Clinton Donnelly: Bitcoin & Crypto Taxes – What Every US Taxpayer Needs to Know

Transcript

hi welcome to the first inaugural edition of epicenter aftershock my name is sibbeston Cuchillo these aftershock podcasts are wholly sponsored and that means that everyone you here on these editions of the show paid to be here but that's ok because we have some amazing sponsors if you're looking for the regular weekly edition of epicenter just look for the numbered episodes in your podcast feed today our guest is Clinton Donnelly he is a crypto tax expert he's helped hundreds of US tax payers both domestic and expatriated file the crypto tax returns he's written five books on crypto tax and he's the founder of crypto tax audit this guy has seen it all and there's no tax return too complicated if you're a US taxpayer and you hold crypto this is

a really important episode that you want to hear here is what you'll learn what are your tax obligations as a crypto currency holder what you need to report and how you can prepare a bulletproof tax return how to put yourself in the shoes of an IRS tax auditor and what to do if you get one of those scary audit letters which I certainly wouldn't want to get what are the biggest mistakes people make when filing their crypto tax return and the risks they face and what to do if your crypto transaction history is totally cluttered and messy and what proactive steps you can take to help improve the situation finally you'll learn about crypto tax audit it's a yearly subscription service which is your Kevlar vest in case you get audited by the IRS it ensures you get competent

representation and advice from experts so that you only pay the taxes that you legally oh and I think you'll be pleasantly surprised to learn just how little it costs to get an IRS audit insurance policy from crypto tax experts thank you to crypto tax audit for sponsoring this episode of epicenter aftershock and thanks to Clinton for offering this great advice to all of our listeners who might be concerned and looking at our stats I happen to know there are many of you so with that here is Clinton Donnelly of crypto tax audit I'm here with Clinton Donnelly he is a crypto tax expert he has prepared crypto tax returns for hundreds of people and helped hundreds of people understand and

I sect and clarify the situation which is you know that everybody gets to face anybody who has Krypton has to face was just filed their tax returns he's also the author of many books on the subject and like to thank him for being our guest today a pleasure to be here so tell us a bit about your background and how you became interested in crypto you know what my tat background is I have an advanced law degree in the international financial regulation including taxation and I'm an enrolled agent which is the highest level of certification that the IRS grants authorizes me to represent taxpayers worldwide which is what I do I have clients in 48 different countries I

got involved with crypto tax reporting at the beginning of 2018 because everybody who had made a fortune in 2017 started to have serious tax questions so I became a legal tax advisor to a crypto tax prep firm but quickly realized that it was a far more complicated and it continued to build my own practice at this point I've written five books on crypto tax preparation I've done I've helped I've done 900 tax amnesty returns and I have a hundred percent success rate on that and I have literally hundreds of clients you know my biggest clients you know doing hundreds two hundred thousand transactions a year but

people having all sorts of complex situations nothing's too complex for us in the crypto attack space and I got a whole t it's not just me I got a whole team behind me that helps me do this very effectively what's a tax amnesty return there are times like there's certain times when you don't file a form that you need to then you're subject to penalties there are two couple types of these one is a someone who like just completely and I know a lot of crypto tax people just stopped filing tax returns they thought you know the taxes were illegal and you know they stopped filing and then a couple years go by and you don't know how to get back into current you've had a change of heart or

maybe you're more concerned you don't know how to get back well tax amnesty allows us to come forward voluntarily disclose this information to the IRS and ask for forgiveness on penalties the other one is the anti money laundering forms that crypto trader owners have to file if you don't file these forms on time it's a ten thousand dollar penalty it's the it's not a tax it's a penalty so this is what Congress wanted to do to force people to remember to file these forms so when the people come to me and they haven't been filing them there's two of them that's twenty thousand a year you're looking at maybe three years worth sixty thousand so we do a tax amnesty return which means we're actually writing a legal affidavit that

you signed under penalty of perjury and you basically say I'm sorry I'm sorry I didn't know and we attached that to the return and we get people tax amnesty so we have a fantastic six we have a successful method for doing that we have a perfect track record that's that's uh it seems very daunting to someone I think to to ask the IRS for forgiveness there's something very symbolic there I think that I know yeah that's a good question I mean there's lots of stuff in the code that the Congress put there to protect taxpayers you know theirs might be reasonable cause that that if you did that if an auditor is auditing you that you have a chance to appeal to his

manager or go get a go to the appeals board inside the IRS or get a third party inside the IRS to intervene what you do when you're doing an audit which are things that we do all the time for our traders who are who may get audited or non traders getting audited as well so you're obviously very knowledgeable about this but tell us a bit about your credentials and the qualifications that allow you to advise and represent clients and tax payers well as a role agent I'm I've met the certifications the IRS has to represent people and because I have a law degree I actually interact with the tax code in the tax regulations and do my own original thought of course you know doing

research and the tax laws in the cases when we attack problems because what happened with crypto taxes is there were a lot of new terms we didn't know how to pigeonhole crypto into the tax code or how the tax code applied to Kryptos and a lot of accountants who are skilled in you know the manipulation of numbers but not skilled in the reading of the tax law you know they they froze and as a result you know because I you know read the law myself interact with the law and read the commentaries you know I'm able to frame you know we have actually a nine page opinion letter on the topic of like kind exchange and why you know

we've gone through the fourteen hundred court cases and seen which ones actually apply to allow like-kind exchange to work we've we've written written a legal argument as well on this new I don't know if you've heard about it a new question on schedule once the top forum that the new forum that you report all your income on it says did you during the year send sell receive exchange or have any financial interest in virtual currencies which is their word for crypto currencies so every taxpayer in the US has to check yes or no on that question and you know we've written the papers we think that's actually a bit of a violation of people's rights forcing you

to swear under oath certain things that are the basically personal matters interesting so let's get into people's obligations so what does the taxpayer need to report and how has it changed over the years you know the tax code just gets more and more complicated my father used to go down to the post office pull some forms and with a pencil or he would fill out the forms right you can't do that anymore I mean it got more and more complicated then people started using TurboTax Tax Act these other software products and then if you got too big for them you had to go to an accountants so it's become more and more complicated at this point I'm gonna say

the turbo tax the tax Act do not provide the type of support a crypto trader needs to report fully his crypto activity I've defined you know when we fill a tax form we hate we hate filling it out right we just wanting you know we've waited to the last minute we just want to get it done and mailed you know get it off our plate right so we're it's kind of like just get the forms submitted and be done with it hope the number is low that you have to pay but I've said I basically look at a tax return in terms of how I defend somebody when they're actually getting audited so we just our company that just does tax preparation but once you get that letter from the IRS you know where they start asking questions that's when we do a lot of work we kick in and represent people

through crypto tax audit so I've defined what if I knew now if I knew then what I know now how would I've done the tax return differently so we have four characteristics of a good crypto tax return I call it a bulletproof tax return you know trying to put a Kevlar jacket on your 1040 so it involves four things first you got to report all your income every transaction has to be horded it's either capital gains mining income staking income you report everything secondly you have to report every crypto owner has to file to anti-money laundering forms once called

the f bar the other ones form 8938 all but the smallest crypto owners would have to file these so we do that we also do the tax amnesty if you haven't done that in past years the third thing is to claim all losses such as if you had a Ponzi scam or financial scam there's a special way to report that so you can get a very powerful deduction of what you invested also if you like had a lost wallet or talking to one guy he threw away his computer and he he lost his wallet that was on the computer and he's you know he's lost you know lots of Bitcoin how we claim that loss well there's ways to do that so that you

could actually write whether you're writing it off to take the loss to reduce your otherwise you're getting so that's the third thing and the fourth is to put in a disclosure statement now this is really interesting one year I hired a former IRS auditor to work for me doing complex tax returns and every time he did one he would throw in these disclosure statements and I said Maurice why why is this disclosure statement why do you put this in here he goes ah you've got to understand the mind of an IRS auditor they're overworked and they have quotas for how much they bring in in taxes each month and of course the important thing for hit neck quota is to

be able to assess penalties penalties are generally a percentage the accuracy penalty on unreported foreign transactions is 40 percent so he said when you put in a disclosure statement two things happen one it deprives the auditor of being able to claim the accuracy penalty right so he can't make as much towards his quota and he has to prove that what you said was inadequate he has to attack it before he can attack the return so it's more work to puts him on the defensive he said when we would get a return it had disclosures in it we would just close it up we just closed that return out move on to the next one it'd be easier so that's my goal I want by using a bulletproof tax return I want to take somebody from me low-hanging fruit for

the IRS to squeeze move their fruit to the top of the tree so that the IRS won't bother is too much of a hassle that's really really helpful and so I there's one thing you mentioned there which i think is is really accurate and you know I'm not in the US but it's also true here in France is that taxes are getting more and more complicated to do like we used to be able to do these things very easily very simply and now you know there's more pay there's more paperwork there are more forms there are more intermediaries required you know like turbo tax so this these types of software and so you know the average person is is overwhelmed I think by by this but there's one thing I think that kind of outlines and show is just

how this complexity is off you skated I wonder if you if you heard about this this story where the the US Government Accountability Office disclosed the IRS is refusal to clarify guidance on how tax payers should file their taxes what does this story tell us about the IRS s policies and how should taxpayers approach this this is this is an interesting drama that's going on at the federal level you know the IRS came out with his initial guidance in 2014 it said Kryptos our property you got to report them like property and then people started having questions

especially after 2017 you know well what do we do with this what do we do about this IRS wouldn't say anything they wouldn't comment finally a bunch of congressmen from the Joint Committee on taxation wrote a letter to the IRS commissioner and said you need to address this IRS is afraid of Congress because the IRS because Congress has the ability to reduce the budget for the IRS they're very afraid of Congress well after this letter the Commissioner came out and said last year he said well we're gonna publish some guidance that'll really clear up these questions well people were waiting and waiting and waiting well October comes in and they finally this guidance comes out comes out in the forum primarily of a Q&A about 45 questions of you know FAQ and a lot of it's helpful some it was a

new area well there were there were a couple issues that were on people were not satisfied with how much have been done so the Government Accounting Office which is kind of like a an accountability watchdog inside the government they came out with a paper that said and if I said four things one is these fa Q's that the IRS needs to modify them to say that this is only a comment and that the IRS is free to change their minds on this it's not permanent doesn't have the weight of regulations it's just an opinion he said the IRS can change does I have to abide by the FAQ so you need to come out and say that secondly they said you need to speak about the form 8938 which is where you report foreign assets one

of the two money anti-money launching forms you need to give guidance to crypto traders on how to fill that out if it's required and then the third thing they said they came after FinCEN and IRS because they their joint on this is the f bar form for reporting the foreign exchanges you need to provide guidance to crypto owners on how to do this well before they published this article or the paper they always give a chance for the agency to comment and I came out last week here we are it's probably like the 14th it came out 14th of February in 2020 the GAO article came out in the IRS his position was we are not going to change the FAQ to say that it's non-binding but make it clear because it is clearly

non-binding they weren't going to make that clear they were not gonna make that clear secondly they said we're not gonna change anything about we're not going to comment anything about the f bar or the 8938 form you know the the FinCEN group said that they would come out with some additional guidance later so the IRS basically said we're not gonna comment now there's two ways I see this one is hey the f bar is pretty in my opinion is very cut and dry there's a question on Schedule B which is the form where you list your interests and deduction interest in dividend income question 7a says very clearly I think it's clear did you ever yes or no did you ever have financial interest in or signature

authority over a financial account in a foreign country so the question is if I have account at hit BTC in China is that a financial account in a foreign country yes or no all right then the second question says if if you answer yes you have to file the F bar form yes or no are you gonna be filing it yes or no so it's very clear in fact the Supreme Court hasn't been taken to court the Supreme Court said this is sufficiently instructive that all taxpayers are obliged to file the f bar form so maybe the IRS is sitting here saying hey it's how you know we're not going to give guidance on things that are obvious all right that might be their position but

if it'd be kind of nice if they said that yeah the other position would be that they're uncomfortable saying anything because they have messed up so many times and giving guidance that if they say one thing someone's gonna slap them on the backside for not meaning addressing something else so I think at this point in time the Commissioner has basically taken the position that we're not giving any more guidance we know the secretary of the Treasury has said recently Stephen Munchen that they're working on more guidance who knows but in my opinion I think the IRS is leaving taxpayers out in the lurch and it tells me that they're not completely clear in their own mind what their strategy is which

puts everybody at risk and everybody should take a very conservative posture in terms of doing your tax returns right because I mean as a cryptocurrency user you might have an account right you said like a hit btc-e or or you know maybe a by Nance account or you know any any crypto exchange you could also maybe have Adams stake with the staking service abroad you know is that financial interest is that an account with that staking service there seems to be that well one your tax payers are not necessarily I think informed on where these exchanges are you know does hit BTC you have a presence and in the US like I don't know this I mean I don't

know have it be DC account but not to pick on hit BTC but you know having to figure out where where these exchanges are headquartered and then all of the other sort of confusion around what constitutes a financial asset or financial interest I think is is something that a lot a lot of people you know might might feel unclear about you're right on let's now switch over and talk about the tax return a little bit more specifically you know help our listeners put themselves in the shoes of an IRS tax auditor what are they looking for and you know if you get one of these IRS audit letters what should you do

this is an important question because we're now starting to see audit letters come out I have one here from one of my clients who's getting audited we had done an amended return we only did part of it and the part that he did is getting audited and we have and this is the second one so we actually are seeing a pattern the exact same words are being used so it's very informative a couple things to take away from this there were people who got letters last year in 2019 if the IRS called educational letters suggesting that they might want to tune up their tax return well this guy he never got one of those letters he was reporting about $38,000 of income in 2017

I'd call that a small amount and he's getting audited and you know the audit starts all audits start with a request for documentation and it's very daunting a region just a little bit you know you and I were talking beforehand right about you know if you've been trading long enough you know you got scraps of records all over and different websites and some people sent you emails and other people sent you you know SMS text and you know all you could get with screenshots of a certain like shapeshift transaction I mean it's clutter so all of a sudden you have to prove get this dock you get this letter IRS wants you to provide copies of all emails screen prints hard copy prints

transaction receipt receipts maintained by the taxpayer or provided by any third party such as a exchange broker peer-to-peer facilitator wire transfers direct deposit records a list of all virtual currency kiosks or ATMs used and their location with copies of the acknowledgement receipts you'll like this one a list of all virtual currency received from hard Forks faucets tipping or any other method where a sale by exchange was not initiated by the receiver commonly called airdrops including the date the type the amount of the currency received the data sale or other dispositions including amounts and descriptions of what was received all

right and then so it just you know this is a plus list all your blockchain addresses owned or controlled at any time by you list of all transactions related to virtual currencies lent virtual currency lending including a collateral for loan loan agreements promissory notes Ledger's transaction receipts pledge security collateralization agreements all cryptocurrency exchanges so you get the feeling this is terrifying to get this right if you've never used cryptocurrencies and you know you were presented with this you'd never want to touch cryptocurrencies you know it's a great deterrent for people to use crypto and like get into D Phi and this kind of stuff okay I got a story for it last week I was talking to a guy he was

in college and he had invested in faucets must been when his high school and he'd been getting he'd uh he'd gotten a couple Bitcoin by now so I'm taught he's caught he calls me up he conferences in his dad alright so he's like you know we talked about it now he he then invested all this cryptocurrency into a Ponzi scheme called bit connect and pretty much lost it all so I said well you had a big run-up in seventeen that's actually a taxable event you know so I said you'd have to pay taxes on and he's like oh I shouldn't actually just sell everything you know I'm not gonna invest in Kryptos I don't want to pay taxes I said no no no you got to understand taxes are good all right the more you pay in taxes

indicates you're making a lot more income I would rather be somebody who I'd rather make a hundred dollars and pay thirty dollars of it in taxes and keep seventy then to only earn twenty dollars it have to pay no taxes right taxes are kind of like a badge of the fact that I've made a lot of money right so you know and if you if you kind of think about this the wealthiest the the people united states that are the wealthiest are living in the states that have the highest state tax rates typically same thing internationally I hear in France has one of the highest tax rates but there's a lot of wealthy people in France so if you've conversely if you go to the poorest countries they

have the lowest tax rates so or lowest participation in the tax at all so the taxes are not bad you don't want to pay more than you have to legally but you know focus on making income not trying to avoid paying taxes the biggest tax break that all crypto traders get is what's called long term capital gains if you hold a coin for more than a year before you sell it then your tax rate goes down to 15% otherwise you're up at you know you're up in the twenty five thirty three percent range on your your bracket so this is the biggest tax break and Congress wants Congress has given it to you it's a long-standing tax break it's something that we should strive for to do long

term capital gains because you work too hard for your money to just flush it down with regular tax rates so let's go back to this art ladder and what people should expect once they get this other letter very good that's a great question so there's a lot of it's it's kind of a mystery and if you've never been through it before it's scary and I was talking to this client here who's getting us Kryptos audit he's been audited two times before all right so he said I know the drill I know what's happening I said you know the most important thing right yes yes I know that I'm never supposed to talk to the IRS agent myself I go that's absolutely right it's just like on the TV shows you know you never talk to the policeman when they've got you in

their interrogation room you'll always wait for the attorney it's during those few minutes before your attorney shows up that they're gonna squeeze you for stuff that you're gonna regret later so never talk to an IRS agent even if you think you've done everything you know picture-perfect it's not they're not interested they already start with a presumption that you're bad that's why they're auditing you you know and a lot of these auditors are not happy people all right so you get a letter it says you're being audited and it has a information request and please get us these documents in you know 30 days all right so all of a sudden you're panicked right I got to get this stuff together and I need somebody represent me and I it's not gonna be my accountant coz he didn't

know what he was doing rewrote the traction he got me in this problem in the first place right so you gotta find someone who knows crypto who knows how to defend people that's what we created crypto tax audit form so what we do next is we introduce ourselves to the rep to the Auditor so he knows immediately that he's not gonna talk to the taxpayer he's gonna be talking to a third party it takes the emotion out it forces him to be he can't play as many games secondly we've packaged we get give him all the documentation he requests and then I have a conversation with him and I say look you know we especially if he has a bulletproof tax return we say look you know we've got disclosure statements here we've done everything this guy is

above the board you're wasting your time with this person we want them to feel like they're wasting their and if he tries to push it I'm gonna drag him out and and make it unfruitful for him so that's kind of what we're on it is about now okay so an auditor after this dialogue might take a couple months the auditor says all right I think I'm the auditor and I think you owe this money well now what happens we have a couple lines of action we can either appeal to his manager we can go we can file a due process hearing we can appeal any determinations that came out there's a lot of different escalation points that are the laws or the regulations provide for us to do that IRS won't really tell you that much

about it but we we work that process in order to protect rights and to escalate it because an auditor just wants to assess a big penalty and move on because that's how he gets measured right you might need to speak to somebody more intelligent and more rational to actually get them to dress Hey look these crypto traders these auditors probably know less about crypto than anyone who's been watching your show for a month all right they know you know they they they don't know it they just know their little thing it's confusing to them so the key is to be as thorough be as polite and kind to them as possible and make them go away that's the best strategy so there's one thing that you mentioned in that in that audit

letter which which I think is particularly interesting because a lot of people that are in crypto you know like especially like the old timers they got into Bitcoin in 2011 back then people remind pizzas on Bitcoin talk for for 10,000 bitcoins and sending each other Bitcoin tipping there have been a number of forks over the years it's like people there are people out there and you who have crypto that they don't really know where they got it or when they got it or how they got it it might be on a an old hard drive it's like finding old photos right you like scrummage sure your old hard drive and you find pictures of like when you were back in high school or something like that and now you take that and you put it into your into your sort of clean photo album well not with crypto because

if you do that then all of a sudden you know you need to start reporting that stuff how should people kind of deal with this clutter first of all when you're audited you're audited on a specific year in this guy's case its 2017 so a lot of those types of transactions refer to or probably you know before then yeah the Auditor he's been given the 2017 tax year to audit you he's not interested in 16 or 18 unless he thinks he can you know increase his quota attainment so you know so he's not gonna be looking there at those other years secondly and I think this is really a couple words of assurance here one for all your tax all tax payers a tax return is not like your

high school math test where you have there's a perfect answer you're trying to get a hundred percent it's not like that at all it's about getting close all right because a lot of these things get to be debatable how much was the gain on this this coin I don't know I can't prove it it's not a vagueness right we want to get too close and that's so I wanna because some people are just overly worried about those details all right you're they're worried more than the auditor is gonna worry and I just want to give people that assurance when they audit Kryptos it really and I've studied this they cannot really do a bottoms-up audit in the same way you as a taxpayer had to calculate your capital gains for

all your trades I mean it's a nightmare and but they're not gonna double-check that because they have no better records than you do they have probably lesser tools than the ones you used online so the way they audit is rather than coming looking at starting from the bottom up is more of what I call a top-down audit they're gonna look to see if you reported enough income that they expected so for example this is very very real case a guy called me and he had received a 1099 tax form 1099 K from bit tricks for a million dollars he said he was out ray he was he was terrified he said I never had more than $28,000 on bit tricks how can they issue me a

$1,000,000 you know 1099 K and I said well hey look here's here and this will give us an idea how they audit imagine when you do a capital gains report you list every transaction you say I on this date I bought this coin for this amount I sold it at this amount and it had this is my gain alright so I have what they call the cost and the proceeds I said look so imagine this so let's it he was not he was a little bit of a high-frequency traders he let's imagine this he takes ten he takes $20,000 he puts it all on Eve the next day he sells it it's gone up to 21 thousand right so he's got cost of twenty thousand and

he's got a proceeds of twenty one thousand a one thousand dollar game so he does this again the next day twenty thousand in in the day after that twenty one thousand out so I got two transactions what does that look like on his capital gains report what are his total proceeds well its twenty one thousand plus twenty one thousand forty two thousand dollars he never had forty two thousand dollars right well if we look at the fact the cost column that said forty in the total gain was two thousand well what how do we correspond this well he was a high-frequency trader so those numbers just got really high all right I had one client high-frequency trader four hundred and twenty million dollars in proceeds all right but that wasn't how much money he made it's just the way

it's counted now the IRS uses that number to see like they're gonna expect I got a 1099 K from bit tricks for a million dollars they want to see at least maybe more but at least a million dollars showing up there on your capital gains report it doesn't mean you had that as income but that's the high level check that they're looking for if you report more than they know about from bit tricks well then the IRS is just happy all right but you're being honest but we want to count for anything of a 1099 k nature so that's kind of how the IRS does that so not to panic too much if you get a large 1099 k okay so they're using these ten nine NK is is sort of an indicator to see which people potentially they could look into it and to audit more thoroughly exactly so what

what is the thing that you see in your practice where people are getting their returns totally a lot wrong like what is the most common mistake that people make while finding their crypto return the two biggest mistakes people make it's one they're not filing the anti-money laundering forms the eff bar and 8938 these are massive these are ten thousand dollar penalties moment the IRS finds it mails you a letter that you didn't submit an F bar as the ten thousand dollar penalty ranked their net and then when you actually fill out and give it to them they'll count the number of exchanges you reported multiply it times ten thousand and they'll hit you with a penalty all right so five exchange is fifty thousand plus the original test sixty

thousand dollars and they can do this for multiple years this is this your mass this is a massive financial exposure it's easy to fix a situation the second biggest mistake people made particularly in 2017 was they thought they only had to report transactions on their tax return where they went to cash so if they went for crypto to cash a fiat then that they would report they thought that if you went from crypto - Krypto to crypto that you didn't have to report those cuz you hadn't taken any gain out if there's a legal word for this it's called like-kind exchange Tax Code section 1031 but the biggest mistake they then made was yes you can

do like kind exchange up until the end of 2017 when the law changed but the mistake they made was they didn't I they didn't list all these trades on the tax return in order to get like current exchange you have to list them so they didn't list them they're not entitled to him so it's a massive exposure for four people these are the two massive mistakes that people make yeah especially the crypto - crypto exchanges those are particularly hard to track because if you used a service like shape-shift before they introduced kyc and everything there's no account there's no email confirmation that's sent to you so there's really not much of a way that people can actually trace these except for like doing a screenshot and keeping

it in their files well screenshots about all you can do they're very dangerous those exchanges from a tax position because they leave you with very minimal documentation it's it's not in a structured format like a spreadsheet you know it did screenshots and you got to stick them somewhere as you were describing before clutter I believe as people start to do their tax returns more and more we're not going to put up with exchanges that do not provide good tools for pulling your transaction logs and in the future you know generate accurate 1099 records I think this is a something that we should put our foot down as traders so we won't put up with the stuff that gets us into trouble so

as a crypto holder who's concerned about maybe some unreported holdings or unreported exchange accounts or unreported gains what are some proactive steps that these people could take to protect themselves against a potential audit and potential penalties in the future the pain that taxpayers feel is like I I realize I didn't do it right seventeen and eighteen I didn't do my taxes right and I now this is the common sentiment that now I want to do my 2019 taxes right because I think here in 2020 I'm gonna make a fortune and I'll be able to pay off back taxes but I don't

want the IRS to come after my fortune because I screwed up in past years well the good news is there's tax amnesty to fix the anti-money laundering forms that I haven't been filed I go back and I do the like-kind exchange analysis and really you there's very few people in the country that do like kind exchange analysis and I'll do it I save people fortunes last year guy came to me he was a doctor he made a lot of money and a lot of was withheld by his practice but he also invested he had in 2017 he had gotten up to two million dollars in crypto assets crypto to crypto trading he told his accountant in 2018 I need to report this the accountant goes Wow let's just file an extension so September comes October comes the

accountant hasn't filed his return the accountant never filed the return because he was paralyzed on the Kryptos so here then you know we've talked to me last year he goes Clinton I got it I got to problem plus I never filed my tax return now hey the IRS was pretty happy with him because they've gotten like then withheld like a couple like a hundred thousand dollars already so yeah they like that alright so I said look here's what we did we filed his tax return we did like kind exchange on 2017 as a result he had no taxes owed for his crypto trading the electron exchange which was available through the end of 17 you know passed on to 18 and then he had gains but at that point in time he

didn't have the penalties he's able to get long-term capital gains treatment on it save them we calculated roughly five hundred thousand dollars I love that the accountants are also are also scared hey actually I've really become much more aware of this from clients calling me up I mentioned at the beginning and schedule one of income now you have to answer this question did you have any dealings with virtual currency right well all accounts all tax preparers have to ask that question now because it's in the form they have to answer it yes or no all right but there but then guys are telling me that the account will vary view counts in my opinion really understand what to do with crypto

currencies which is you know I have an opinion about that but what people people are now telling me is that their accountants have a statement in there says they're not responsible for any reporting related to their crypto currencies so how would you like to have your tax return done by a guy who's not taken responsibility for doing it right you know how much did you pay for that return so how can you help our listeners who are in the u.s. or even you know I think like a lot of our listeners are also expats and live abroad but still have to file taxes in the US what do you offer them we have a lot of experience with expats and lot expect traders my company we we do a lot of tax returns we do the bulletproof tax returns that I

describe but in order to help the most amount of people we've are now offering a service called crypto tax audit at crypto tax audit calm and for a low annual subscription rate you get audit protection on any return that the IRS come after you for and particularly if it's related to kryptos now we could matter what they're coming after do we can help you with it but if you if it's crypto related then our IRS representation services and tax research are done for free if it's a if it's directly a crypto related problem and we can do that because we're gonna be we're handling lots of them we understand how they're coming after we know how to come

answer those audit letters and how to deal consistently with these auditors but you know when you do a tax return there's a lot of other work that's done besides talking to the IRS you have to you know gather up lots of documentation and yeah you know synthesize it into something meaningful that's other work that has to be done so also in the crypto tax subscribers to crypto tax audit get access to some first of all you get a free copy of our crypto health check book which is a helps you look at your past tax returns to see you know how good are they you know what do you you know have you done the things you need to do so magnificent tools about 38 pages long it's chock full of good stuff

secondly we have a couple of video mini courses one is on how to prepare the f bar in form 8938 these are the anti-money launching forms I did this because accountants do not know how to complete these software like turbo tax attacks Act will not even file the F bar form in most accounting software for a professional-grade tax software will not do the F bar form for you so you know in order to empower my subscribers I've given them a video they can learn how to do it how to subscribe at themselves they be educated and then we also have another video how to use TurboTax to file a crypto tax return

TurboTax does not support really a true crypto tax return so I show you how to basically go off-roading with TurboTax how to jam in some extra forms so you can create you can put a Kevlar vest on your tax return and you know feel better at night I want to do things that are affordable for people because not everybody can afford to have a firm amend your returns for you but if you have some help you could do it yourself that's the biggest help I do and if somebody really has a complex problem they could reach me on the crypto tax audit web page you can schedule a consultation and we can talk and fix your returns so how much does this cost $97 for a year so for ninety seven dollars a year you get this ebook you

get the videos you get the how to complete your TurboTax crypto return but you also get you described it earlier as sort of an insurance policy it's an insurance policy for the IRS representation now there's other things in a responding to a tax return that are not IRS representation you gotta you know put together the documents and all sort of stuff that's there's a fee for that the video mini courses have a very nominal fee for them as well you have to surprise anyone but you know we we charge that so we try to keep the quality up and keep it out there I'm looking at putting more things out there so yeah it's a tremendous value I think for the vast majority of traders this is what you know plus you're getting you're

getting hooked into the a-team the moment you get an IRS letter you already know who you're gonna call you know you'll be calling my staff me will be going right to work to get you the best defense to keep you know the IRS I got a quote here for you by a US Senator Henry Belmont he says in a recent conversation with an official of the IRS I was amazed when they told me if taxpayers in this country ever discovered that the IRS operates on ninety percent bluff the entire system would collapse so that bluffing is in full it begins when they start sending you this audit letter there's it's all about scare it's

all about fear so you know that's why I want to protect people defend people show them how to defend do it a good tax return and then represent people you get selected okay I trying to drive this point home here so what people get when they when they sign up for this this defense annual subscription is that they get the piece of minds of if ever they get one of these forms if ever they to get audited you'll have their back essentially and you'll be representing them with the IRS and you'll be calling those Bluffs basically and and helping them make the best of the situation and helping them file all these disclosure forms and putting together this bulletproof tax return as

you mentioned exactly that's that sounds great I mean it seems like a great value it's fantastic there's nobody else doing anything like this accountants aren't doing it turbo tax tax act or not providing they don't support crypto traders they don't offer anything like that you're on your own but we give you the tools as part of the service because the best time to fix a problem your tax return is before you get the letter so that's why we put those tools out there to show you how to do that great so please remind people where they can find you and have them get more information about this crypto tax audit com you go there to subscribe if you have an immediate need you can also there's a page for non subscribers to contact our offices and have a half hour

consultation Clinton thanks so much for being on and helping provide this great resource to our listeners that's a real pleasure to be here with you Sebastian [Music] [Music]