Business Startup

iVLG News Roundup Week 13 2014: Facebook Buys Oculus VR; Washington Passes Crowdfunding; Bitcoin Taxation

Facebook Buys Oculus VR; Non-equity Stakeholders Feel Slighted

After raising $2.4 million through a Kickstarter campaign that helped bring their virtual reality headset to real reality, Oculus VR sold to Facebook in a cash and stock deal worth $1.99 billion. The company announced it was joining Facebook because “[t]his partnership is one of the most important moments for virtual reality: it gives us the best shot at truly changing the world. It opens doors to new opportunities and partnerships, reduces risk on the manufacturing and work capital side, allows us to publish more made-for-VR content, and lets us focus on what we do best: solving hard engineering challenges and delivering the future of VR.”

Facebook buys Oculus VR

The trajectory the company took to a $2 billion exit was sharply upward, seeing as it started the Kickstarter funding raising campaign in August 2012. But critics, including those who supported their Kickstarter campaign, felt slighted by Oculus’ “sell-out.” Some of them even made death threats. One wonders if the early supporters would have felt the same way if they had bought an equity stake in the deal.

Governor Inslee Makes Crowdfunding a Reality in Washington

The work of many in support of business’ access to capital culminated this week when Governor Inslee signed HB 2023, the “crowdfunding” bill. The bill allows certain small securities offerings to non-accredited investors. That is, it basically allows a Kickstarter type campaign but with equity ownership. Check out our post explaining the bill here. While the bill passed and was signed into law, you can’t start selling shares in your company just yet. The Washington Department of Financial Institutions is not slated to issue rules for crowdfunding until April 2015. Washington joins a handful of other states, including Michigan, Maine, and Wisconsin, in passing crowdfunding legislation.

IRS Says Bitcoin is “Property” Not “Currency”

The IRS issued a notice this week detailing the tax treatment of bitcoin and other virtual currency. The IRS is treating virtual currency as “property,” as property is defined under the tax code. The notice details that anyone buying and selling using bitcoin must fix the fair market value of the virtual currency in US dollars at the time of receipt and at the time of payment, and must pay capital gains taxes on any rise in the price of the currency between receipt and payment. This treatment irked many bitcoin enthusiasts, because it significantly increases the administrative burden for bitcoin users as compared to if the virtual currency was deemed to be simply currency rather than property. The notice also highlighted that bitcoin miners must pay income tax on the value of any bitcoins successfully mined. The price of bitcoin slipped considerably in the wake of the IRS announcement. On the bright side, Mt. Gox found $116 million worth of bitcoin in an old style wallet, the equivalent of finding your cash in “another pair of pants.”

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Photo: striatic | Flickr


Gideon Dionne

Gideon has fly fished for trout in rivers on three continents.

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