{"id":22358,"date":"2023-06-25T10:25:07","date_gmt":"2023-06-25T14:25:07","guid":{"rendered":"http:\/\/privacyfight.io\/?p=22358"},"modified":"2023-06-25T12:59:36","modified_gmt":"2023-06-25T16:59:36","slug":"irs-determination-letter-1","status":"publish","type":"post","link":"https:\/\/privacyfight.io\/irs-determination-letter-1\/","title":{"rendered":"IC1 &#8211; IRS Determination Letter Video 1"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"22358\" class=\"elementor elementor-22358\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-e50faf9 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"e50faf9\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-ccba8f4\" data-id=\"ccba8f4\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-390d6c6 elementor-widget elementor-widget-heading\" data-id=\"390d6c6\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t<h1 class=\"elementor-heading-title elementor-size-default\"><b>IC1 \u2013 IRS Determination Letter<\/b><\/h1>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-4a5f73d elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"4a5f73d\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-52b3e34\" data-id=\"52b3e34\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-a64899e elementor-widget elementor-widget-spacer\" data-id=\"a64899e\" data-element_type=\"widget\" data-widget_type=\"spacer.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-spacer\">\n\t\t\t<div class=\"elementor-spacer-inner\"><\/div>\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-ff3c359 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"ff3c359\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-e3d4e2d\" data-id=\"e3d4e2d\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-8eb5772 elementor-widget elementor-widget-text-editor\" data-id=\"8eb5772\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<h4 style=\"text-align: center;\"><strong><a href=\"https:\/\/privacyfight.io\/irs-determination-letter-1\/\">Video 1<\/a>\u00a0 \u00a0 |\u00a0 \u00a0 <a href=\"https:\/\/privacyfight.io\/irs-determination-letter-2\/\">Video 2<\/a>\u00a0 \u00a0 |\u00a0 \u00a0 <a href=\"https:\/\/privacyfight.io\/irs-determination-letter-3\/\">Video 3<\/a><\/strong><\/h4>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-dd3d9be elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"dd3d9be\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-1bad07b\" data-id=\"1bad07b\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-45a8cdd elementor-widget elementor-widget-spacer\" data-id=\"45a8cdd\" data-element_type=\"widget\" data-widget_type=\"spacer.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-spacer\">\n\t\t\t<div class=\"elementor-spacer-inner\"><\/div>\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-b1d2734 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"b1d2734\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-1b80ff4\" data-id=\"1b80ff4\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-2294ef1 elementor-widget elementor-widget-shortcode\" data-id=\"2294ef1\" data-element_type=\"widget\" data-widget_type=\"shortcode.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-shortcode\"><div class=\"vidseo_wrapper\" style=\"width: 100%;\">\r\n\r\n    \r\n    \r\n        <div class=\"vidseo_vimeo\">\r\n\r\n            <iframe title=\"vimeo-player\" src=\"https:\/\/player.vimeo.com\/video\/733234915\/?\" width=\"100%\" frameborder=\"0\" allowfullscreen><\/iframe>\r\n\r\n        <\/div>\r\n\r\n    \r\n    \r\n    <div class=\"vidseo_collapse\" style=\"\">\r\n        <div class=\"vidseo_btn\" style=\"\">\r\n            0:08\r\nOK, thanks for joining today. I'm going to talk about something, I have not published. I've been using it for clients over the years, the last three years or so and I wanted to share it now And I wanna give you guys all the details. And I wanna give you the exact documentation so that you can ...        <\/div>\r\n        <div class=\"vidseo_collapse_content\" style=\"\">\r\n            <p>0:08<br \/>\nOK, thanks for joining today. I'm going to talk about something, I have not published. I've been using it for clients over the years, the last three years or so and I wanted to share it now And I wanna give you guys all the details. And I wanna give you the exact documentation so that you can do it yourself or you can have a CPAP so willing to do it. But I'm gonna open this up by basically criticizing some CPAs because over the last couple of years, I am I showed them how to do this and they don't do it, so I'm happy to do it. But more of us should be understanding how to use the system that's actually taxing us. It doesn't make sense to be afraid of it. It's taxing us. We kinda let it creep in, It's here. It's not illegal, OK, The system itself is not, There's anything wrong with it. We just don't like it, But we should be using it, OK, and I'm gonna show you guys how to do it, so I'm not a CPA. I don't know Accounting, I understand accounting, I understand some basic rules, I'm not an attorney, I'm not a tax attorney, but I understand the law.<br \/>\n1:08<br \/>\nI understand cases, things like that, and I understand this procedure. I understand property rights. So I understand what we need to do here to show whether or not there's a liability for what we're talking about.<br \/>\n1:19<br \/>\nSo most of the time, people are concerned about the get a 1099 from the exchanges, where they're dealing with cryptographic currency or virtual currency.<br \/>\n1:27<br \/>\nUsually from what I've seen, the 1099 Xer erroneous, we cannot go to the issuer to get those fixed. We have to ask the IRS to do it.<br \/>\n1:37<br \/>\nYou can't just write a letter to your friendly local IRS agent, you have to talked to the IRS using its own documentation or form letter, which I have. And now, I, it's not like I just figured this out last year, OK? I've been doing this for a few years when it comes to virtual currency, but I started doing this in the late nineties for other matters.<br \/>\n1:57<br \/>\nThe two different periods of time, when I did this in the nineties and when I'm doing it now, it's kind of similar because it does concern with it is concerned with backup withholding and I'll get into that a little bit.<br \/>\n2:09<br \/>\nSo I understand I've understood how to do this for a long time. There's no reason why your CPA shouldn't do it. You can certainly do it yourself.<br \/>\n2:15<br \/>\nJust follow my instructions, but let me just go through, I'm going to step back a little bit and do some review, because I think some of you that are hearing this, maybe you're hearing it for the first time, and so I want to give you some foundation.<br \/>\n2:28<br \/>\nSo it starts making sense, hopefully, or more easily.<br \/>\n2:33<br \/>\nMy first point on this is that, yeah, CPA's should be doing this.<br \/>\n2:37<br \/>\nI'm not really qualified to be an accounting person, but I understand that. So, for that reason alone, I mean, it's very simple thing to do. I did this by myself. No one helped me with this. I figured it out.<br \/>\n2:49<br \/>\nRegarding the irises definition of cryptographic or virtual currency, it's defined exactly the same as gold. OK, it's property.<br \/>\n2:57<br \/>\nSo why are you giving it a different tax treatment and paying tax on the change in value? But you're not doing that for gold.<br \/>\n3:04<br \/>\nI mean, that's a simple question.<br \/>\n3:06<br \/>\nIf gold is defined as property by the IRS and so is virtual currency. Why are we even talking about this? Why are we talking about the changing value?<br \/>\n3:13<br \/>\nAnd then making it more complicated by saying, we have to track.<br \/>\n3:17<br \/>\nCoin to coin exchanges in the dollar value the whole time, no, we do not.<br \/>\n3:21<br \/>\nWhat we're doing is we're buying property.<br \/>\n3:24<br \/>\nMaybe the value changes, and then when we dispose of the property, we measure the value. It was. when we bought it against the value.<br \/>\n3:30<br \/>\nIt was when we sold it, OK? That's really what it's, what is.<br \/>\n3:34<br \/>\nShe should be going on here because the thing being taxed as dollars, it's not virtual currency, it's not gold.<br \/>\n3:41<br \/>\nIf gold were taxed you'd have to pay.<br \/>\n3:43<br \/>\nYou'd have to shave off a section a portion of that gold every year and send it to the IRS. We don't do that.<br \/>\n3:50<br \/>\nMore tech, We're being taxed on the dollars we receive from the disposition of the asset selling it.<br \/>\n3:55<br \/>\nWhere the beneficial interests change forever, OK.<br \/>\n4:00<br \/>\nSo there is no law that imposes a tax on virtual currency.<br \/>\n4:04<br \/>\nIt's not taxable, the only exception to that is not in this country. It's in El Salvador, El Salvador.<br \/>\n4:09<br \/>\nNow there's another country to I forget the name, but El Salvador, um, defined bitcoin as legal tender.<br \/>\n4:18<br \/>\nNo longer property even though legal tender can be property.<br \/>\n4:22<br \/>\nBut because it did that, it's basically saying, Bitcoin is now a thing that can be taxed.<br \/>\n4:30<br \/>\nIn our country, United States, no laws have changed. There's no new taxing regulations. All we have are new websites, a new blah, blah, blah KYC bluffing, going on by the government, OK to scare people in.<br \/>\n4:40<br \/>\nAnd make CPUs, do things you're not needing to do.<br \/>\n4:42<br \/>\nYou don't need to go to your client if you're a CPA and ask them to fill out an additional form, an additional disclosure statement, whether or not it's under penalty of perjury.<br \/>\n4:53<br \/>\nIt doesn't matter regarding his income and assets, OK? That is the purpose of a tax return.<br \/>\n4:59<br \/>\nYou only did signed under penalty of perjury once a year, OK?<br \/>\n5:03<br \/>\nOr quarterly Or whatever you're doing, but you don't need to start adding supplemental documentation, and I know you're told to do this, but this is this is not professional. This is not what you're supposed to be doing. You're supposed to be doing accounting.<br \/>\n5:14<br \/>\nYou're not trying to do investigative work and data collection and policing for the IRS, although they use you for that.<br \/>\n5:20<br \/>\nYou're doing accounting.<br \/>\n5:25<br \/>\nSo anyways, we covered that.<br \/>\n5:29<br \/>\nRight? So I don't have to report the change in value in what, in my property. Now you can, if you want.<br \/>\n5:35<br \/>\nIf you do that, it's taxable.<br \/>\n5:38<br \/>\nIf you used accrual based accounting like big corporations do and they're vault holdings of gold and Silver or whatever, precious metals, they may report the change in value of those. Maybe there's tax benefit to them, but we don't have to do that. We use cash basis accounting. That means you're not taxed until you have an actual taxable gain.<br \/>\n5:55<br \/>\nThat means you disposed to the asset.<br \/>\n6:00<br \/>\nAll right, so I think that we all get that.<br \/>\n6:03<br \/>\nCertainly, this is covered in many, my other videos, but this is a special series here, because I'm gonna get into the real technical aspects, and I'm gonna give you guys a documentation. So I want to be thorough here.<br \/>\n6:17<br \/>\nI can hold the bottom line here.<br \/>\n6:18<br \/>\nI can hold property as long as I want, and I don't have a tax liability just as if I own stock and never receive a dividend, or I never sell it.<br \/>\n6:29<br \/>\nIt's not reportable or taxable, OK?<br \/>\n6:31<br \/>\nI it could be if I report it that way, So I can said if you report under penalty of perjury, the government's gonna accept it at face value, OK?<br \/>\n6:39<br \/>\nUnless there's some apparent fraud, or or a mistake, or something like that, that's the whole idea behind filing a tax return under penalty of perjury.<br \/>\n6:47<br \/>\nSo it has to be accepted at face value, but you're not required to do that.<br \/>\n6:51<br \/>\nAll right. It's only cash basis. You sell for dollars, OK? Now we got to report it.<br \/>\n6:56<br \/>\nGetting into cryptocurrency exchanges in third parties This is where you have a different type of relationship.<br \/>\n7:01<br \/>\nCoinbase and likely all third party exchanges hold the private keys OK. To the virtual currency in your account.<br \/>\n7:07<br \/>\nThis is what, I think the technology has not understood that well.<br \/>\n7:11<br \/>\nSo Coinbase and other third parties, as far as I can tell, hold the private keys to the virtual currency in an account that's your account. Now when I say your account, It could be your personal account.<br \/>\n7:23<br \/>\nIt could be the company account that you're using to manage your Kryptos, OK, That's what I mean by your account.<br \/>\n7:29<br \/>\nThis is different than your hard wallet where you have exclusive control the private keys, all right. Paper wallet hard wallet.<br \/>\n7:34<br \/>\nSoftware wallet Atomic Wallet those guys, OK, Exodus the account holder.<br \/>\n7:39<br \/>\nYou are your trust at Coinbase does not own any of the virtual currency in the account no ownership ever changes. I don't care if you put a million bucks in there and get all kinds of coins, and then start moving them back and forth and getting new coins with coins. You have.<br \/>\n7:54<br \/>\nThe exchange is not changing the ownership, it still retains a private keys what it's done is it created, It's in its software, it's creating an overlay of an accounting function to mimic the blockchain. The blockchain data is not changing. Therefore the ownership doesn't change.<br \/>\n8:09<br \/>\nWhat you're doing is you're changing your beneficial interests or the appearance of your account, your account holdings.<br \/>\n8:16<br \/>\nWhen the coins are moved off of the exchange, that's when there's, let's call it a settlement, or that's when there's a reconciliation of, or a change in the blockchain. Because that's what, that's what Coinbase has to do, that's how the system works.<br \/>\n8:28<br \/>\nBut while you're in Coinbase, is application, the ownership stays with Coinbase and likewise all the other third parties everywhere I've looked. It's always the same. Every third party is always the same.<br \/>\n8:41<br \/>\nSo, what does the account holder case, and now the account holder, here's the relationship, the account holder, whether it's you or your LLC or trust or something.<br \/>\n8:49<br \/>\nThat is the beneficiary of a trust.<br \/>\n8:52<br \/>\nThe trust involves a trustee that owes the money back to the beneficiary. Who's the trustee? It's the third party exchanged Coinbase.<br \/>\n8:59<br \/>\nCoinbase is the trustee at the moment you open an account and put money in there.<br \/>\n9:03<br \/>\nIt makes Coinbase the trustee and it makes you the account holder or the beneficiary.<br \/>\n9:09<br \/>\nThat's why no ownership changes.<br \/>\n9:10<br \/>\nThat's why all that software you're being told to use Coyne Tracker is bogus so you're not supposed to use that.<br \/>\n9:19<br \/>\nIt's different than your hard wallet, OK? Where you have exclusive control. The private keys is the credentials to the private keys.<br \/>\n9:24<br \/>\nIf you control the access to the private keys, then you're the owner, by definition, OK.<br \/>\n9:29<br \/>\nJust like if your name appears on it on a house, the title of real estate, OK, that you're, you're leasing out to somebody else.<br \/>\n9:35<br \/>\nAnd so, that person that you're leasing out out the house, too, has, in fact, ownership, rights over the house?<br \/>\n9:41<br \/>\nI mean, if you look at your lease Agreement, you'll see it's just like that, but the actual owner, the title holder, is the name that appears on public records just like so, so you have the right to sell the property the tenant doesn't, that's where it stops, OK?<br \/>\n9:54<br \/>\nThe tenant is the, in fact, owner of the property, under the most state law, OK, even though your name is on the title.<br \/>\n10:02<br \/>\nBut the tenant that that write stops, Right? He has, at the moment, he has the wants to sell the property. He can't do that. Only the title holder can sell the property. That's the difference, OK?<br \/>\n10:13<br \/>\nOh, gosh, all right.<br \/>\n10:16<br \/>\nSo, when you have a hard wallet, a ledger or something, and you control the private key credentials and you access it, you're the owner.<br \/>\n10:22<br \/>\nYou have the right to sell if you have the right to sell.<br \/>\n10:25<br \/>\nYou're the owner, if you have the exclusive right to sell, you have a certain type of liability, all right, Ownership is established by whoever holds exclusive rights over the private keys, their credentials, login password, c-code, all those things.<br \/>\n10:38<br \/>\nOK?<br \/>\n10:39<br \/>\nSo the beneficiary, the account holder at Coinbase, the third party the beneficiary of a trust relationship formed once the account is open and funded, OK.<br \/>\n10:49<br \/>\nYou're, you're, that, you're the beneficiary.<br \/>\n10:51<br \/>\nLikewise, the Coinbase or an exchange that holds exclusive rights over the private keys is the trustee I know I'm being a little redundant here. I'm sorry.<br \/>\n10:59<br \/>\nThe account holder such as you personally who funds the account at Coinbase with the dollars then acquires. Virtual currency is not the owner of the currency.<br \/>\n11:05<br \/>\nYou're not the owner of the virtual currency that shows up in your Coinbase account.<br \/>\n11:09<br \/>\nYou can engage in transactions, just the same as if you're just using different software, different kind of software, in which the ownership is not changed.<br \/>\n11:20<br \/>\nIt's just different software, it just gives that appearance, OK?<br \/>\n11:27<br \/>\nIf the beneficiary you wants the money, the trustee has to give it to you. That's the nature of the trust relationship. That is your trust, OK? I don't need a document to show that, you don't need to trust document.<br \/>\n11:37<br \/>\nA trust is a relationship, You can document the relationship, but the document itself is not needed if there is in fact a trust.<br \/>\n11:45<br \/>\nNow let's get into talking about reporting on the 10 40 for several years We've been talking about the definition of purchase, We get that right from the irises website. If you want to go check it out, and I have a link probably in these notes, and by the way, the notes of course are going to be you should be seeing them right now, there with the video.<br \/>\n12:02<br \/>\nThere's some website links in here.<br \/>\n12:04<br \/>\nVideo links in here.<br \/>\n12:06<br \/>\nBut the definitely the IRS has defined purchase to mean The acquisition of cryptographic or virtual currency using other virtual currency.<br \/>\n12:15<br \/>\nSo if I take my coins and I buy somebody else's coins I take my litecoin by some, some other persons bitcoin.<br \/>\n12:22<br \/>\nAs long as the private keys change hands, then we have a purchase according to Iris Standard.<br \/>\n12:28<br \/>\nSo if you search on the Internet for IRS Virtual currency questions and answers.<br \/>\n12:33<br \/>\nI believe it's question and answer number five that says what I just told you, in so many words, OK? You have to it. You have to really read it to get that message.<br \/>\n12:41<br \/>\nIt doesn't literally say exactly what I just said.<br \/>\n12:42<br \/>\nBut a purchase doesn't mean I use dollars to buy cryptographic currency. That is not a purchase according to IRS definitions.<br \/>\n12:50<br \/>\nSo we get now to the point where, and I'm gonna do a separate video on this, but we're getting to a point now, where the on the 10 40, they're changing the instructions heavier about disclosing your interest and cryptographic currency.<br \/>\n13:01<br \/>\nAnd it's to the point now where I'm reading them, I'm thinking.<br \/>\n13:04<br \/>\nThere's no way to and to not say yes, OK, if you're dealing with us even if technically your LLC owns all the coins from beginning to end, yeah, at some point you have the beneficial interests.<br \/>\n13:15<br \/>\nAnd so saying yes on the 10 40 is probably accurate and I would just tell you I don't have a problem with that.<br \/>\n13:21<br \/>\nOther than I know they're probably making a list of people that buy a virtual currency.<br \/>\n13:25<br \/>\nYou just can't avoid that. All right, I'm not afraid of an audit. You should not be afraid of an audit.<br \/>\n13:30<br \/>\nIf we ever get into a situation, here's the worst-case scenario. Guys.<br \/>\n13:33<br \/>\nIf you're saying, yes, I have some interest in virtual currency. Here's the worst thing that can happen.<br \/>\n13:39<br \/>\nThe IRS says, oh, well then let's pull your individual master file and your business master file from our internal records.<br \/>\n13:45<br \/>\nLet's create an examination changes and send a notice out.<br \/>\n13:48<br \/>\nSo here's what this looks like, go look it up on the Internet.<br \/>\n13:51<br \/>\nIt's form IRS Form 45, 49.<br \/>\n13:55<br \/>\nNow, I'm telling you, hypothetically, what I would expect, if the Irish were to do anything with you, saying, yes, I have an interest in virtual currency on your 10 40, this has not happened yet.<br \/>\n14:07<br \/>\nYou would get likely an examination changes notice on form 4549, you can go look this up on the internet, put PDF after that, OK, you'll find it.<br \/>\n14:17<br \/>\nThis is what it looks like, so I look at that the same way.<br \/>\n14:21<br \/>\nI would look at a 1099, that's erroneous and which is the purpose of this video.<br \/>\n14:25<br \/>\nSo, so far, we've only seen the 10 99 from the exchanges.<br \/>\n14:28<br \/>\nWhat I'm saying is, by saying yes, on the 10 40, which I don't have a problem with, you might see the 45, 49, which is a letter from the IRS on a form saying, hey, what do you think about this?<br \/>\n14:39<br \/>\nAnd so, in response to that, I would do the same exact thing that I've been doing for the 10 ninety nine's, except this time, it would be on form 4549.<br \/>\n14:48<br \/>\nNotice of examination changes.<br \/>\n14:49<br \/>\nIt's called a notice ... proposed examination changes.<br \/>\n14:54<br \/>\nNo reason they get all excited.<br \/>\n14:57<br \/>\nIt's the thing that happens, OK?<br \/>\n15:00<br \/>\nHere's the other thing that could happen there. Call you in for an audit with the summits where you have to show up and produce records.<br \/>\n15:05<br \/>\nOK, people don't like that. I don't like that.<br \/>\n15:07<br \/>\nI've been too many of those, OK, all over the country, used to fly all over the place, sit there with the IRS agent, my client, and work it out.<br \/>\n15:15<br \/>\nAlways had good results, I'm not gonna get into that right now.<br \/>\n15:17<br \/>\nSo in any case, you can get it, you get the examination changes notices proposed, you can get an actual audit, or both, or 1099.<br \/>\n15:25<br \/>\nThis video, this content, deals with all of those situations.<br \/>\n15:30<br \/>\nOK, and hopefully, CPAs are not afraid to use this information.<br \/>\n15:34<br \/>\nUm, buying virtual currency with dollars is not reportable and not taxable as OK, as To the request of 10 4, 40 would ask for if you did a purchase.<br \/>\n15:43<br \/>\nOK, we already talked about that Buying an asset is not reportable, but as in terms of money, like, for example, If I buy something with so many dollars, I'm not required to tell the IRS about that, but If I sell it, Yeah, I should tell the IRS how much money I got from that.<br \/>\n15:58<br \/>\nI know that there's a lot of forms. There's many forms and things where you can disclose that information. But buying an asset itself is not taxable, This is nothing new. OK?<br \/>\n16:06<br \/>\nIt just seems new because we're all excited about Kryptos and it's a new area, but they've been doing the same thing for for a long time, OK?<br \/>\n16:17<br \/>\nI don't wanna get too far off here. So anyways, to cover that.<br \/>\n16:22<br \/>\nLet me get into the next thing, OK, This is another important aspect of it.<br \/>\n16:27<br \/>\nThis is where, this goes into the, the exchanges, This is another reason why I'm able to get the IRS to agree that the 10 99 that was sent by the exchange to my client minus the amount of money he took out personally.<br \/>\n16:41<br \/>\nThe rest of the 10 99 is not reportable or taxable and can be excluded from the 10, 40.<br \/>\n16:51<br \/>\nHere's the reason why are part of the reason, because the client, the filer, the taxpayer, retained the beneficial interests the entire time.<br \/>\n17:01<br \/>\nSo the value he put on the exchange, let's say it's $100,000, was moved into coins.<br \/>\n17:07<br \/>\nHis interest in that stayed the same, whether or not it's titled in the name of an LLC or not his interest in, that property stayed the same, he moved it around, did whatever, maybe it's now worth $200,000.<br \/>\n17:20<br \/>\nHe takes it out.<br \/>\n17:22<br \/>\nThere are tax consequences, but the rate, the beneficial interest, did not change, OK, so let's get to this.<br \/>\n17:27<br \/>\nSo if I spend or convey virtual currency from my personal account at Coinbase to my wife's account, for example, that is not a sale or disposition of assets because it took place within the marital community, OK. The beneficial interest did not change. Why do I know that?<br \/>\n17:42<br \/>\nBecause I still care about the money, right?<br \/>\n17:44<br \/>\nIf I give it to my, my wife's a calf I sent to my wife's account, I still care about it because she's going to probably spend on something we want, right.<br \/>\n17:53<br \/>\nIf I move it from one account to another, where I control the credentials, and I control the private key, I still have the beneficial interest, even if I move it to another exchange, like from Coinbase to cracking or something. I'm still going to retain the beneficial interests.<br \/>\n18:06<br \/>\nEven though the title ownership of it, whether or not I'm using an LLC or whether or not the exchange, owns the private keys and credentials. I still retain the beneficial interest. How do I know that? Because I still care about the value the money. I still care about the money, the property, OK?<br \/>\n18:19<br \/>\nThat's how you know.<br \/>\n18:19<br \/>\nSo if I exchange one of my coins for another, then back again and buy different coins on Coinbase and do that several times a day until I reached the reporting period.<br \/>\n18:27<br \/>\nOr reached the reporting threshold of $20,000.<br \/>\n18:31<br \/>\nWhich, as of today, February.<br \/>\n18:33<br \/>\nIn 20 22, OK.<br \/>\n18:35<br \/>\nStill $20,000 for my daughter stand, and more than 200 transactions in one period, meaning by December 31st, that's one tax rate for most of us.<br \/>\n18:44<br \/>\nI might receive a form 1099, OK.<br \/>\n18:47<br \/>\nAnd you'll get this by e-mail, by the way, they're required.<br \/>\n18:49<br \/>\nThey require the exchanges are required to send them by e-mail because of the volume of the account holders they have.<br \/>\n18:58<br \/>\nThe 10 99 is going to be in USD, whether or not you receive dollars, it's not going to make that distinction.<br \/>\n19:04<br \/>\nSo, that's where we come in, with this request, If it's incorrect, in terms of, you didn't receive the dollars that stayed on the 1099 or the 4549, then we'll get it corrected, OK?<br \/>\n19:15<br \/>\nSo, the most important aspect is the erroneous.<br \/>\n19:17<br \/>\n1099 that's erroneously reports the virtual currency as if it had been disposed of, or if it were exchanged, or sold for dollars, the dollar value is not important.<br \/>\n19:26<br \/>\nIt's just that the dollar value you did not receive is important.<br \/>\n19:30<br \/>\nSo, the 10 99 is going to show dollar value.<br \/>\n19:32<br \/>\nThe question you should ask is: Did I get these dollars in my name personally?<br \/>\n19:37<br \/>\nIs this 10 99 accurate, does it report the correct amount of dollars in the recipient's name, Am I the recipient on the 10 99.<br \/>\n19:44<br \/>\nOK, So that's where I would come in if it's a personal account and you got this and it doesn't meet the criteria and you didn't sell for dollars, I can fix it.<br \/>\n19:51<br \/>\nOK, I can read I can I can correct that.<br \/>\n19:54<br \/>\nTo avoid all that drama, we can use a limited liability company.<br \/>\n19:57<br \/>\nGreat, so now the LLC gets a 1099. We can ignore that. I don't have to I don't care what the IRS thinks because the LLC is going to be a pass through.<br \/>\n20:04<br \/>\nI think if you're using my strategies, you're not going to have an issue with the taxes.<br \/>\n20:09<br \/>\nThe only time there's going to be an issue is if the LLC is going to file a return.<br \/>\n20:13<br \/>\nNow it's a different world.<br \/>\n20:15<br \/>\nOK. if it does not file a return, nobody cares. It's Unsettled Funds. The IRS does not care.<br \/>\n20:20<br \/>\nThere's no legal duty to file a return.<br \/>\n20:22<br \/>\nIronically, there's no legal duty to file a return until once filed, because then, then the government has to reconcile that.<br \/>\n20:30<br \/>\nI know we've said that in other videos.<br \/>\n20:34<br \/>\nThe reporting party, Coinbase or whoever is not required and not supposed to correct 1099. This is why we have to go to the IRS. I didn't make the system.<br \/>\n20:42<br \/>\nI'm just telling you how to play it, OK? This is how they work it.<br \/>\n20:45<br \/>\nLet's look, next section here. Let's look at figuring out cost basis.<br \/>\n20:50<br \/>\nYou still, in some cases, are going to have to figure in cost basis.<br \/>\n20:56<br \/>\nAnd where the coin tracking software claims to be able to do that.<br \/>\n21:00<br \/>\nNo, Don't use that. It's erroneous. You're not going to get the right information. You can compare my method to the coin tracking software and the like.<br \/>\n21:07<br \/>\nAnd you decide for yourself, here's how you do it, good old fashioned algebra.<br \/>\n21:14<br \/>\nIt's not, it's not going to hurt, I promise.<br \/>\n21:16<br \/>\nIt's algebra.<br \/>\n21:17<br \/>\nSo I'm gonna read to you.<br \/>\n21:19<br \/>\nAs you can see in the document, I wrote the equation for you.<br \/>\n21:23<br \/>\nYou can make this up yourself if you just think it through. OK, I kept talking about this for a couple of years. And finally, someone said, OK, well, how do you do it?<br \/>\n21:29<br \/>\nAnd so I said, OK, fine. So I went and wrote this up.<br \/>\n21:32<br \/>\nAll right, So here's an actual example.<br \/>\n21:33<br \/>\nThis woman had a small investment, it got to be quite large.<br \/>\n21:37<br \/>\nShe took a small portion out.<br \/>\n21:38<br \/>\nAnd what's, really, it's a great example because she, the portion, should, she took out, was just a little bit less than her original cost basis. This was really great example.<br \/>\n21:46<br \/>\nSo to calculate reportable gross income after taking a small portion from a new principal, the original investment being worth much more.<br \/>\n21:54<br \/>\nFor example, you subtract the product of the original investment and the amount you are taking divided by the new value of the principal.<br \/>\n22:03<br \/>\nThere's an order of operations here, so you've got to gotta look at what I've written down.<br \/>\n22:08<br \/>\nI put some red brackets there from the amount you're taking. So here's the example.<br \/>\n22:12<br \/>\nSo in her case, it was $23,500, she put in, She was up to $400,000. Now, remember, she didn't take this money out yet.<br \/>\n22:20<br \/>\nShe only took out $220,000. You want to do home improvement?<br \/>\n22:24<br \/>\nI forget what it may redo her kitchen or something.<br \/>\n22:27<br \/>\nSo the taxable amount is $20,000, OK, because that's going to her personally.<br \/>\n22:31<br \/>\nSo that's measured against the same proportion of our original investment of 23,500.<br \/>\n22:37<br \/>\nSo, the 20,000 it happens to be 5%.<br \/>\n22:41<br \/>\nThe new principle, 400,000.<br \/>\n22:43<br \/>\nThe same proportion of the original investment is 5%, 23,500 or 1075 in terms of dollars.<br \/>\n22:50<br \/>\nSo the gross reportable income is then here's your total equation. You take the $200,000.<br \/>\n22:56<br \/>\nI mean, sorry, the $20,000, you said that you start with that, but you're going to divide 20,000 by the 400,000.<br \/>\n23:03<br \/>\nThe amount she took out against the new principal, you divide that first.<br \/>\n23:08<br \/>\nThen you take the 20,000 and subtract that Quotient, after it's multiplied by 23,500, OK, sounds crazy.<br \/>\n23:18<br \/>\nYou just have to see it in writing.<br \/>\n23:20<br \/>\nMy brain doesn't work that way, either, so.<br \/>\n23:22<br \/>\nSo, anyways, this is the idea.<br \/>\n23:24<br \/>\nSo what happens is, you're gonna find out that in this example, the actual real taxable amount, reportable amount is the 18,825.<br \/>\n23:34<br \/>\nThat is, he adjusted gross income when you factor in cost basis.<br \/>\n23:42<br \/>\nIf you guys don't agree, or if I'm wrong, please tell me.<br \/>\n23:46<br \/>\nI think this is right.<br \/>\n23:49<br \/>\nIf you have short term and long term holdings, I know that's your next question: and you made a series of byes over a period of time that includes long term. And short term, you can just make this calculation once for each of the long term amounts.<br \/>\n24:01<br \/>\nAnd once for each of the short-term amounts, just do it again every time, OK.<br \/>\n24:06<br \/>\nAnd then apply the appropriate tax rates to each.<br \/>\n24:09<br \/>\nAnd I have a video on how to do this.<br \/>\n24:11<br \/>\nI put the link here. All right, so here's the summary.<br \/>\n24:14<br \/>\nAnd again, this is part one, so we're definitely gonna cover this more. We're gonna do a Q and A, but for right now, I just wanna laid out, lay out the foundation, OK?<br \/>\n24:22<br \/>\nSo, number one, there's no trust relation in holding virtual currency without a third party exchange, or Trust custodian, third party custodian, OK?<br \/>\n24:31<br \/>\nThere is no tax liability trading between coins.<br \/>\n24:34<br \/>\nEven if the exchange is considered a purchase by IRS definitions.<br \/>\n24:37<br \/>\nThe only difference is whether or not you answer yes or no, on your tax return.<br \/>\n24:43<br \/>\nRemember, also, this is not a financial question, It's just yes or no. Yeah, They probably put you on a list.<br \/>\n24:48<br \/>\nBut There's not a consequence. Yeah. You might get audited. Yeah, you might get an examination changes notice we can deal with that. It's just paperwork.<br \/>\n24:58<br \/>\nThere is no tax liability even when you trade your virtual currency for someone else's and private keys change.<br \/>\n25:09<br \/>\nCoins to coins.<br \/>\n25:10<br \/>\nYeah, You could do coins to coins with other people in a club and As you do it because you're smart your initial $10000 is now or $25,000.03 months later Because you're You know super genius in this stuff That doesn't create a tax liability.<br \/>\n25:26<br \/>\nIf you claim it as a gain $15,000 gain, OK? That's on you.<br \/>\n25:30<br \/>\nYou don't have to do that. Your accountant will tell you to do that. He or she is wrong.<br \/>\n25:37<br \/>\nIt's cash basis accounting, OK?<br \/>\n25:40<br \/>\nNot until you sell.<br \/>\n25:44<br \/>\nSelling virtual currency for dollars where the dollars are considered settled funds such as excuse me.<br \/>\n25:50<br \/>\nYeah, Sorry about that.<br \/>\n25:52<br \/>\nSettled funds, such as you receive them personally in your personal exchange account, is reportable and very likely taxable.<br \/>\n26:01<br \/>\nThat's what most people are doing right now.<br \/>\n26:03<br \/>\nThey've got there, they got their coin account at Coinbase and it's exciting in there.<br \/>\n26:08<br \/>\nBuying and selling and then they go and take some profits or they sell the coins and they go buy a new car or something.<br \/>\n26:13<br \/>\nIt's flat out taxable. Flat out reportable.<br \/>\n26:15<br \/>\nCan avoid it, OK. You didn't change your tax treatment. There's no way around that. Can't go back in time either, guys.<br \/>\n26:21<br \/>\nOnce you've done that, you've done that, can't reverse it.<br \/>\n26:25<br \/>\nThat works both ways, too, because if you vojta tax liability, the government can go back and make you incur it, so that works out no problem there.<br \/>\n26:33<br \/>\nSo calculate cost basis using simple algebra, like I explained here, not software For your convenience.<br \/>\n26:41<br \/>\nOK, like coin tracker, I'm not bashing coin tracker, I'm just saying, I don't believe it's correct. I believe it gives you erroneous results.<br \/>\n26:48<br \/>\nUse algebra use a spreadsheet. It takes a little more effort, but do it correctly.<br \/>\n26:53<br \/>\nAn increase of value of property is not taxable unless it's reported as gain in this environment in what we're talking about here.<br \/>\n27:00<br \/>\nOK, I'm sure there's some situation where it would be, In this case, it is not, were using cash basis, accounting, and the last point is that, or last two points, buying property, gold stock, real estate, virtual currency.<br \/>\n27:12<br \/>\nThat is not taxable, maybe they want to know about it.<br \/>\n27:15<br \/>\nMaybe as in this case, the 10, 40, OK fine, you gotta say yeah, I got some virtual currency.<br \/>\n27:20<br \/>\nAgain, it's not necessarily in and of itself taxable.<br \/>\n27:25<br \/>\nAnd by the way, on the 10, 40, you know, if you don't fill in the information, if you leave it blank, that's considered an incomplete return or not filing.<br \/>\n27:35<br \/>\nAnd the government will just either send it back to you or send you a bill for a penalty for being late.<br \/>\n27:41<br \/>\nSo be sure that you complete it.<br \/>\n27:43<br \/>\nIf you're going to file a tax return, file it, complete everything, tell the truth, OK?<br \/>\n27:48<br \/>\nA purchase of virtual currency does not include using dollars to buy virtual currency. That's by the irises definition.<br \/>\n27:57<br \/>\nA purchase only takes place when exchanging coins or other, for other coins, between different owners, with different beneficial interests, when the private keys actually change hands.<br \/>\n28:09<br \/>\nAll right. So, that is the foundation that I wanted to lay out.<br \/>\n28:12<br \/>\nI think I covered the most important points.<br \/>\n28:15<br \/>\nWe're definitely gonna cover this, at least in two more videos, OK. So the next one, I'm going to show you guys the Request for determination letter, we're going to we're going to dissect that.<br \/>\n28:24<br \/>\nAnd then I'm going to follow it up on let you guys watch this, and then we're going to do a Q&A.<br \/>\n28:28<br \/>\nThank you for watching.<\/p>\n        <\/div>\r\n    <\/div>\r\n\r\n    \r\n<\/div><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-5b08655 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"5b08655\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-fe34c15\" data-id=\"fe34c15\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-df48c8f elementor-widget elementor-widget-spacer\" data-id=\"df48c8f\" data-element_type=\"widget\" data-widget_type=\"spacer.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-spacer\">\n\t\t\t<div class=\"elementor-spacer-inner\"><\/div>\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-2898559 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"2898559\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-eb20e22\" data-id=\"eb20e22\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-2f0ca16 elementor-widget elementor-widget-text-editor\" data-id=\"2f0ca16\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<p><strong>Summary<\/strong><\/p><p style=\"padding-left: 40px;\">1. The video features an expert sharing his experience with a tax process he has used for clients in the last three years, focusing on the taxation of cryptographic or virtual currencies.<br \/>2. He criticizes certified public accountants (CPAs) for not effectively utilizing tax systems, despite having been shown how to do so, stating that individuals should not be afraid of the tax system, but understand and use it to their advantage.<br \/>3. The video points out that the tax system is not illegal and criticizes the approach of some CPAs towards the taxation of cryptographic currencies, noting that most concerns arise when individuals receive a 1099 form from exchanges dealing with these currencies.<br \/>4. The speaker suggests that issues arising from the 1099 form cannot be rectified by the issuer but must be corrected through the Internal Revenue Service (IRS) using their own form letters.<br \/>5. Cryptographic or virtual currency, according to the video, is treated in the same manner as gold by the IRS, prompting the question as to why the tax treatment differs and why individuals pay tax on the change in value for virtual currencies but not for gold.<br \/>6. He stresses that the object being taxed is dollars, not virtual currency or gold, and asserts that there is no law that imposes a tax on virtual currency in the United States, unlike in El Salvador where Bitcoin has been declared legal tender.<br \/>7. The video then discusses the relationship with third-party cryptocurrency exchanges, like Coinbase, that hold the private keys to the virtual currency in a user&#8217;s account, emphasizing that this structure is similar to a lease agreement where the lessee has beneficial ownership rights, but the lessor holds the title.<br \/>8. He clarifies that the account holder is not the owner of the virtual currency in their account, and can engage in transactions according to IRS standards, however, gains or losses are realized only when the private keys change hands.<br \/>9. The video advises against fearing an audit and explains the worst-case scenario as receiving a Notice of Examination Changes (form 4549) from the IRS.<br \/>10. Finally, the video discusses a method to calculate reportable gross income after taking a small portion from a significantly appreciated investment, highlighting that the 1099 form from the exchange or third-party custodian does not represent the actual tax liability.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-6f6d9aa elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"6f6d9aa\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-7c9644d\" data-id=\"7c9644d\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>IC1 \u2013 IRS Determination Letter Video 1\u00a0 \u00a0 |\u00a0 \u00a0 Video 2\u00a0 \u00a0 |\u00a0 \u00a0 Video 3 Summary 1. The video features an expert sharing his experience with a tax process he has used for clients in the last three years, focusing on the taxation of cryptographic or virtual currencies.2. He criticizes certified public accountants [&hellip;]<\/p>\n","protected":false},"author":131,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[124],"tags":[],"_links":{"self":[{"href":"https:\/\/privacyfight.io\/wp-json\/wp\/v2\/posts\/22358"}],"collection":[{"href":"https:\/\/privacyfight.io\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/privacyfight.io\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/privacyfight.io\/wp-json\/wp\/v2\/users\/131"}],"replies":[{"embeddable":true,"href":"https:\/\/privacyfight.io\/wp-json\/wp\/v2\/comments?post=22358"}],"version-history":[{"count":16,"href":"https:\/\/privacyfight.io\/wp-json\/wp\/v2\/posts\/22358\/revisions"}],"predecessor-version":[{"id":25469,"href":"https:\/\/privacyfight.io\/wp-json\/wp\/v2\/posts\/22358\/revisions\/25469"}],"wp:attachment":[{"href":"https:\/\/privacyfight.io\/wp-json\/wp\/v2\/media?parent=22358"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/privacyfight.io\/wp-json\/wp\/v2\/categories?post=22358"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/privacyfight.io\/wp-json\/wp\/v2\/tags?post=22358"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}