Point about airdrops is smart. If you get a high value one like with ENS you can get into trouble. Ordinary income meaning I owed like 3.5k on it, and then the token price dropped in half eventually.
Once again, as a crypto tax pro, great post. I’ve seen the degen dave example far too many times IRL and wish more people understood the concept. So thanks for clearly laying it out.
Personally, I will *at least* sell my highest tax rate multiplied by the staking or airdrop reward at claim to make sure my tax is covered. Keep that stables and can still farm airdrops with the stables (being careful to avoid a terra luna or sketch smart contract situation).
And I have seen both the IRS, ATO and CRA all sending notices to crypto investors who traded on KYC exchanges and haven’t reported crypto yet at a higher rate than ever this year. They’ve got the tech and the data and they’re coming for their pound of flesh. Better to do your own calculations to report what you owe than have them come knocking.
And finally- anyone in the US looking for a crypto tax pro now…be prepared to file an extension. My firm has been booked out since Feb. and every good crypto accountant I know (we’re in a group chat) is in a similar boat.
It’s ridiculously easy to file an extension and saves a ton of stress. Just estimate your tax, make a payment online by the deadline, and you get 6 more months to file. But don’t wait until last minute if you do get the extension to avoid interest accruing at 0.5% per month.
I haven't seen them specifically target this, no. Most letters I've seen were sent to people who didn't report any crypto on their taxes despite having history on KYC exchanges.
That said, knowingly falsifying or omitting things from your records can land you in jail. Need to have plausible deniability and show that you acted in good faith.
Just google "Texas Man Charged with Filing Tax Returns that Falsely Reported His Cryptocurrency Gains" and you'll see what not to do. A dude is facing lots of jail time by clearly acting in a pre-meditated way to avoid paying tax
At the beginning of the post, you mentioned timing is everything and you leave the trading up to AI trading bots. Can you do a paid post about this topic? Been interested in this but not sure where to start. Lots of noise/scams out there on this front.
Point about airdrops is smart. If you get a high value one like with ENS you can get into trouble. Ordinary income meaning I owed like 3.5k on it, and then the token price dropped in half eventually.
Hence why we suggest just selling half of it usually covers tax + guarantees a profit
I already filed my extension, lol.
Have not been able to finish my tax filings on time since 2021. Complete nightmare.
extensions are an anxiolytic
Once again, as a crypto tax pro, great post. I’ve seen the degen dave example far too many times IRL and wish more people understood the concept. So thanks for clearly laying it out.
Personally, I will *at least* sell my highest tax rate multiplied by the staking or airdrop reward at claim to make sure my tax is covered. Keep that stables and can still farm airdrops with the stables (being careful to avoid a terra luna or sketch smart contract situation).
And I have seen both the IRS, ATO and CRA all sending notices to crypto investors who traded on KYC exchanges and haven’t reported crypto yet at a higher rate than ever this year. They’ve got the tech and the data and they’re coming for their pound of flesh. Better to do your own calculations to report what you owe than have them come knocking.
And finally- anyone in the US looking for a crypto tax pro now…be prepared to file an extension. My firm has been booked out since Feb. and every good crypto accountant I know (we’re in a group chat) is in a similar boat.
It’s ridiculously easy to file an extension and saves a ton of stress. Just estimate your tax, make a payment online by the deadline, and you get 6 more months to file. But don’t wait until last minute if you do get the extension to avoid interest accruing at 0.5% per month.
Have you seen IRS crack down on anyone who tried to not report airdrops as ordinary income / or try to sneak around that one?
I haven't seen them specifically target this, no. Most letters I've seen were sent to people who didn't report any crypto on their taxes despite having history on KYC exchanges.
That said, knowingly falsifying or omitting things from your records can land you in jail. Need to have plausible deniability and show that you acted in good faith.
Just google "Texas Man Charged with Filing Tax Returns that Falsely Reported His Cryptocurrency Gains" and you'll see what not to do. A dude is facing lots of jail time by clearly acting in a pre-meditated way to avoid paying tax
I guess ox finally got caught :/
Can you please elaborate on AI trading bots mentioned at the beginning of this post? Specifically which bots should we look into?
If you're not making the bot it doesnt work. We'll leave it at that
If you think you can invest in an AI bot and make money you will lose everything
At the beginning of the post, you mentioned timing is everything and you leave the trading up to AI trading bots. Can you do a paid post about this topic? Been interested in this but not sure where to start. Lots of noise/scams out there on this front.
If you’re in PR for act 60, do you pay PR tax income on airdrop farming ?
It’s not covered under the investment decree and since it’s outside of an llc I assume yes you do.
Just asked my cpa but he hasn’t emailed me back about it.
Solve with your accountant ser, as always anything that has ever gone from a cex to a wallet is easily traceable so do it by the books
at what NW did you guys create off-shore trusts?
bowtiedbrazil talks about this on twitter
Already filed my extension but it’s gonna be a long painful weekend here!
Good luck!
I thought there was no wash sale rule for crypto? So one can sell ETH for a loss and rebuy right away?
Talk to your accountant
“In the US, you can also use specific ID inventory methods (if you keep the right records - tax software can help)”.
Does anyone know if you can identify and sell specifically identified assets with Coinbase/Gemini?
I always thought it was last in-first out, but am accountant couple also said what Bull said in this post.
This is a matter of accounting not actually the specific sat being sold.
Thanks! Will explicitly ask my accountants when the time comes.