Technology is constantly evolving. When I began law school typewriters and carbon paper were still used in law offices. Though, it was rare – I’m not that old. Today, we work in The Cloud and I personally love doing Zoom trials.
Money is no longer just cash, check, or credit. Just like Zoom has become normal for virtual meetings, virtual money also exists. They’re known as cryptocurrency which uses a technology called Blockchain. The most recognizable is Bitcoin. This currency is often used for investment purposes, but more and more it’s replacing the dollar in common transactions. Bitcoin and similar cryptocurrencies can also be easy to hide from a spouse in a divorce. This isn’t an issue to be ignored.
Cryptocurrencies and Divorce
Divorces can be very contentious. Many former spouses, or even an ex in a paternity or custody case, don’t think twice about trying to pull the wool over your eyes. Bitcoin and other cryptocurrencies are custom-made for doing just this: hiding in plain sight.
Fortunately, to an experienced eye, some red flags or clues can help us find undisclosed cryptocurrency like Bitcoin.
Legal Implications for Cryptocurrency
As an example, in the United States, Bitcoin or cryptocurrency, via IRS Bulletin 2014-21, cryptocurrency is considered property just like a stock. It’s not considered currency like a dollar. So, for tax purposes, cryptocurrency transactions are reported as capital gains and losses on Schedule D of the individual’s 1040. Every sale should be reported on the tax return and a brokerage will submit these capital gains as information to the IRS as if it were a stock transaction.
Stock trading and brokerage statements, along with stocks, bonds, and other transactions, may also have cryptocurrency transactions listed. These statements, often overlooked, should be reviewed to discover any hidden assets.
Something new, but another arrow in our quiver to find hidden assets like cryptocurrency, is discovering what Apps your former spouse has downloaded from the Apple store or Google Play. If any cryptocurrency-related apps have been downloaded, we can ask about these in discovery. There are methods we can use to print out the download history to locate hidden assets such as Bitcoin.
Coinbase.com is a useful resource once we’ve found the asset and need to determine distribution. Remember, cryptocurrency such as Bitcoin, are marital assets subject to distribution in a divorce. It may also be income that should be imputed to a party for purposes of child support, alimony, and attorney’s fees.
It pays to find cryptocurrency, even if many people believe they can hide it. That’s not always true, and piecing together a few of the clues can help us find this often hidden asset.
We are Georgia divorce and child custody attorneys. This is all we have done since 1995. We can help. If you need help, whether about Bitcoin or any other legal issue, or have any questions, we would be happy to speak with you via email, text, or phone. Check us out at www.shawlaw.com