U37 – How to Calculate Crypto-Taxes 0:04 Hi everybody, this is John Jay, and I’m going to do my best to summarize and give you the Cliff Notes version of my discussion with Uncle vigilante from Friday, May 21st. 0:14 Yeah, I have some my notes here. 0:17 I just watched that and super fast …

U37 – How to Calculate Crypto-Taxes
0:04
Hi everybody, this is John Jay, and I’m going to do my best to summarize and give you the Cliff Notes version of my discussion with Uncle vigilante from Friday, May 21st.
0:14
Yeah, I have some my notes here.
0:17
I just watched that and super fast motion, super fast speed to time, so I can, I think I’ve covered all the the points we made in the discussion so what we were talking about, which what precipitated the discussion was a couple of things.
0:30
one was the purchase of cryptographic currency and then when it should be reported on your 10, 40, lot of people ask me about that And then how to calculate personal use of the money, the taxes on it? We’re going to talk about that.
0:44
We could talk about, we’re going to cover the 10 99 K, and what happens if it’s inaccurate and how to get a determination letter.
0:51
And then also, the use of the software. It the exchanges, for example, Coin tracker.
0:56
And I don’t want to pick on just coin tracker, I’m just saying, let’s just use that as our poster child for software that you should never really be using, and this in this world here, OK, with the crypto world.
1:08
So starting with purchases, the IRS is very clear about, um, and I, I mentioned in the video.
1:15
You can go look on the irises website, and there’s a link in my previous video on the privacy bite channel at YouTube Where I’m explaining what constitutes the need for it gives rise to the need to say yes, senior 10 40, when you’re buying coins cryptographic currency.
1:32
And the IRS says that: if you purchase cryptographic currency, then you should answer yes, you’re 10, 40, But that actually has a special meaning. It doesn’t mean what you think it does, mostly.
1:42
It means when you use cryptographic currency to buy a cryptographic currency from someone else, it does not mean using dollars to buy a cryptographic currency.
1:51
That does not mean you have to say yes, on your 10 40, ironically, If you use dollars to go into Coinbase or some exchange or buy from your friend, then you buy coins from somebody else with your dollars that does not require you to say yes on 10 40 in response to the question. Did you purchase cryptographic currency the only time that you’re required to say yes?
2:14
When you purchased cryptographic currency, is if you use the currency the coins to buy coins from someone else a third party or a second party.
2:23
Let’s say Exchanging your coins for your own coins It’s the answer’s no in the 10 40 Exchanging dollars for coins anywhere.
2:34
Again, the answer is no when you’re 10 40 exchanging your coins for someone else’s coins, cryptographic currency. That’s what I mean by coins.
2:43
Then the answer is yes, on your 10, 40, according to the IRS Q and A Which I referenced in the video, So we did talk about that.
2:52
I also wanted to touch on, and by the way, guys, when we talk about taxes, taxes are required. There’s no such thing as a tax that you don’t know if there’s a tax, that means it has to be paid.
3:02
So the trick is, don’t have a tax liability, OK, So avoid that situation.
3:07
So there’s no question there, but when you’re dealing with an IRA in the states or a 401 K, remember that these are not your investments, if it best, their savings accounts.
3:17
And there they are truly the investment of the fund manager for the 401 K, the IRA.
3:23
I should probably exclude the self directed IRA and then the, the Roth IRA if it’s self directed, OK. So, those are the exception, because then you get to decide what assets to buy, But if someone else is deciding what assets to buy and you really don’t have control over it, it’s actually not your investment.
3:38
Just the same, you’re not gonna escape the rules so you can’t rollover your IRA into something that doesn’t consider the tax situation.
3:46
So, if you want to liquidate your IRA, you’re going to pay penalties and taxes because that’s what you agreed to. And that’s why I suggest.
3:56
You know, if you set it up for a specific purpose, go forward with that purpose.
4:00
If you feel like there’s too much risk there, meaning you’ve tied up your money only for a tax benefit, when you think you could be making more money on the other way and then have better tax benefits or management, it might be worthwhile to consider liquidating and paying the penalty.
4:15
So, truly, you could measure the tax and penalty amounts against the lost opportunity amounts you expect, and therefore, look at the lost opportunity as a tax.
4:28
And, again, measured against the actual tax you can calculate based upon the rules for withdrawing your money for your IRA.
4:34
So you have to kind of decide what’s gonna benefit you more financially, but you’re not going to escape the rules. You’re going to have to end up paying taxes if you liquidate your IRA early or your 400 K or something like that.
4:45
Now, um, we did discuss a method that I came up with.
4:51
And this is not just I mean anybody can do this, OK.
4:55
So what we’re trying to do is calculate based upon the original principle invested in cryptographic currency against profits, I’m going to take one I don’t take out the whole new principle.
5:07
OK, so, if I take out a percent of profits later on, when my principal goes way up, I want to measure how much that ratio against my original principle so that when I report a taxable amount, I’m going to be able to deduct my cost basis. I guess is the way you guys would say this. So, I’m gonna give you a real life example, OK? This is where I came up with this.
5:29
If I have, if I start with five years ago, if I start with $23,000, $22,500, $23,500, I put that in cryptographic currency, and I did it over a period of time. So there’s some long term gains, and there are some short-term gains. So you’re gonna have to divide this out.
5:45
But basically, it’s the same equation.
5:48
So let’s say I started with 20 35. I end up with $400,000. I want to take out $20,000 and do something personal with it, in which case it’s going to be taxable, reportable, taxable, gross income.
6:02
What is that?
6:03
$20,000, What ratio is that against my new principal. So, I just divide them out, so I take $20,000 divided by $400,000, and I get a ratio, and I multiply that against my original principal.
6:15
So, my ratio is 5% or 120th, and my original principle is the 5500 when I multiply them together. I get 1175.
6:26
OK, that’s the number I subtract from the $20,000 that I’m spending for my new windfall for personal use.
6:34
I’m going to back out my cost basis, which would be 175 in this case.
6:38
So, the equation looks like this: the money, I’m taking S profit as a portion of my new gains, $20,000 minus, the ratio of my $20,000 divided by the new principal, $400,000. When I multiply it by the original principal, $23,500.
6:58
I subtract that that amount from the $20,000 and I end up with, like I said, the 175.
7:06
My new, taxable, reportable income.
7:11
It’s going to be $18,825.
7:17
So, that is how I would recommend figuring out the taxable amount if you’re going to take part a part of your new windfall and spend it on something personal. Not re-invested.
7:29
The other thing we talked about is that there’s a big difference, OK? So look at all the articles that are on the internet that people are are so excited about regarding taxation and reporting and what the IRS can do and all these new powers they have.
7:40
And, no, there are no new powers. The rules are the same. No laws have changed.
7:45
But the drama is created by all these articles to scare people.
7:51
These articles are based on the presumption that everyone filing a 1040 is going to be using accrual based accounting. This is ridiculous. We’re not going to do that. Accrual based accounting is what Enron did.
8:01
I don’t know if you remember what. What happened with Enron? Enron acquired all these energy producers.
8:06
Then, I don’t know what you want to call it because I’m not in that world.
8:09
But they took their receivables and claimed him as current income for the current tax periods so they can boost their stock value. I don’t even know. There was an accounting rule for this, and they probably invented some county roads. And so basically, it’s fraud. OK, you’re taking accrual based accounting, and you’re it’s not good enough for you. You just have to make it even worse.
8:28
So you abuse it and you create a situation where you have inflated, stock valuation, inflated, stock valuation.
8:37
And that’s what Enron did, OK?
8:39
This is they did this from accrual based accounting, Your large corporations that run the planet, OK? These guys are using accrual based accounting.
8:47
They’re being taxed on the value of their assets and income not upon the realization of the cash from the assets.
8:55
People who fell 10 forty’s are using cash basis accounting. They’re not using accrual based accounting.
9:01
So cash basis. Accounting is like, I explain, it’s what you see is what you get.
9:05
So when I actually have the dollars in my hand, or when I have the right to spend the dollars, let’s say, If I sold an asset and I now have the right to spend the dollars, that is, That is a gain.
9:15
So if I can always avoid having the right to spend the dollars, but I can move the asset around without having the right to spend the dollars that I’m going to avoid again, And this is cash basis accounting.
9:26
So all this stuff you’re hearing on the news is on the presumption that you’re going to do a certain thing. And you don’t have to.
9:32
Now, again, you can’t choose accrual based accounting as I explained in the video, but why? you’re not doing that now. anyways.
9:39
OK, So, it’s cash basis. accounting.
9:42
Then, that brought us into the discussion of coin tracker And I’m, you know, I’m not going to just pick on one software brand, but they’re all the same, OK, so, let’s say coin trackers, the poster child, what you should not be using to do any accounting at all. If you want to do accounting with a kryptos, you can do in terms of dollars, and you can also do it in terms of the actual coin itself. You can have someone create a Balance Sheet and an income statement based upon the number of Bitcoin, OK, in Fractions of Bitcoin and all that.
10:11
Or you can do it in its value in as it Is it calculated out in dollars, or you can even do it in grams of gold? You can do it however you want.
10:18
So your accounting should be done, you should have someone do an accounting for the value of your portfolio or a portion of it, but you don’t need the coin tracker software.
10:28
one, the, I believe, the calculations are incorrect anyways. I believe they’re erroneous because I’ve seen enough cases that I’ve actually had the IRS correct and agree with me on certain cases.
10:38
Um, in fact, I’ve never had the IRS not agree with me, so far.
10:44
I don’t want to go over my limit here, Some probing it, I’m a stay in my lane with this little bit of, if I ever have to go to the IRS, I want to make sure that the request I’m making, I’m clear about this is how it’s correct.
10:56
Many case, don’t use Coin tracker, I’m going to do a screen share with you, I’m gonna show you why.
11:00
this is what we discussed as, well, and, um, with uncle vigilante.
11:05
You say, I’m going to switch over here, All right, so look at what I have here. I have Internal Revenue Bulletin.
11:12
Um, this is what, if you want to share with your tax accountant, this is what I used to create.
11:20
I created, let’s see here, one second.
11:24
one second.
11:27
Yeah.
11:29
All right.
11:32
Let me go back to screen share. Sorry about the interruption.
11:36
So what I have here is the internal revenue bulletin. And everybody wants to know, how the heck are you getting the IRS to agree that the 1099 is erroneous. And what’s the procedure? Your accountant, you know, maybe should understand how to do this. Some accounts have been practicing for a long time, should know how to ask for a letter ruling or determination letter, what we’re doing here is asking for a determination letter.
11:57
It’s a technical distinction between letter rolling.
12:00
You’ll see in here also that this is a demonstration of how to ask for a letter ruling, but it can be used for the determination letter, so I don’t wanna be too confusing.
12:08
But I’m showing you, what I used, and I started doing this way back in 2000 way before Kryptos came along, I did this for other reasons and it was effective for people, I was working with my clients.
12:18
So, you just scroll down, you can see it’s, it’s pretty easy to follow, OK, you can, it tells you how to ask the IRS for an opinion or a legally binding conclusion on a particular transaction, OK, And this is all I did, I just read this thing that I did not reach all 278 pages here.
12:35
But I just, I went quickly down through here, and I found how to create a request for determination letter. And you can see in here, there’s, there are samples of how to do that.
12:44
It took a long time, I mean, I think it took me a few weeks to put this, together. It’s, it’s not an easy thing, and I still use that similar form.
12:50
Later, I had to recreate the formula because I had to recreate it in round 2000, 2015, or 16. I think it was, because people started coming to me with the situation. Actually, I was like, 2017.
13:01
But before that, I had, I’d use this for other purposes. So you get the idea here. So you guys can look this up yourself, OK, no secret. I’m just sharing with you how I do it.
13:12
This is no nothing magical here.
13:14
I’m gonna get rid of this window and I want to go like it should coin tracker. This is for any other reason.
13:20
If for no other reason, This is what you should consider.
13:24
Why would there be disclaimer There should be a disclaimer, But what what does this indicate? If coin tracker who’s supposed to be tracking using software to track where you have a tax liability, OK or the reportable amount of coin value or whatever, and it’s disclaiming all liability. Look at this.
13:40
You acknowledge and agree information provided is is not protected.
13:44
OK.
13:45
Nothing we’re telling you is considered legal or tax advice that right there would tell you that they are not responsible, so they can tell you anything.
13:53
I don’t know, I don’t even think they care about Tanya.
13:57
The truth or anything that’s going to assist you at all, because they’re not liable.
14:02
They really shook me anyways.
14:04
But, look, I mean You are hereby understand and acknowledge that. These acquaint drakkar you’re not being represented by an attorney, or a financial planner, or a broker, or an accountant, or anything like that.
14:15
Use them as your sole exclusive risk.
14:19
All right? That should tell you all you need to know.
14:21
So, how the heck do you do accounting?
14:23
Well, I just told you how to use algebra, a basic understanding of calculating the ratio of your new principle against the profit you want to take, measured against your old principle that you originally invested, because you only get take a portion of that out, and you’ll see if you track that equation.
14:39
If you put in there, instead of the 20,000, you’re putting your whole principle, You will see it works out perfectly, OK, and if you factor in a loss, you’re gonna see how the number comes out to zero, so, you get it right there. And, you can go on … dot com or find a bookkeeper and you can say, Do accounting for me. You can do accounting. In terms of the rupee dollar pound the euro gold grams coins, litecoin, OK, you dollars. You can do accounting However you want.
15:04
You should do your own accounting.
15:06
Do not rely on the software.
15:08
Alright, I’m gonna, I’m gonna stop at this screen. share thing I didn’t want to go to for too long ago to that.
15:15
OK, now in here, we’re talking about Escrow.
15:19
Escrow allows us to move money around and not have to take a game.
15:27
So, I’m going to explain how that works, just one second here.
15:33
Alright, so anytime that you’re able to use escrow you can do this, you can actually put your property that you want to dispose up, you can put it under escrow.
15:42
So, it’s, it has to be qualified esker, that means it’s a third party that’s neutral, it’s only doing escrow. It’s not your Uncle Bob or something like that that you trust, OK?
15:51
So, use it, a real escrow agent, usually this is done with real estate. You can do this with large purchases, too, you can buy a boat this way, but typically it’s done with real estate.
15:59
So, if your agent can’t do this, we can do this. I have a partner where we can actually purchase your coins for your agent and put the money into escrow the dollars or whatever you want and then you can complete your transaction.
16:12
So, this is pretty amazing. Now, for our members where they actually have a setup using a limited liability company and the way we’ve set this up for that purpose, they actually have the same benefit without using escrow.
16:24
It’s just the same that you can use esque or just understand that you can use escrow.
16:28
Escrow allows a person with personal holdings in Kryptos or any like Gold or something like that to put that value into escrow, to liquidate it under escrow terms then close on a purchase or the transfer conveyance of that valued asset into a new type of asset without having gains in dollars.
16:47
All right.
16:48
Um, now, the end side of that is that you take the possession not in your name, use a trust, or a company, or use debt.
16:58
To encumber it legitimate debt.
17:00
So, you can’t do this in the process.
17:04
Without a company, you can use escrow. There’s a fee for that.
17:08
It’s way less than that you’d pay in taxes and it legally avoids the tax situation reporting.
17:14
You if you have an LLC or you have the proper setup, you could do a similar transaction and or use escrow and avoid the need for our fee or service. OK, just say no, I mean, I’ll just tell you guys, so you can, you can figure out what you want to do. I think our service is just a way to help people that don’t already have a correct setup.
17:35
So, but, yeah, so we talked about how to buy a car, and I was making fun of Uncle ….
17:41
Jaunty on, Didn’t get cheapskate, and only spending $50,000 on his wife’s car, So I said, What, about a quarter million dollars?
17:48
And so what we’re talking about is, you would simply sell the asset, using your LLC, you would put the cash in the LLC, and you would move that money to the seller of the vehicle, to the dealer, let’s say. So let’s say you’re buying a car from a dealer, and you would let’s say you wanna pay cash for the car, you can do that.
18:04
I would not put the card my name at that point, I would put it in the name of a trust, I can use an LLC that way, an LLC or a trust or other company.
18:12
That way, it would not be considered as a purchase for something personal or myself, because the car pretty much for most of us, is going to be a personal liability. It’s going to be, it’s going to demonstrate that you acquired something in dollars and it’s worth dollars and therefore it’s your personal income.
18:29
So you want that’s why you want a title and a company name or if you want to put it in your name, you would want to structure it with a loan on there.
18:36
So what you want to do is move your cash from your LLC after you sold the coins and put it into sending it to the dealer and then explain to the dealer that XYZ is the lender and the dealer will write up all the documents, and send the title work, and the lien documents to the lender which could be your company OK.
18:54
And then you want to make sure that you have a record of paying the them, the payments on the loan, and make sure the interest rate is legitimate.
19:02
Fair Market value.
19:03
Let’s say, OK, basically, you’re paying yourself, but really, it’s set up in a way where it’s a third party, OK. You control it, but still, it’s a third party, and do the right thing, and it’ll be a good transaction.
19:13
So, that’s how you would buy a car.
19:15
It’s a simple version, You could, pretty much, by any liability, That way, you could buy a house that way, where I caution people as being eager to pay off consumer debt.
19:23
So what we’re talking about also is, I mean, we can certainly go into more detail, and I’ve mentioned this before in other videos, but If I have a lot of cash, and I wanna just get rid of my mortgage, and I paid off and advance one lump sum, first of all, I’m probably gonna have a huge tax liability, because anywhere.
19:39
I pay anywhere that a personal debt is paid off, it doesn’t matter who’s paying for the personal data, it’s my personal debt. Then it’s considered my income, which whoever paid for it. OK, So that’s something to consider.
19:49
And the other thing is, there’s a better use of capital than paying off consumer debt in one lump sum, because what happens is, you take your cash that can be used for something to generate more money for yourself, and you put it into a liability that actually cost you money.
20:04
So your cache will actually be the opposite of an investment, It starts costing you money if you want to do something like that. So I just recommend against it, it’s a bad use of capital.
20:12
Instead, if, let’s say, for example, this is what we talked about on the on the interview, If I had $150,000 to pay off my $130,000 balance on my mortgage, instead, I could take $15,000 of that and I can buy an asset that doesn’t take a lot of work to manage and I can offset my mortgage payments with that money.
20:29
And then when my mortgage is paid off and let’s say 17 more years, my asset is offsetting that debt on my personal balance sheet.
20:37
So, I still have the debt, but I also have an offset in an asset and when the debt is paid for over the life of the loan, I’m still going to have the asset presumably, OK, so I think that’s a better use of capital.
20:51
We also talked about Yeah, OK.
20:56
A couple of things here, I don’t know what I don’t want to get bounced around too much, but, um, passing off valuable investments to heirs. So there’s a couple things I’d recommend.
21:07
So if you want your children or family to benefit from the thing you’re creating right now, your treasure as I call it, you should you should help them understand what it is. And they should have some financial intelligence. So they understand a few basic principles. Like, for example, don’t make financial decisions based upon how it affects your personal credit. Don’t make financial decisions based upon what you believe to be equity.
21:27
This is like counting your chickens before they hatch, as you’ve heard before.
21:31
Um, don’t make financial decisions solely upon mmm hmm.
21:35
What you believe to be a tax benefit or to obtain a tax benefit? And for no other reason, sometimes you even get in trouble doing that.
21:43
Make financial decisions for the merit of the financial decision so that you can increase your internal rate of return. your capitalization rate, increase your net present value, increase your cash flow, return on principal. Now, those are the things you want to look for.
22:00
Make your decisions based on that.
22:02
Explain that to your heirs because it’s one thing.
22:04
If your children inherit something from you and they don’t know how to use it, it’s actually dangerous.
22:09
So you can easily allow them access to the thing once you’re gone, OK?
22:15
Um, or don’t need it anymore?
22:17
But it’s another thing, as to whether or not they know how to use it.
22:20
So you want to kind of bring them on board about how to do these things, and how to get how to gain some financial intelligence.
22:27
And then we talked a little bit about securing the credentials that access those assets.
22:34
So one way to do it is to keep, like uncle vigilante was explaining, he actually has instructions in a location that, if he were to disappear or not, be around anymore his wife, or family whoever’s leftover could find that, and then know who to contact for assistance on accessing his.
22:52
Credentials.
22:53
For the asset’s, he has that he built up, OK. And that would not risk any disclosure of that access to anyone else.
23:02
It’s just that he would trust those people to work with his wife or family on gaining access and they would just, you know, they, they know how to do all the things anyways, so that way, there’s, no, you’re not, you’re not giving someone the secret password.
23:16
You’re just giving someone access to the secret password that you would want to have access to the password, OK? So, we talked about how to pass on credentials.
23:25
We talked about this a lot in our calls, and I discuss this with the, you know, each of you. And we can actually put a plan together. Some of some of the things I appeal to you, some don’t.
23:35
Some are better for others and than other methods, The other one we’ve talked about is using third party custody.
23:42
And we’re making the joke of, we don’t mind using attorneys for attorney client privilege status in protecting the privacy of the thing you’re doing.
23:51
Like, for example, if I put access to my credentials, let’s say, in a black box or a sealed envelope with a security seal on it and delivered under a contract to a law firm where there’s a specific attorney that’s assigned custody of that. And there’s a succession of attorneys appear, no longer available, then the next one would be responsible, attorneys are bonded.
24:12
So you can use a law firm to take custody of things that they don’t even know what they are. They just know that it’s a black box.
24:19
And that at some point in the future, someone may come to them and give the secret password, so to speak, in which case, under the contract, they’d be required to turn over this black box to the individual.
24:29
Maybe it’s your family member, and then that person wouldn’t know what to do and then I would give him access to the the wealth or whatever the treasure that you created.
24:37
So you gotta give this, these things. Some thought. You got it. You got to really plan this out. I don’t believe we can rely on our banking system for these things anymore.
24:45
So we just have to think this through.
24:47
Generally, what we’re talking about, what I like to say is, it’s better to have more debt on assets and less debt on personal things like houses, cars. Yeah, have some debt, but not too much, What does that mean?
25:01
I don’t know. 20 or 30% on personal things houses cars.
25:05
80%, 50 to 80% on an asset.
25:08
So if I bought an apartment complex, maybe borrow against it, up to 80%, 50 to 80%, OK. Something like that.
25:17
Because the asset is presumably going to be servicing the debt and you’re still going to have your cash flow. Cash flow out of it.
25:23
So, hopefully, that’s the case.
25:27
And then, the 1099 duty.
25:30
OK, there’s no duty created for 1099, so as long as the thing, getting 2009, doesn’t file a tax return, At least in the States, I believe it’s the same in other countries. I haven’t tested that yet. As long as there’s no tax return, then there’s no tax treatment.
25:43
There’s no, What do you call it?
25:46
Duty to reconcile against 1099 will then, nobody cares literally, nobody cares and there’s, no, it’s no, there’s no cheating there. It’s not a trick. It just doesn’t work that way.
25:58
Financial Crimes Network and FinCEN Reporting or Reporting, comes from irregular transactions. And the example I gave was, Let’s say you made $185 a weekend from your paycheck. And then some Christmas Uncle Bob gives you a thousand dollars and you put it in your account, while the financial crimes report may get sent to the Financial Crimes Network on your account. You’ll probably never know about it. It’s all electronic.
26:21
And I think almost every transaction is being reported to the Financial Crimes Network, or it’s get access has been given to that data to FinCEN, as we call it, to see all that.
26:31
Now, at some point, if there’s a really unique situation that does fit the let’s call it fingerprint of money laundering. Then FinCEN.
26:39
We get involved and start communicating with the bank. There would be personnel from FinCEN contacting the bank and they’d be collecting documents and they would look at the account documents that open the account and find out who’s involved. And they had probably do some background investigation and see if there is really a possibility. There’s money laundering, I’m sure that happens all the time. In fact, it’s probably happened to many of us without us even knowing, so don’t think that.
27:00
It’s like in the movies where only $10000 or $3000 thresholds are gonna get investigated.
27:06
If it’s just really irregular or unusual transaction’s, OK, no big deal, just don’t don’t try to get involved in money laundering. And I think I I hit all the items. I hope that was a good Cliff Notes version. Certainly, I can answer questions. You will find a lot of this discussed in other videos. But like I promised. I did want to summarize what we just talked about, we talked about. So I hope that helps, See you guys, on the next call.

Summary

1. The talk discussed the intricacies of calculating crypto taxes, with John Jay providing a summary of his conversation with Uncle Vigilante.
2. Purchasing cryptocurrencies needs to be reported on the IRS 1040 form but only when using one cryptocurrency to buy another, not when using fiat currencies like USD.
3. The tax implications of liquidating retirement accounts like IRAs or 401Ks were explained; any liquidation will trigger penalties and taxes, hence, careful consideration should be given before doing so.
4. John Jay suggested a method to calculate taxes on crypto profits, using the ratio of the new principal against the profit intended to be taken, measured against the original principal invested.
5. They discussed the incorrect assumption that everyone filing a 1040 form uses accrual basis accounting. In reality, most individuals use cash basis accounting, taxing on the realization of cash from assets, not their value.
6. The discussion argued against the need for software like Coin Tracker, with a belief that these tools provide incorrect calculations.
7. The method to get a determination letter from the IRS confirming a 1099 is erroneous was touched on. This is relevant in cases where individuals believe their crypto earnings have been incorrectly reported.
8. Using escrow for large transactions was explained as a way to handle large transactions while potentially avoiding tax implications.
9. The podcast also delved into purchasing high-value items like cars or property with cryptocurrencies, with recommendations to do so under a company name to avoid it being considered personal income.
10. Finally, the importance of educating heirs on how to manage and secure digital assets was emphasized. This included potentially using law firms for the custody of sensitive access credentials for security and continuity.

Leave a Reply