking rewards fluctuate in value, so accurate reporting ensures that financial statements reflect true market conditions.</li></ul>Final Thoughts Staking activities highlight how traditional accounting principles intersect with emerging blockchain technologies. By adhering to proper revenue recognition practices and understanding tax implications, accountants can ensure accurate reporting and help businesses navigate this evolving landscape. For Web3 professionals, staying informed about these nuances is critical to maintaining compliance and fostering trust among stakeholders.&nbsp;Sources:Haqshanas, R. (2025, January 2). IRS delays new crypto tax reporting rules until 2026. 99Bitcoins. Retrieved February 22, 2025. Warfield, D.E., Kieso, J.J., &amp; Weygandt, T.D. Intermediate Accounting (18th Edition). Wiley Global Education US, 2022.Disclaimer: The information provided in this blog is for educational purposes only and should not be considered as professional accounting, tax, or financial advice. Stoic Bookkeeper is not a licensed CPA or tax professional. We soley provides services related to general bookkeeping services. Readers are encouraged to consult with a qualified CPA or licensed tax advisor before reconciling or accounting for digital asset transactions to ensure compliance with applicable laws and regulations. Stoic Bookkeeper LLC has access to numerous licensed proffesionals, and we are happy to schedule a consultation.&nbsp;

Recognizing Revenue from Staking Digital Assets

Tax season can be a stressful time for many individuals and businesses, especially in a bustling city like Los Angeles. With its unique tax regulations and diverse economic landscape, preparing for tax season requires careful planning and organization.&nbsp;<h2>Start Early and Stay Organized</h2>The key to a stress-free tax season is starting early. Begin by gathering all necessary documents, such as W-2s, 1099s, and receipts for deductible expenses. Keeping these documents organized throughout the year can save you significant time and effort when tax season arrives.<figure id="figure-hf3f34mtl9m7hrqnkf"><img id="hf3f34mtl9m7hrqnkf" src="https://media.gettyimages.com/id/2179430871/photo/finance-and-economy.jpg?b=1&amp;s=2048x2048&amp;w=0&amp;k=20&amp;c=TxDE6FioDvnRFXXrrhQC9zREch-QLQsQgI-XBm9swfQ=" alt="tax documents" class="object-cover bg-gray-100" style="aspect-ratio: 16/9;" data-mce-src="https://media.gettyimages.com/id/2179430871/photo/finance-and-economy.jpg?b=1&amp;s=2048x2048&amp;w=0&amp;k=20&amp;c=TxDE6FioDvnRFXXrrhQC9zREch-QLQsQgI-XBm9swfQ=" data-mce-style="aspect-ratio: 16/9;"></figure>Consider using digital tools to help with organization. Many apps and software solutions are available to scan and store your receipts and documents securely, which reduces clutter and ensures you have everything you need at your fingertips.<h2>Understand Local Tax Regulations</h2>Los Angeles has specific tax regulations that can affect your filing process. For instance, if you own property or run a business in LA, you might be subject to local taxes that differ from federal ones. It’s crucial to familiarize yourself with these regulations or consult a CPA who understands the local landscape.<figure id="figure-ndp6uezc74m7hrqnkf"><img id="ndp6uezc74m7hrqnkf" src="https://media.gettyimages.com/id/1463288473/photo/los-angeles-ca.jpg?b=1&amp;s=2048x2048&amp;w=0&amp;k=20&amp;c=68038FKCx19fjFCpxescTsnx70nqdxEk5n2ZmwhR4dc=" alt="los angeles skyline" class="object-cover bg-gray-100" style="aspect-ratio: 16/9;" data-mce-src="https://media.gettyimages.com/id/1463288473/photo/los-angeles-ca.jpg?b=1&amp;s=2048x2048&amp;w=0&amp;k=20&amp;c=68038FKCx19fjFCpxescTsnx70nqdxEk5n2ZmwhR4dc=" data-mce-style="aspect-ratio: 16/9;"></figure>Additionally, be aware of any tax incentives or credits available to Los Angeles residents. These can provide significant savings but are often overlooked by taxpayers unfamiliar with local policies.<h2>Maximize Deductions and Credits</h2>One of the best ways to reduce your tax liability is by maximizing deductions and credits. Common deductions include mortgage interest, state taxes paid, and charitable donations. A local CPA can provide guidance on which deductions apply to your situation.<ul><li>Home office expenses</li><li>Education credits</li><li>Energy-efficient home improvements</li></ul>Don’t forget about lesser-known deductions specific to California residents, such as certain medical expenses or disaster-related losses.<h2>Consider Professional Help</h2>Navigating the complexities of tax preparation can be overwhelming, particularly if you have multiple income sources or investments. Hiring a professional CPA can alleviate some of this burden, ensuring that your taxes are filed accurately and efficiently.<figure id="figure-92v73v9olpm7hrqnkf"><img id="92v73v9olpm7hrqnkf" src="https://media.gettyimages.com/id/961308742/photo/securing-finance-for-their-future-dreams.jpg?b=1&amp;s=2048x2048&amp;w=0&amp;k=20&amp;c=fOx3dfhvhYnGxy2z1heTH43EWxOU9HV1HPtKV9PVIPs=" alt="accountant office" class="object-cover bg-gray-100" style="aspect-ratio: 16/9;" data-mce-src="https://media.gettyimages.com/id/961308742/photo/securing-finance-for-their-future-dreams.jpg?b=1&amp;s=2048x2048&amp;w=0&amp;k=20&amp;c=fOx3dfhvhYnGxy2z1heTH43EWxOU9HV1HPtKV9PVIPs=" data-mce-style="aspect-ratio: 16/9;"></figure>CPAs have the expertise to identify potential issues before they arise and can represent you in case of an audit. Moreover, they stay updated on the latest tax laws and changes, providing peace of mind come tax season.<h2>Plan for Next Year</h2>Once your taxes are filed, take some time to reflect on what went well and what could be improved. Consider adjusting your withholdings or estimated tax payments if you received a large refund or owed more than expected.By planning ahead and implementing new strategies throughout the year, you can make the next tax season even more manageable. Remember, preparation is key to reducing stress and ensuring a smooth tax filing process.

How to Prepare for Tax Season in Los Angeles: Tips and Insights

Bitcoin - Crypto Currency Wallet On A mobile Phone

Over the course of the past couple of years, FASB has been taking into consideration the proper methodology associated with how to account for digital assets on the balance sheet. Accordingly, to ASU 2023-08, which was recently made into effect last December 2024, states that businesses that have acquired digital assets must reflect them on their financial at the Fair Market Value, which also includes both assets and liabilities, both short term and long term (Rashty 2024). Digital assets have been developing vary use-cases across various blockchain ecosystems, includes the ability to use certain digital assets, such as Bitcoin, as a form of collateral, to then borrow against, and take out a long-term loan. These crypto loans can be in the form of an alternative digital asset which is subject to charges in prices / exchanges rates, which then in turn has an ever-changing Fair Market Value that must be accounted for. &nbsp;The FASB ruling, ASU 2023-08 also coincided with what is mentioned in Intermediate Accounting, “Companies have the option to record fair value in their accounts for most financial assets and liabilities, including noncurrent liabilities. Fair value measurement for financial instruments, including financial liabilities, provides more relevant and understandable information than amortized cost. If companies choose the fair value option, noncurrent liabilities, such as bonds and notes payable, are recorded at fair value, with unrealized holding gains or losses reported as part of net income. An unrealized holding gain or loss is the net change in the fair value of the liability from one period to another, exclusive of interest expense recognized. (Warfield 2022, Section 13-42).” Therefore, when a business acquires a loan in the form of a digital asset, the company will not only reflect the Fair Market Value or technically what the cost basis was at the time of acquisition but also periodically make necessary adjusting entries to account for either unrealized gains or losses (short-term or long-term). This way, when the business closes out their books for a specified period, the digital asset account that represents long-term liabilities will properly reflect the Fair Market Value for that specific ending period. &nbsp;Of course, as both interest and principal payments are paid off over the course of time, the business can make the corresponding entries to account for the interest expenses along with the overall ammortization of the loan. In terms of digital asset accounting, the debits and credits associated with the journal entries will be reflected at the Fair Market Value during the exact time of disposal. Moreover, since the digital asset loan value may have appreciated in value since the date of acquisition, and there are disposals that are occurring, a company must also account for any realized gains or losses for tax purposes, even if the digital asset was acquired in the form of a long-term liability. &nbsp;&nbsp;Rashty, J. (2024, December). FASB’s new guidance on accounting for crypto assets. The CPA Journal. Retrieved from https://www.cpajournal.com/2024/12/25/fasbs-new-guidance-on-accounting-for-crypto-assets/#google_vignette &nbsp;Warfield, Donald E. Kieso, Jerry J. Weygandt, Terry D. Intermediate Accounting. Available from: MBS Direct, (18th Edition). Wiley Global Education US, 2022.&nbsp;

Crypto Loans & FASB Best Practices

<h3>Accounting is no longer just about crunching numbers—it's about leveraging cutting-edge AI tools to save time, reduce errors, and deliver deeper financial insights.</h3><figure id="figure-t4otkoxjtom6la18qm" class=""><img id="t4otkoxjtom6la18qm" src="https://cdn.durable.co/blocks/109cjGjxKQqXFKkrIUPwErmpVYWL0OgmdOyf7LM0bYBSBIiFossc2BE22xOWalCh.png" alt="" title="" class="object-cover bg-gray-100 rounded-lg md:rounded-xl lg:rounded-2xl" style="aspect-ratio: 3/2; object-position: undefined undefined;" data-corners="default" data-aspect="3:2" data-caption="" data-positionx="undefined" data-positiony="undefined" data-fullwidth="false" data-mce-src="https://cdn.durable.co/blocks/109cjGjxKQqXFKkrIUPwErmpVYWL0OgmdOyf7LM0bYBSBIiFossc2BE22xOWalCh.png" data-mce-style="aspect-ratio: 3/2; object-position: undefined undefined;"></figure>In 2025, a wave of innovative platforms is transforming the profession, automating up to 95% of routine tasks and empowering accountants to focus on strategy. Whether you're managing clients or streamlining your own business, these AI-powered solutions are redefining what's possible in modern accounting.&nbsp;Ramp: Automates expense categorization, receipt collection, and invoice processing. Includes AI-powered coding suggestions and real-time reporting. Recent Developments: Added treasury solutions to optimize cash flow and integrated with Workday for enhanced financial management. Best For: Businesses focused on expense management and accounts payable automation.Pilot: &nbsp;Combines generative AI (Pilot GPT) with expert bookkeeping, tax preparation, and CFO services. Recent Developments: Expanded its Pilot GPT capabilities in 2023 to automate data entry and offer strategic insights. Best For: Startups requiring both automation and expert financial guidance.Botkeeper: Automates bookkeeping tasks like bank reconciliation, transaction categorization, and financial reporting. Offers human oversight for enhanced accuracy. Recent Developments: Continues to improve machine learning algorithms for more precise predictions. Best For: Accounting firms managing multiple clients.Bookkeeping.ai: Automates 95% of accounting tasks, including ledger preparation, tax form generation, and real-time financial advice. Recent Developments: Introduced AI-driven tax chat for instant regulatory insights. Best For: Small businesses needing high levels of automation.Basis: Streamlines workflows with AI agents for data entry, reconciliation, and report preparation. Recent Developments: Raised $34M in Series A funding in December 2024 to address labor shortages in accounting. Best For: Accounting firms seeking efficiency improvements.Kick: Self-driving back office with automated transaction categorization and tax preparation. Recent Developments: Secured $9M in seed funding in October 2024 to expand operations. Best For: Small businesses looking for affordable bookkeeping solutions.Vic.ai: Focuses on accounts payable automation with AI-powered invoice processing and purchase order matching. Recent Developments: Integrated predictive analytics into its platform for better financial insights. Best For: Mid-sized to large enterprises managing complex accounts payable workflows.Truewind: Provides concierge bookkeeping services combined with AI for monthly closings and financial reporting. Recent Developments: Enhanced its R&amp;D tax credit services in 2024. Best For: Startups requiring precise financial management.<h3>Additional AI-Accounting Tools</h3>Booke AI: Automates reconciliation and categorization with RPA and Generative AI. Offers OCR for invoices and receipts. <ul><li>AI Capabilities: Detects inconsistencies in books, generates interactive reports, and integrates with QuickBooks/Xero.</li><li>Best For: Accounting firms seeking comprehensive automation.</li></ul>cc:MonetKey: Fraud detection, inventory management, automated invoicing. <ul><li>AI Capabilities: Continuous monitoring for anomalies and advanced ledger management.</li><li>Best For: SMBs needing fraud prevention alongside bookkeeping.</li></ul>Shield AIKey: Advanced automation for complex accounting tasks. <ul><li>AI Capabilities: Predictive modeling to streamline financial workflows.</li><li>Best For: Enterprises handling large-scale accounting operations.</li></ul>

Emerging AI Accounting Tools for 2025

Gold Bitcoin. Cryptocurrency  Data Concept

<h2>Understanding the Repeal of SAB 121</h2>In recent years, the intersection of banking and digital assets has become increasingly significant, with regulatory frameworks continually evolving to accommodate this burgeoning sector. The repeal of Staff Accounting Bulletin No. 121 (SAB 121) marks a pivotal moment that could reshape the landscape for banks engaging in digital assets. Initially, SAB 121 provided guidelines on how banks should account for, and report on, digital assets. Its repeal, however, raises critical questions about the future direction of financial regulations in this space.<figure id="figure-m1e59o1ngm6hmh8dl"><img id="m1e59o1ngm6hmh8dl" src="https://cdn.durable.co/getty/18ReC6sW479i3nIfVfKPnNRbXEhYcKafOH2l1oNKY4xVgtO8U0NtoGebaETHUO1r.jpeg" alt="banking regulations" class="object-cover bg-gray-100 rounded-lg md:rounded-xl lg:rounded-2xl" style="aspect-ratio: 16/9;" data-mce-src="https://cdn.durable.co/getty/18ReC6sW479i3nIfVfKPnNRbXEhYcKafOH2l1oNKY4xVgtO8U0NtoGebaETHUO1r.jpeg" data-mce-style="aspect-ratio: 16/9;"></figure><h3>Implications for Banks</h3>The repeal of SAB 121 has immediate and long-term implications for banks. In the short term, banks may experience a degree of uncertainty as they navigate the absence of specific guidelines. This uncertainty can impact their operations, particularly in areas like compliance and risk management. However, the repeal also presents an opportunity for banks to explore more flexible accounting practices that align with their strategic objectives.Long-term, the repeal may encourage banks to innovate in their approach to digital assets. Without the constraints of SAB 121, banks might be more inclined to develop new products and services that cater to the growing demand for digital assets. This could lead to enhanced customer experiences and increased competitiveness in the financial sector.<h3>The Impact on Digital Asset Regulation</h3>Digital asset regulation is a rapidly evolving field, and the repeal of SAB 121 signals a shift in regulatory priorities. It suggests that regulators are reevaluating their approach to digital assets, potentially paving the way for new frameworks that better reflect the dynamic nature of these technologies. This could include more nuanced guidelines that address the unique characteristics of different types of digital assets.Such regulatory changes could have significant implications for the development of digital asset markets. More comprehensive and adaptable regulations could foster innovation by providing clearer pathways for firms to operate legally and securely within these markets.<h3>Opportunities for Innovation</h3>The absence of SAB 121 can be seen as a catalyst for innovation within banks. Freed from rigid accounting requirements, banks have the opportunity to explore new business models and partnerships in the digital asset space. This could involve leveraging blockchain technology to enhance operational efficiency or collaborating with fintech companies to offer innovative financial products.The repeal may also encourage banks to invest in technological infrastructure that supports digital asset transactions. By doing so, banks can position themselves as leaders in digital finance, capitalizing on the growing interest in cryptocurrencies and other digital assets.<h3>Preparing for the Future</h3>As banks adjust to the post-SAB 121 environment, it is essential that they remain proactive in anticipating future regulatory changes. Engaging with regulators and industry stakeholders can provide valuable insights into upcoming developments and help banks align their strategies with evolving standards.Moreover, banks should consider enhancing their risk management frameworks to address potential challenges associated with digital assets. By adopting robust security measures and maintaining transparency in their operations, banks can build trust with clients and strengthen their position in the digital asset market.<h3>Conclusion</h3>The repeal of SAB 121 is a landmark event that underscores the dynamic nature of financial regulation in the context of digital assets. While it presents challenges, it also offers a unique opportunity for banks to innovate and adapt to a rapidly changing landscape. By embracing these changes and preparing for future developments, banks can play a pivotal role in shaping the future of digital finance.

The Repeal of SAB 121: Implications for Banks

Close up of man checking on incomes, using calculator

Understanding how digital assets are reflected on a company’s financial statements can certainly vary based upon a few different criteria, such as; the type of digital assets that the company holds, business model, and if the business complies with either GAAP or IFRS standards. Even though GAAP standards mention that digital assets should be reflected on a company’s balance sheet at the Fair Market Value, in accordance to “Subtopic 350-60 digital assets are measured at fair value under Topic 820 after their acquisition, with fair value changes recorded in current period earnings (Muir 2024).” A company that follow’s IFRS standards may reflect digital assets at cost or net-realizable value, whichever is lower. Moreover, companies that comply with IFRS standards, digital assets can be subject to impairment, along with revaluation back up to the original cost-basis. However, we'll see that IFRS does allow for Fair Value accounting as well, for certain circumstance. The primary differences between GAAP and IFRS standards can be found in KPMG’s recent article listed in the sources below. As mentioned, under IFRS Accounting Standards:&nbsp;"Digital assets classified as intangible assets are typically indefinitely lived and measured after their acquisition at cost less impairment losses.&nbsp;When digital assets are classified as inventory, but the company is not a broker-trader, they are measured at the lower of cost and net realizable value (NRV).” &nbsp;(Muir 2024)&nbsp;Now, why is this the case and what is net realizable value? “The term net realizable value (NRV) refers to the net amount that a company expects to realize from the sale of inventory. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion and disposal (Warfield 2022).” Due to market conditions, it is possible that the fair market value of the digital assets within a company’s inventory could fall below the acquisition price or cost basis associated with the original purchase. Therefore, “a departure from cost is justified because inventories should not be reported at amounts higher than the amount that is expected to be realized from sale or use. (Warfield 2022).” Hence the justification associated behind the IFRS policy. However, according to IFRS standard, there are a couple of paths for companies to also reflect their digital asset holdings at fair value, somewhat comparable to GAAP standards.&nbsp;According to KPMG, “IFRS Accounting Standards offer two possible routes to fair value subsequent measurement of digital assets classified as intangible assets or inventory:&nbsp;The revaluation model in IAS 384 can be applied as an accounting policy option to intangible assets if an active market exists; however, determining whether an active market exists can be challenging.&nbsp;Broker-traders measure their inventory at fair value less cost to sell under IAS 25.” (Muir 2024)&nbsp; Nonetheless, depending on the circumstances associated with how digital assets are treated, such as; inventory or intangible assets, along with jurisdictional requirements, and business model, there is consistency associated with keeping track of cost-basis, along with understanding market conditions, and possibly making adjusting entries accordingly.&nbsp;Sources: &nbsp;Muir, S., Tricarichi, N., &amp; Ahuja, K. (2024, September 6). Digital assets under IFRS Accounting Standards vs US GAAP: The basics. IFRS Institute. KPMG. Retrieved from https://kpmg.com/us/en/articles/2024/digital-assets-under-ifrs-accounting-standards.html&nbsp;Warfield, Donald E. Kieso, Jerry J. Weygandt, Terry D. Intermediate Accounting. Available from: MBS Direct, (18th Edition). Wiley Global Education US, 2022.&nbsp;

Digital Assets: IFRS vs. GAAP – Net Realizable Value, Cost Basis, or Fair Market Value

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Recognizing Revenue from Staking Digital Assets

How to Prepare for Tax Season in Los Angeles: Tips and In...

Crypto Loans & FASB Best Practices

Emerging AI Accounting Tools for 2025

The Repeal of SAB 121: Implications for Banks

Digital Assets: IFRS vs. GAAP – Net Realizable Value, Cos...