CRYPTO TAX STRATEGY

PROACTIVE PLANNING TO SAVE

$10,000+ EACH YEAR
 CRYPTO TAX BASICS
● Crypto is taxed as property per IRS Notice 2014-21
○ IRS also issued Revenue Ruling 2019-24
● Transactions triggering a capital G/L calculation:
○ Selling for USD
○ Redeeming for goods and services
○ Converting from one Crypto or NFT to another

● Selling crypto taxed as capital gain

 CRYPTO TAX BASICS
● Transactions triggering an income tax calculation
○ Airdrops
○ Staking
○ Mining
● Earning crypto taxed as ordinary or business income
 COMMON MISCONCEPTIONS

● “I never redeemed USD, therefore I didn’t incur a taxable event”

● “The IRS won’t be able to find my transactions”

○ Easily summons info from central exchanges
○ Most blockchains are public

● “I need an LLC or S Corporation”

○ Only for liability protection or partnership agreements

● “I’ll calculate at the end”

○ End up paying more tax and prep costs
 TAX REGULATION STATUS

● THE IRS WANTS ITS CUT

● Investing Billions in software and infrastructure,

hiring thousands of employees

● Regulation changes to come

○ Uncertain but necessary
○ Tax increases?
○ Increased reporting requirements
for exchanges (brokers)

● Crypto tax softwares are new and massively flawed

○ This will change
 CAPITAL GAIN CALCULATION
OPPORTUNITIES
● Must use First In, First Out OR Specific Identification
● Specific ID means you can use any units you want
○ As long as you can identify
○ Last In, First Out
○ Highest In, First Out
○ Holding Period optimization
● Strategize to optimize your short and long term outcome
○ Pick one and be consistent
● Use a good crypto software and CPA
 CAPITAL GAIN TAX STRATEGIES

● Proactive planning

● Wash Sales

● Tax Loss Harvesting

 CAPITAL GAIN TAX STRATEGIES

● Qualified Opportunity Zones

● Buy, Borrow, Die

● Complex Trusts
 ORDINARY/ACTIVE INCOME
TAX STRATEGIES
● Start a business or fund for the business deductions (education)

● Miner Depreciation (bonus)

● Real Estate Investments

○ Offset active income as RE Pro
○ RE Pro=750+ hours (3-5 props)

● Complex Trusts
 ULTIMATE CRYPTO TAX STRATEGY:
TRUSTS
● Used for:
○ Capital Gains, State and Federal Income Tax Mitigation
○ Asset Protection
○ Privacy
○ Multigenerational Wealth Transference

● Different Trusts for different goals

● ALWAYS CONSULT WITH YOUR TAX ADVISOR

● Think of taxes as a game

 UNDERSTANDING TRUST CONCEPTS
● Contracts and Titles are everything
○ Even money. Owning money = having title to debt
● Every entity has a contract. Citizenship is a contract.
● Every asset has a title. Ownership

Crocker v. Malley, 249 US 233, 239 Supp Ct 270

“A Trust Organization created under the U.S. Constitutional right

of contract, cannot be abridged. The agreement, when executed,
creates a Federal organization, not under the laws passed by any
of the several (State) legislatures.”
 ULTIMATE CRYPTO TAX STRATEGY:
NON-GRANTOR COMPLEX TRUSTS
● Defer ALL Capital Gains and Passive Income in perpetuity per IRC
643(b)

● Can be used to significantly reduce active business income

○ Convert Active to Passive income

● No investment option limitations (all assets are corpus)

○ Applies to Real Estate & Stocks
 ULTIMATE WEALTH STRATEGY:
COMBINING TRUST STRUCTURES
● Protect your assets from liens, levies, lawsuits
Smith v. Morse, CA 524

“The Trustees of a trust have all the power necessary to carry

out the obligations which they assume. Their books and
records are not subject to review or subpoenas.”

● Leverage Business Trust and Private Foundations to maximize tax

mitigation and asset protection
○ Ex. Gates, Clinton and Rockefeller foundations are for?
○ Where did Elon Musk’s $5.7B donation go?
 ULTIMATE WEALTH STRATEGY:
COMPLEX NON-GRANTOR TRUST
Morrissey v. Commissioner of Internal US Supreme Court in Luther v. Borden, 48 US 1, 12
Revenue Service 296 US 344 (1935) L.E.d. 581 (1849)

“The fact that a business trust is not regarded as a legal
entity distinct from its trustees, if a true trust… may
result in this advantage to the trust, which a corporation
does not possess; The trust consists of individuals…
who are Citizens, and who, therefore, are entitled to
certain rights and immunities such as those
guaranteed by the privileges and immunities clauses
(Art. IV, §2. Cl 1) of the Federal Constitution, which
do not apply to Corporations.”
“The governments are but trustees acting under derived authority
and have no power to delegate what is not delegated to them. But
the people, as the original fountain might take away what they
have delegated and in trust to whom they please… The
sovereignty in every state resides in the people of the state and
they may alter and change their form of government at their
own pleasure”

Justice George Sutherland, Gregory v. Helvering, 239

US 469 (1934)

“The legal right of a taxpayer to decrease the amount of what

otherwise would be his taxes, or altogether avoid them, by
means which the law permits, cannot be doubted”
 QUESTIONS?

: anthonypricecpa
: anthonyprice1
: Anthony E Price, CPA
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anthony@anthonypricecpa.com TAX PLANNING”
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