The best relationships are built on great communication and mutual understanding – which is why the relationship between federal CIOs and the applications that drive their agencies’ performance is getting more complicated. This week on NVTC’s blog, Davis Johnson, the vice president of public sector at NVTC member company Riverbed Technology explains why it’s important to improve your network visibility.


The best relationships are built on great communication and mutual understanding – which is why the relationship between federal CIOs and the applications that drive their agencies’ performance is getting more complicated.Federal leaders are too often in the dark about which applications are delivering value, which personnel are using them, and how those applications are performing. Agencies simply don’t know their apps very well, and understanding applications begins with gaining visibility into the networks they run on.

The network visibility crisis is getting even more serious as agencies move to the cloud and consolidate data centers. The result is that applications are traveling farther distances across agency networks to reach defense and civilian workers that rely on them every day. Agencies need to make sure they have visibility into the new network paths, and roadblocks, that their applications navigate, or face negative impacts to performance and budgets.

In a Riverbed-commissioned survey conducted by Market Connections, over 50 percent of Federal IT respondents reported that it takes a day or more to detect and fix application performance issues. Furthermore, only 17 percent reported being able to address and fix the issue within minutes.

The costs associated with network outages can be staggering. Today, the average cost of an enterprise application failure is $500,000 to $1 million per hour. This is why it is so important to have good network visibility to identify and fix network and performance application problems as they occur.

Many federal IT executives lack the manpower, budget and tools necessary to find and fix performance issues quickly and efficiently. Without the right tools to monitor network and application performance, federal IT professionals cannot pinpoint problems that directly lessen agency or mission effectiveness. This can mean supply chain delays of materiel to warfighters in the field or lack of access to critical defense and global security applications.

Networks need to perform quickly and seamlessly in order to fulfill mission requirements. Performance monitoring tools provide the broadest, most comprehensive view into network activity, helping to ensure fast performance, high security and rapid recovery.

With visibility across the entire network and its applications, IT departments can identify and fix problems in minutes—before end users notice, and before productivity and citizen services suffer. More than two-thirds (68%) of respondents see improved network reliability as a key value of monitoring tools and more than three-quarters (77%) of respondents said automated investigation and diagnosis is an important feature in a network monitoring solution.

Survey respondents shared which features are important in network monitoring, providing a window into their thoughts about current issues. Those features, listed in order of importance, are capacity planning (79%), automated investigation (77%), application-aware visibility (65%), and predictive modeling (58%).

By improving network visibility, an agency will have improved network reliability, know about problems before end-users do, experience improved network speed, maximize employee productivity, and gain have insight into risk management/cyber threats. Because IT executives will be able to see an agency’s whole network, they can become proactive in not only fixing issues but avoiding them as well.

With today’s globally distributed federal workforce, network visibility is critical to monitoring performance, and identifying and quickly fixing problems.

Using network monitoring tools is a critical step toward managing the complex network environment and ensuring transfers to the cloud are effective and beneficial experiences for the agency, the end users and, ultimately, the constituents.

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Bitcoin: What are the U.S. Tax Implications?

May 26th, 2015 | Posted by Sarah Jones in Guest Blogs - (Comments Off)

Although many critics are already considering Bitcoin irrelevant or even dead, technology behind Bitcoin is here to stay. This week on NVTC’s blog, John Calanog of member company CohnReznick LLP discusses the basic U.S. tax implications of using the Bitcoin currency.


In my first blog on the subject, I described Bitcoin and its increasing popularity as an alternative currency.  As the digital currency is becoming more and more prevalent in the marketplace, and for those already exchanging Bitcoins, the following article discusses the basic U.S. tax implications of using the currency. Although there may also be Foreign Bank and Financial Accounts (“FBAR”) and Foreign Account Tax Compliance Act (“FATCA”) compliance requirements, that is not covered in this blog.

What is the U.S. Taxation?

On March 25, 2014, the IRS released guidance in Notice 2014-21 explaining that Bitcoin would be treated as “property” and not as “currency” for federal income tax purposes.  From a practical standpoint, this means that gains and losses on the disposition of Bitcoin will not be treated as “exchange gain or loss” and will not be ordinary in character.  This is bad news for investors who hold depreciated Bitcoin and were hoping to take exchange losses as ordinary losses. However, it is good news for investors who hold appreciated Bitcoin and prefer capital gains treatment.

For those holding Bitcoin for sale in a trade or business (i.e., for “miners”  [1] and “dealers”), income resulting from the sale of such Bitcoin may be taxed as ordinary income.  However, for most investors who merely “trade” in Bitcoin, gains or losses will likely be capital and not ordinary.

From a tax compliance standpoint, the taxpayer has the burden of keeping a record of their tax basis in the Bitcoin and determining the fair market value of the Bitcoin at the time they seek to sell or otherwise dispose of it.  Fortunately, most exchanges and e-wallets have been implementing tools that enable customers to receive the needed documentation.  Still, users without any obtainable records should seek professional tax advice as they are likely going to need to estimate their tax liability from the records they do have on file.

Virtual Currency as Net Earnings from Self-Employment

A taxpayer who receives virtual currency, such as Bitcoin, as payment for services has gross income equal to the fair market value (“FMV”) of the currency, in U.S. dollars, as of the date of receipt.

Moreover, an independent contractor who receives virtual currency for performing services has self-employment income.  The amount of the income is the FMV of the currency, in U.S. dollars, as of the date of receipt.

If a taxpayer’s “mining” of virtual currency is a trade or business and is not undertaken as an employee, the net earnings from self-employment from that activity is treated as self-employment income.

Additional Tax Considerations

There may also be filing FinCEN Form 114, Report of Foreign Bank and Financial Accounts, (FBAR) or Foreign Account Tax Compliance Act (FATCA) reporting requirements.  However, that is beyond the scope of this blog.

Conclusion

Bitcoin has only been around for six years (since 2009) and many critics are already considering it irrelevant or even dead.  However, such pessimism is missing the point.  The technology behind Bitcoin is here to stay.  And that technology is likely to become more significant as developers create new and improved versions.

With the IRS issuing a Notice to give guidance for the tax treatment of this means of exchange suggests that Bitcoin is a real and lasting phenomenon. Technology companies and others using the Internet will need to deal with it in the future.  Our monetary system was not originally designed for the internet or for globalized trading.  This is where Bitcoin comes in – as a truly globalized currency.

_________________________________________________________________________________

The content of this article is intended to provide a general commentary on the subject.  Please seek the advice of a tax professional regarding your specific circumstances.

John Calanog, CPA, is a Tax Manager with CohnReznick LLP and is a member of the Firm’s Technology Industry Practice.  John’s experiences over the last fifteen years include U.S. tax compliance and consulting for C Corporations, S Corporations, Partnerships, and high net worth individuals who operate businesses in a wide variety of industries and taxing jurisdictions.  Contact John at john.calanog@cohnreznick.com. Follow CohnReznick’s Technology Practice on Twitter via @CR_TechInd


[1]Mining is the verification process of running mathematical operations on digital data in order to validate transactions and provide the requisite security for the public ledger of the Bitcoin network. The speed at which you mine is measured in hashes per second.

The Bitcoin network compensates “miners” for their effort by releasing Bitcoin to those who contribute the needed computational power. This comes in the form of both newly issued coin and from the transaction fees included in the transactions they validate when mining. The more computing power that is contributed, the greater their share of the reward.

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Top Technology Trends for 2015

March 17th, 2015 | Posted by Sarah Jones in Guest Blogs - (Comments Off)

This week on NVTC’s blog, Davis Johnson, senior director of Public Sector Sales and Business Development at Riverbed, shares his top tech trends of 2015. 


Technology has always been, and will always be an ever-evolving landscape. A decade ago the trends and policies we saw in the private sector greatly differed from those taking shape in the government, but heading into 2015 it is clear that those siloes have been broken down.

With a national focus on cybersecurity, increased usage of the cloud, and a push towards consolidating IT resources to improve efficiency and save money, we can expect the lines between these groups to continue to blur.

Federal CIOs Will Achieve A Broader View Into Cyber Threats
Unless you have been living under a rock you have probably heard about the Sony hack. If you haven’t, chances are you have heard the President at one point or another talk about cybersecurity and its growing importance as it relates to our national security. In fact, at a February 2015 Stanford University appearance the president signed an executive order requesting public sector IT join forces with the federal government and the military in an effort to strengthen overall security across both groups. During this same meeting the president highlighted some alarming statistics—one of which being that overall cyber threats since he took office in 2009 have impacted more than 100 million individuals and businesses.

Given the importance, and emphasis being place on cybersecurity by both government leaders and businesses, it is safe to say that the cyber conversation will only increase, and evolve in the coming years. With that evolution will come increased usage of tools that allow agencies and companies to look across their entire network for abnormalities and catch suspicious behavior before it escalates. These visibility tools will allow network operators and CIOs to see who is accessing what information and when, and if that information is protected or should not be viewed by the user, allows them intervene before any potential leak or hack occurs.

Analytics will also play a major role in future of cybersecurity by offering increased visibility and proactively alerting security teams to potential suspicious activity.  Currently, Intelligence Advanced Research Projects Activity, which conducts research for the U.S. intelligence community, is using public information and Big Data in an effort to actually predict cyberattacks before they occur. This proactive vs. reactive approach is something we can expect to see more of as the public and private sector solidify and sharpen their cyber processes.

The Cloud Will Continue To Mature
Within the government there has been a notable shift from debating on whether or not to move to the cloud, to picking which cloud option best suits an agency’s needs. While Gartner’s “Private Cloud Matures, Hybrid Cloud is Next” report states that hybrid cloud is today where the private cloud market was three years ago, we can expect to see agencies weighing all of their cloud options in 2015 and beyond.

In fact, one cloud option that has long been popular in the public sector and is now gaining popularity in the government is the public cloud. With the Defense Information Systems Agency’s newly released guidelines, the Department of Defense (DoD) now has a clear outline for what they are able to place in the public cloud, as well as what must to be housed within a virtual environment, among other things. With these guidelines we can expect to see a deeper conversation and openness to public cloud offerings within the government and information from both sides housed in the same place.

IT Center Consolidation
With increased virtualization throughout the government, data center consolidation will continue to a hot topic in 2015 and beyond. By consolidating data centers agencies have the ability to reduce costs, improve their security and streamline overall IT processes. In fact, a 2014 U.S. Government Accountability Office report found that of the 24 agencies participating in the Federal Data Center Consolidation Initiative, 19 agencies collectively reported achieving an estimated $1.1 billion in cost savings and avoidances between fiscal years 2011 and 2013.

While there are obvious benefits that data center consolidation brings, the shift also means that applications are now hosted farther away from employees or federal workers that rely upon them every day. That distance, and the increasing complexity, require networks to keep pace. So federal CIOs and companies will look for tools to assist in consolidating their datacenters over the next few years. These tools will be ones that empower visibility into app and network performance issues, and those that help solve bottlenecks to make sure workers have access to the apps they need so productivity doesn’t suffer. To ensure that consolidated data centers are providing maximum benefits for IT leaders on both sides, we can expect to see them implement optimization tools moving forward as data center consolidation is definitely here to stay.

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