CWS e 8: Crypto and Your Taxes

Full video here:https://youtu.be/Nbssed9-2SI

 

 

The intersection of Crypto Currencies and taxes is a very tricky subject.

In this podcast we address the difference between short term gains and long term gains and how some tax payers may even be in a 0% bracket without even realizing it.  

Ever wonder how Airdrops are taxed?  Or what about forks?  What happens when you swap a main net coin for a token. i.e Ethereum for an ERC-20 token.

 

How is mining treated and when is the tax applied?  Is the tax applied when you receive the coins or is it applied when you sell the coins?

What about wash sale rules?  Are you allowed to claim a loss and immediately buy your bitcoin back?   How does the IRS view crypto?

All of these subjects and more are discussed and make sure to stick around for our ad at the end which goes over important reasons to consider a crypto IRA?

Rough outline below:

 

Today we are joined by Beth logan who is an enrolled agent with kozlog tax advisers.  Beth is one of the few tax professionals who has an understanding of crypto and more importantly what that means for you and your taxes.   The government has sure made it difficult for people to understand what the heck is going on.  IRS says bitcoin is property but what does that mean for others…. CFTC says it’s a commodity and the SEC says that ICO’s are more than likely securities but bitcoin and Ethereum aren’t securities.  Bottom lines it’s a mess.  A lot of people are confused and that’s where Beth can help us out.

 

 

I think the first thing people want to know is what is an enrolled agent and maybe what the difference between an EA and a CPA we’ve all heard of  Certified public accountants but most people probably have no idea what an EA is? So can you help us out a little and break down the distinction.

 

Beth Logan:  taxes@kozlog.com

 

 Some of the questions we answered:

1. What are some important distinctions crypto investors need to make as it pertains to how their gains are treated.
   1. Lets say I got started early and I was mining with my laptop… How would that be treated?
   2. What about the person who bought a few bitcoin off coinbase several years ago and last year they exchanged some of it for another crypto?
      1. Would this be treated as a like kind exchange even if it happened before 2018 in your opinion.
      2. We’ve seen some examples where someone turned $5000 of bitcoin into $500,00 then they exchanged the 500k into another crypto that lost 90%.... which is most of them. Let’s say they owed 100k in taxes and now they don’t even have $100k…   What should someone in this case do? And this is a very real possibility for a lot of people
      3. Are gains treated differently if I’m a day trader vs a long term HODLER?

 

2. Running into the end of year. What should people be mindful of as they are doing their taxes.  Any last second things they need to be aware of?

 

1. Segway into Wash sale rules and property vs security. Could someone sell bitcoin today who bought it at $20k.  Take the loss and immediately buy back. Could they buy back same day?  Wait 30 days?   Get into 3k max loss but can offset future gains
   1. Long term vs short term gains
   2. Anything else

                   

3. What about crypto businesses or ICO’s that raised maybe $25 million in Ethereum and maybe now its only worth $2.5 Million. If they pay their employees in Eth are the employee’s basis the price of ether when it was transferred?  Can the company write any of these losses off?
   1. Probably something this company would want to talk with you or someone like you one on one as a lots going on.
4. Question from the audience: What about people who mainnet coins to tokens? Someone exchanges ETH for an ERC 20 token like Binance coin?
5. good crypto tax trackers recommended,
6. Anything I didn’t touch on that you think people should be aware of

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Can you work with people around the country?

How people can reach you       - ok to link in show notes?

-How you charge -Hourly        - do you want to say how much?