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Decentralized autonomous organizations: Tax considerations

Published 02/06/2022, 09:11 AM
Updated 02/07/2022, 11:20 AM

A decentralized autonomous organizations (DAO) is an organization that is managed by a computer program powered by blockchain and run by a group of individuals who collectively vote to decide on organizational proposals. Typically, each member’s voting power is determined by their percentage interest in the DAO, which is calculated by dividing the digital assets contributed by a member by the total amount of digital assets in the DAO.

A DAO generally (but not always) operates without the need for a board of directors or other governing body and can provide an effective and (potentially) secure platform to gather individuals and resources to achieve a collective goal.

Chris Kotarba is the managing director at Alvarez & Marsal Taxand, LLC in San Jose, California. He specializes in international tax and his primary areas of concentration are planning, structuring, and transfer pricing, both outbound and inbound, for multinational companies of all sizes. He has specialized expertise in transactions involving cryptocurrencies, NFTs, and other digital assets, including ICOs, forks and token swaps.
Qiaoqi (Jo) Li is an international tax associate with Alvarez & Marsal Taxand, LLC in San Jose, California. Her areas of focus include international tax and transactions involving digital assets.

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