{"id":193,"date":"2025-01-15T16:24:09","date_gmt":"2025-01-15T16:24:09","guid":{"rendered":"https:\/\/www.bourbonnaistax.com\/blog\/?p=193"},"modified":"2025-01-15T16:24:09","modified_gmt":"2025-01-15T16:24:09","slug":"you-cant-spell-crypto-without-cry","status":"publish","type":"post","link":"https:\/\/www.bourbonnaistax.com\/blog\/you-cant-spell-crypto-without-cry\/","title":{"rendered":"You Can\u2019t Spell Crypto Without \u201cCry\u201d"},"content":{"rendered":"
\n
\"\"<\/figure><\/div>\n\n\n

Americans love being first. First to finish a race. First to climb Mount Everest. First to reach the moon. First to reach a net worth of a trillion dollars. Sometimes, those firsts lead to fame and fortune. Other times, it\u2019s shame and ruin. (If the headline starts with the words \u201cFlorida man,\u201d it\u2019s usually the latter.)<\/p>\n\n\n\n

On January 3, 2009, an unknown figure calling himself Satoshi Nakamoto \u201cmined\u201d the first Bitcoin and launched a modern-day Gold Rush. Fifteen years later, there\u2019s still no significant use case for cryptocurrency; wild price swings have failed to establish it as any sort of store of value, and a rogues\u2019 gallery of actual rogues has hijacked, rug-pulled, swindled, and scammed millions of hapless \u201cinvestors\u201d across the globe. Most famously, crypto whiz kid Sam Bankman-Fried is arbitraging cans of tinned mackerel in the same prison where Epstein didn\u2019t kill himself, while he appeals his conviction on federal fraud charges.<\/p>\n\n\n\n

Yes, plenty of people have made plenty of money speculating on crypto\u2019s wild price swings. But that\u2019s exactly what it\u2019s been\u2014speculation on a wildly volatile asset with no cash flows of any sort to establish any kind of \u201cfundamental\u201d value.<\/p>\n\n\n\n

One of the reasons early adopters piled into the crypto sector was the promise of an anonymous economy, free from government control, government manipulations, government snooping, and government reporting. Naturally, that attracted sketchy investors who saw it as a place to do more than just make money\u2014they saw it as a place to make tax-free<\/em> money.
In 2014, though, the IRS issued a notice stating crypto would be treated as property. That meant capital gains and losses would be taxable like any other asset.<\/p>\n\n\n\n

Nobody wanted to hear that, and crypto bros scrambled to find rationales to avoid it. At one point, for example, some argued that a trade from, say, Bitcoin to Ethereum was a nontaxable 1031 exchange. (Nice try!)<\/p>\n\n\n\n

Except, of course, everything winds up on the blockchain, and most transactions go through brokers. So, it wasn\u2018t long before the IRS figured out how to track gains and losses without waiting for investors to report them. Then, they started requiring crypto exchanges to start reporting gains on Form 1099. Then, they added a checkbox to Page 1 of Form 1040 requiring taxpayers to disclose if they bought or sold any crypto assets during the year. Today, crypto is just another volatile asset class like options and futures. There\u2019s really no mystery to the tax rules.<\/p>\n\n\n\n

That, in turn, brings us to this week\u2019s dubious first. The DOJ has just announced the first prison sentence of a taxpayer solely for failure to report gains from crypto sales. His name is Frank Richard Algrehn III, of Austin, TX. In 2017, 2018, and 2019, he filed false tax returns and structured various transactions to avoid tax on $3.7 million of bitcoin sales. He even wrote a blog post in 2014 on using \u201cmixer\u201d services to hide transactions even more effectively.<\/p>\n\n\n\n

So Frank Ahlgren is ushering in 2025 with a two-year prison sentence plus $1,095,031 in restitution. As Acting Special Agent in Charge, Lucy Tan of IRS-Criminal Investigation (IRS-CI)\u2019s Houston Field Office said, \u201cThis case marks the first criminal tax evasion prosecution centered solely on cryptocurrency. As the prices for cryptocurrency are high, so is the temptation to not pay taxes on its sale. Avoid the temptation and avoid federal prison.\u201d<\/p>\n\n\n\n

The good news\u2014for you, at least, if not Frank Ahlgren\u2014is that there are plenty of legitimate ways to avoid, offset, or mitigate tax on your crypto gains. So call us when 2025 brings good news, and let us help you keep the most!<\/p>\n","protected":false},"excerpt":{"rendered":"

On January 3, 2009, an unknown figure calling himself Satoshi Nakamoto \u201cmined\u201d the first Bitcoin and launched a modern-day Gold Rush. Fifteen years later, there\u2019s still no significant use case for cryptocurrency; wild price swings have failed to establish it as any sort of store of value, and a rogues\u2019 gallery of actual rogues has hijacked, rug-pulled, swindled, and scammed millions of hapless \u201cinvestors\u201d across the globe. Most famously, crypto whiz kid Sam Bankman-Fried is arbitraging cans of tinned mackerel in the same prison where Epstein didn\u2019t kill himself, while he appeals his conviction on federal fraud charges.<\/p>\n","protected":false},"author":2,"featured_media":194,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[3],"tags":[94,92,93,50,4,11,9,64],"class_list":{"0":"post-193","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-taxes","8":"tag-blockchain","9":"tag-crypto","10":"tag-cryptocurrency","11":"tag-irs","12":"tag-tax","13":"tag-tax-savings","14":"tag-tax-strategy","15":"tag-taxpolicy","16":"entry"},"_links":{"self":[{"href":"https:\/\/www.bourbonnaistax.com\/blog\/wp-json\/wp\/v2\/posts\/193","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bourbonnaistax.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bourbonnaistax.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bourbonnaistax.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bourbonnaistax.com\/blog\/wp-json\/wp\/v2\/comments?post=193"}],"version-history":[{"count":1,"href":"https:\/\/www.bourbonnaistax.com\/blog\/wp-json\/wp\/v2\/posts\/193\/revisions"}],"predecessor-version":[{"id":195,"href":"https:\/\/www.bourbonnaistax.com\/blog\/wp-json\/wp\/v2\/posts\/193\/revisions\/195"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bourbonnaistax.com\/blog\/wp-json\/wp\/v2\/media\/194"}],"wp:attachment":[{"href":"https:\/\/www.bourbonnaistax.com\/blog\/wp-json\/wp\/v2\/media?parent=193"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bourbonnaistax.com\/blog\/wp-json\/wp\/v2\/categories?post=193"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bourbonnaistax.com\/blog\/wp-json\/wp\/v2\/tags?post=193"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}