0:00

While everyone else is talking about

0:02

the Chief's Super Bowl victory, Taylor

0:04

Swift and Joe Biden's decreasing ability

0:07

to form a coherent sentence, we're

0:09

here today to discuss something really

0:11

important because tax time is approaching.

0:14

Sure, you'd rather talk about anything other

0:16

than this, but understanding the latest changes

0:18

to the U.S. tax code should be

0:21

very important to all U.S. citizens. That's

0:23

why we're happy to welcome Clinton Donnelly

0:25

back to the show for his annual

0:27

update on what you need to know

0:29

regarding changes and how the U.S. government

0:31

looks at cryptocurrency. The tax man is

0:34

back, baby, so let's consult the thousands

0:36

of pages of tax code and find

0:38

out what you need to know on

0:40

our Tax This, episode number 713 of

0:42

the Bad Crypto Podcast. And

1:10

welcome back to the

1:12

Bad Crypto Podcast, the

1:15

show for the crypto

1:17

series and the crypto

1:19

curious and congratulations to

1:21

the Kansas City Chiefs

1:24

for winning the the

1:26

scripted Super Bowl. Way to go.

1:29

Right, yeah, so scripted. I don't know.

1:31

I would say this though, man. I

1:33

was thinking about this in the overtime

1:35

game. I was like, dude, this is one

1:38

of the very best football games I've seen,

1:40

maybe ever, even if we lose. Because here's the

1:42

thing, dude, my bank account is

1:44

so full when it comes to the Chiefs victories.

1:46

You know what I mean? What I wanted was

1:48

I wanted the Kansas City Royals to win a

1:51

World Series when my kids were young. I wanted

1:53

to be able to see a Jayhawk, Kansas Jayhawks

1:55

championship, and I wanted us to at least go

1:57

to a Super Bowl. Go to one.

2:00

I. Mean, if if he remarked, you're out of

2:02

my life then when does your boss's nineteen seventy

2:04

and I was born in Seventy Three is? I've

2:06

never. I've never seen one rights. And

2:08

isn't how the last five years they've

2:10

been the for so as as insane.

2:12

So yeah what a crazy ride it's

2:14

been You know what? Was.

2:17

Thinking about that, we can maybe talk about that after

2:19

the fact that. Was. Thinking about the

2:21

whole save our chief thing from back in

2:23

the day that that we were a part

2:26

of help from flying banners over Arrowhead to

2:28

stick it in the fire the previous coach

2:30

and I made a russian out and hiring

2:32

and be read like we are small parts

2:34

as of the butterfly effect of against You

2:37

it's your group growing is using the community

2:39

that to push chains that we wanted and

2:41

who would have thought that want to came

2:43

anywhere near this is just insane to me.

2:46

And. Once again, they have pull his

2:48

victory three times in four years. Needless

2:50

to say, Aaron is very happy. and

2:53

yeah, I'm over. and quite frankly, I'm

2:55

already over. I'm ready for the three

2:57

peat. Let's go get get another one

2:59

next year ago. All right, Well, let's

3:02

talk about something that maybe more important

3:04

to your bottom line. Unless you're getting

3:06

Patreon home salary and you're probably not

3:09

armed and that is taxes. For the

3:11

fifth, you're in the row, Clinton Donnelly

3:13

is joining us and you're gonna want

3:16

to listen. In to see what's up

3:18

Here we go. And

3:21

here to talk about our favorite

3:23

subject in the world and yours

3:25

as well. Nice. You pay attention

3:27

to every word that comes out

3:29

of his mouth. Is our tax

3:31

expert, especially knowledgeable in the realm

3:33

of crypto texts. Mr. Clinton Donley

3:36

of Crypto Tax audit.com Good sir.

3:38

Welcome back to the show for

3:40

your fifth. Appearance: Be

3:43

competing with I think regime O

3:45

S was are all time leader

3:47

and I think was was John

3:49

Mcafee on the show four or

3:51

five times trove. Your.

3:54

Muted Travel. To lips are

3:56

moving I can hear what you say that were yeah

3:58

yeah I think he was. The show four

4:00

times where we interviewed him and then

4:03

we had as just time where he

4:05

was on virtual block same week. That

4:08

he go So Clinton you're you're like

4:10

number two then for the show right

4:12

now with a was the owners of

4:14

a buyback see it as a bit

4:16

of although he died of resident Spades.

4:18

So glad to be here. Yes,

4:21

We're glad that you're here, are alive wherever in

4:23

the world you are in our your and are

4:25

you in Europe? These. Days

4:27

I'm enjoying the southern coast

4:30

line of Portugal. Beautiful.

4:32

Edited: Beautiful Here In one thing that we

4:35

all we talked about why we likely the

4:37

porch felt. It is really a peaceful place.

4:39

You know the placement. Don't walk around with

4:42

guns. Or everything is very

4:44

cheap. is really hang back at

4:46

the spirit every should come visit

4:48

you know before we given taxes

4:50

at my first questions actually around

4:52

the golden visas my understanding that

4:54

are you know Portugal's been a

4:56

great plan b. For. A

4:59

lot of for citizens for years

5:01

and there's been some changes because

5:03

some of the people of Portugal

5:05

aren't happy with rising property prices.

5:08

What can you tell us about

5:10

what's happened there? and is a

5:12

golden visa still an option for

5:15

people to become a citizen of

5:17

Portugal? I'm. Glad you asked.

5:19

The Portugal is actually the number

5:21

one foreign desk. The data for

5:23

Americans. Ah it. It really does.

5:26

A cool, cool country. A high

5:28

percentage of artificial speaks English, so

5:30

it's really easy to get around

5:33

it. It's extraordinarily affordable. Portugal in

5:35

the. Canopy. Of a

5:37

European country to be considered

5:39

poor, A poor country. So.

5:42

The. Cost of labor's low everything Me I

5:44

get a drink ago got good glass

5:46

of wine at a restaurant. I pay

5:48

roughly two to three euros which is

5:50

about same up dollar. ah so we

5:52

that in the never drop hundred dollar

5:54

that a restaurant. For. My wife and

5:56

I would never do that. I was an ip back

5:59

from us. That's. Breakfast up to

6:01

the the a lot of great

6:03

way to for America to really

6:05

want markets to come to Portugal

6:07

Ah they want you to com

6:09

and live in and spend money

6:11

in Portugal. That the really cool

6:13

about taxes here. Ah the golden

6:15

be the his base of the

6:17

idea if I com and I

6:19

buy an apartment or house that

6:21

it's over a certain price than

6:23

it leads to Over a period

6:25

time becoming a permanent resident in

6:27

Portugal of having a passport felt

6:29

that. Was take the way because because

6:32

really hard place to debate the price

6:34

the housing really. Out of reach

6:36

in a lot of areas in the country so

6:38

the the cut that off but they have of

6:40

the now called the d seven. Visa.

6:43

Which are you come over You

6:45

say you could provide for yourself

6:48

below yellow hair and are retired

6:50

and com or whatever and of.

6:53

They will not tax your foreign sourced

6:55

income of for ten years. In after

6:58

ten years Ah, you can become a

7:00

citizen. I have a friend of mine

7:02

who's going if he's going to all

7:04

the steps he uses. his goals from

7:06

a citizen within five years isn't been

7:08

a you have a passport is a

7:10

permit right to be of the country.

7:14

At. Pretty reasonable at the great as

7:16

where the easiest place to the world

7:18

do that it in a place that's

7:20

really it his might one actually live

7:22

as opposed to your substrate island the

7:24

Pacific in the Atlantic. Never heard. Of. Her

7:27

yo and and coincidentally in

7:29

Portugal was the place where

7:31

I had the very best

7:34

lasagna. Of. My life get some

7:36

if you like lasagna and he

7:38

likes save money on your taxes.

7:40

maybe Portugal's or a were. Actually

7:42

it was in a place called

7:44

Sentra which was right now off

7:46

of Lisbon like and eleven twelve

7:48

hundred year old castle. And.

7:50

There's a place called Lawrenceville a hotel or

7:52

some of the chef their mates. It is

7:54

unbelievable so I think of that often because

7:57

I tried was on your all over the

7:59

world. That was it. Is

8:01

it amazing? I

8:03

mean that's like the number one tourist destination

8:05

in Portugal. Super, super cool. Lots of medieval

8:08

castles. You know in November

8:10

we have the

8:12

annual Solana breakout conference.

8:15

So they have their annual conferences

8:17

here. Lisbon has become pretty much

8:20

the crypto mecca of Europe. Very

8:23

very attractive friendly place for that. Web 3

8:25

conferences is here. So it's really cool. Even

8:28

Taylor Swift does concerts here. That's

8:30

great. And if you live in Lisbon you're actually

8:32

a Lisbon. Which is cool. I've always wanted to

8:34

be one of those. So let's

8:36

talk a little about taxes. So you

8:38

know with that as I said this is the fifth time

8:40

you've been on the show. How

8:42

do you see the landscape of taxes

8:45

evolving for crypto? Especially

8:48

with the supposed increased attention from the

8:50

IRS as they hired 800,000 new agents

8:55

or whatever. So what's new that people might

8:57

need to be aware of? All right.

9:00

Let's look at it for three parts. First of all let's just

9:02

set the base the base plate. What

9:04

is taxable about cryptocurrency? Any

9:07

time you sell or exchange cryptocurrency

9:10

you experience some sort of gain

9:12

and that gain is taxable in

9:14

US dollars. Buying

9:17

crypto is not

9:19

a taxable event. HODLing crypto not

9:22

actually selling or exchanging at all

9:24

is not taxable. And

9:26

if you get strange airdrops from people you don't

9:29

know about, don't want

9:31

that's not taxable. Staking

9:33

rewards are taxable. Mining proceeds

9:36

are taxable. When

9:38

you're in DeFi the rewards you get from

9:40

various activities are taxable in the fair market

9:43

value in US dollars when you receive them.

9:45

So that's pretty

9:47

much if you experience a gain and

9:49

you know when you've experienced a gain

9:51

or loss that's taxable. And I will

9:53

say this losses are very

9:56

important because losses reduce your gains

9:59

at the end So that's my base

10:01

plate. The

10:03

second thing is what's new. A lot of things

10:05

are new this past year. The

10:08

IRS came out with a variety

10:10

of little rulings, but the big

10:12

one that's gotten the most amount

10:14

of attention is a proposed regulation

10:16

called broker-dealer regulation. And

10:19

this places a, this

10:22

is still proposed. So

10:25

some tax laws are made by Congress. So

10:27

it's law. And then some

10:29

things are left to IRS to tease

10:32

out. And these are called regulations. And

10:34

they have to solicit comments, which they did. And

10:37

now we're waiting for them to become formal. The

10:39

broker-dealer regulations place

10:41

an obligation on

10:43

any business that acts

10:47

as a broker or dealer of cryptocurrencies

10:49

to file a 1099 form

10:51

with the IRS at the end of the

10:54

year reporting their activities on your behalf. So

10:59

this is very

11:01

controversial because the definition of who is

11:04

a broker-dealer seems to be quite broad

11:06

and could suck in a lot of

11:08

people who may only tangentially handle it.

11:11

One of the areas is like with

11:13

a DeFi protocol be

11:15

a broker-dealer because once you launch the protocol,

11:18

it's kind of out of people's hands and

11:20

they want to hold somebody's foot to the

11:22

fire. So this is controversial. A lot of

11:24

people are going to not like the

11:27

reporting of your transactions. What they do

11:30

is they don't necessarily know how much

11:32

your gains are on trading,

11:34

but they will report the total volume, the proceeds

11:36

of what you did. This can be a large

11:39

number, especially if you're a high-frequency trader. And the

11:41

IRS will start to have visibility to that. This

11:44

past year, supposedly going into effect would be a

11:46

1099 form from anybody who paid you

11:48

anything more than $600. At

11:51

the very last minute, the IRS backed off on

11:53

this and raised the limit

11:55

to $5,000. So where it

11:58

used to be $20,000, you'd get like a... 1099

12:01

for PayPal or wherever. It's now down to

12:03

5,000 and next year be down to 600. The

12:08

reason they backed it off is they

12:10

felt that it was inadically communicated. A

12:12

lot of small businesses would be adversely

12:14

affected by such a harsh implementation. Well,

12:16

Clinton, who does the reporting if it's

12:18

like a MetaMask, Uniswap

12:21

transaction? Who

12:23

has that obligation? They're trying

12:25

to define the protocol authors

12:27

of MetaMask as the people

12:29

who have a legal obligation to do it. Or

12:32

would it be MetaMask runs on computers

12:34

somewhere? Somebody is running a computer that

12:36

runs the software. Do they have the

12:38

legal obligation? So this is, you know,

12:41

you can feel for the IRS trying

12:43

to, you know, push into the space,

12:45

but it causes a lot of complexity.

12:49

Just because, you know,

12:51

you might pay somebody an NFT to participate

12:53

in your $100 raffle, does

12:55

that mean you become obligated to issuing 1099? You

12:59

know, this is where the

13:02

regulations they wrote, let me tell you

13:04

about this, they felt that it was

13:06

very overreaching. Here's, I was at an

13:08

IRS conference. The IRS commissioner

13:10

was there and spoke. They

13:13

get in the neighborhood of

13:16

2 million, uh,

13:21

correct? No,

13:23

2 billion, 2 billion, 1099s a year.

13:30

With the new regulation, they'd expect to get another 8

13:33

billion, 1099s. So

13:36

this is a staggering expansion

13:39

of the type of information the

13:41

IRS is collecting on taxpayers. Okay.

13:44

So this is all, this is very

13:46

controversial and it

13:49

remains to be seen, it gets implemented, but this

13:51

will become a big issue. Once it becomes public,

13:53

which I expect this spring it will, people

13:56

are going to have absolutely flip out on this.

13:59

It could drive a lot of money. of companies believing the US.

14:03

I got to ask this real quick because you said 8 billion

14:05

more like how many 1099 per

14:07

people do you have normally people

14:09

file one 1099 or whatever right

14:12

or it just sounds like jobs

14:14

and stuff and

14:17

side hustles and I mean, you got a

14:19

couple million people in the US plus you

14:21

got companies and

14:23

so companies get 1099 from other

14:25

companies that pay them services right. So

14:29

you know, you probably have one or two bank

14:31

accounts. They may or not be issuing you interest

14:33

of course, few trousers, no money to bank accounts. You're

14:35

not getting those. So but if

14:37

you have dividends, you have 1099

14:39

B brokerage for you know, like

14:41

Fidelity, you know, this kind of

14:43

shit. So yeah, but they're

14:46

expecting for now then I found out when

14:48

I was at the conference that they had

14:50

just implemented a new system for tracking 1099.

14:54

Just the year just this year. So now they've

14:56

developed this new system which kind of blows that

14:58

one completely out of the water. So the operational

15:00

aspects are very hard for them. And

15:03

we said what the points that we made

15:05

were now crypto tax audit

15:07

were members of the digital

15:09

Chamber of Commerce were the only tax prep firm that's

15:11

a member of them. We said this is

15:13

going to be a vast duplication of

15:16

numbers, right? So I traded something

15:18

on MetaMask, I then

15:20

moved that coin over to Coinbase and I

15:22

cashed out for cash and now I got

15:24

duplicate counting of my numbers. So

15:26

they realized that they're going to

15:28

get a massive overstatement of how

15:30

much, you

15:33

know, income people made off of

15:35

crypto proceeds, not necessarily profits. So

15:38

it's a big problem. It's a problem

15:40

they want to have. I don't know if that, you

15:42

know, do we like that? Do we

15:44

want to protest the investigatory overreach of

15:46

this branch of Congress? I don't know.

15:49

This branch of government. So what

15:51

are we as filers liable for then

15:54

if we're not sent to 1099

15:56

from whatever exchange or wallet

15:59

or D. or

16:01

is it required that we file something

16:03

or not? Well, no. I mean, that's

16:06

just the IRS wants to know, and then they take what

16:08

they know, and they compare it to your tax return and

16:10

see if all the income that

16:13

they know about is accounted for

16:16

on your tax return. Let me tell

16:18

you for example, did you all hear this past year the

16:20

IRS commissioner came out

16:22

and said, we're going to increase audits

16:24

of people that make over $400,000. Secretary

16:29

Yellen, President Biden all

16:31

reiterated the same thing. We're going to increase audits,

16:33

not on the poor, but on the people making

16:35

over $400,000. Of course, everybody goes, yeah, yeah, go

16:37

after those guys. The problem is when

16:40

they said income, they don't define income the same

16:42

way you do. All right. You're thinking in terms

16:44

of like how much money got to my back

16:47

pocket. No, no. They're looking

16:49

in terms of what they call total

16:51

positive income. That's your income without

16:54

any expenses. That's your

16:56

proceeds from trading without the cost

16:59

of how they purchase those coins. If

17:01

you're a high frequency trader, get this.

17:03

So let's say you have $20,000 and

17:05

you like you invested all of one

17:07

coin. At the end of the week, you sell

17:09

it, you've made $1. The next

17:11

week, you invested again, $20,000, and you make $1. At

17:15

the end of the year, you've done this for the two weeks, how much

17:17

do you have? You have

17:20

$20,052, but

17:24

your total positive income, the

17:26

proceeds from all your sales is way

17:28

over a million. So

17:31

that person would fall into

17:33

the people over $400,000 total

17:35

positive income, higher likelihood of

17:37

auditing. The audit rates are currently

17:39

posting are at least at 12%, and that's

17:41

before they bring on all these new auditors. So

17:45

this is a big, big, big, serious thing, and we've

17:47

done – I've

17:49

been really struggling with a massive question

17:54

in my mind. I want to bounce it off, you guys,

17:56

because you're aware of this. We

17:58

know what the IRS has said. were cracking down

18:00

on audits. They said we can bring in lots

18:02

more money, give us this budget, because the number

18:04

one offenders are crypto people not paying their taxes.

18:07

They said this. But

18:09

we really haven't seen the

18:12

crackdown. We haven't seen our friends

18:14

dropping like flies from crypto audits.

18:16

And we know that before 2017, only 800

18:18

people had reported cryptos on

18:24

their tax returns. And

18:26

in 2017, a big year, we still believe

18:28

that less than 5% of the investors reported.

18:31

OK, so 95% non-reporting. Even

18:34

now, our research at

18:36

the IRS backs it up, shows that 75% of

18:40

crypto investors are not reporting your

18:42

crypto income their tax returns. I

18:44

mean, they're engaged in some level

18:47

of whether intentionally or unintentionally

18:49

of tax fraud and evasion. So

18:57

my question is, why haven't we seen the

18:59

crackdown? There are statutes of limitations where they

19:02

have like three years, six years to audit

19:04

you. Why is that? What we've discovered is

19:08

in convoluted way is that

19:11

basically all crypto, I

19:13

call them active crypto

19:15

traders, have

19:19

no statute of limitations protection at all

19:22

on their tax returns. By

19:24

active, I mean that you were

19:27

doing active trading, you were just the hodler, and

19:30

you traded somewhat on foreign

19:32

exchanges or on DeFi. And

19:35

if that's the case, you are in a position where

19:37

you have no statute of limitations protection. I won't get

19:40

into the details. We'll post it on our website. We're

19:43

also looking to work through the digital chamber of

19:45

commerce. We're going to raise the red flag on

19:47

this and demand that through the digital chamber of

19:49

commerce that we go to the IRS Commissioner and

19:51

offer tax amnesty programs so

19:53

that we have limitations on this. Let

19:56

me Tell you an example. If

20:00

you have if you made if you had two

20:02

thousand dollars of tax of she didn't report two

20:04

thousand and seventeen. And

20:07

the Iris discovers that is crypto

20:09

related. The. You'd be

20:11

paying approximately twenty four thousand dollars

20:13

to pay that off or death

20:15

penalty plus taxes have two hundred

20:18

forty percent of. Our.

20:21

Concern is that they can take all the

20:23

time the world come after you and the

20:25

more they wait the more they get additional

20:27

a percentage respond. That's just last month. The.

20:30

Iris. Have. Filed

20:32

a. Legal. Charges against

20:34

a Connecticut couple that in two

20:36

thousand and six did not report

20:39

couple million dollars income. That's.

20:41

Eighteen years ago. Think

20:45

about that, you know you know you did

20:47

something. Podium: Roger: probably terrified, didn't have had

20:49

a clean it up, didn't have money clean

20:51

it up. Years pass you're thinking like likes

20:53

good your kids growing up, the going to

20:55

college you think everything's great melt a sudden

20:57

like the nuclear bomb goes off your life.

20:59

not only the half hour quarter million dollars

21:02

penalty of potentially several years in jail at

21:04

least one year, then you still gotta get

21:06

on a you have to pay all these

21:08

back taxes which for them was eight billion

21:10

dollars plus interest and penalties were up. It's

21:12

of your the twenty million dollar range. They

21:15

are completely devastated because he didn't

21:17

address something. Eighteen.

21:19

Years ago and this is where the irises

21:22

the when it comes to taxes. The block

21:24

chain is not your friend. So.

21:26

What's the question you use? You

21:28

have this theory, but what? What?

21:31

Are you asking? Well. Because and

21:33

section Sixty Five a one paragraph

21:35

see eight It lays out a

21:38

and exclusion that the Statue of

21:40

Limitations does not start unless you

21:42

file for eighty Nine thirty Eight

21:45

where you report foreign assets. On.

21:47

what considered for nasa there's no tax

21:49

no tax associated with this form but

21:51

if you don't file it when you

21:54

should have than the statue of limitations

21:56

never starts so this or something that

21:58

you actually have been doing for us

22:00

And by the way, you guys are

22:02

gonna want to check out crypto tax

22:04

audit using our link bad code In/tax

22:06

is where you're gonna go as part

22:09

of what you do is make sure

22:11

these forms are filed So that's how

22:13

you do that then we're covered. Is

22:16

that what that means? Exactly.

22:18

You're covered. So we've been doing that since

22:20

we started doing crypto returns in 2018 We

22:23

saw that this foreign filing obligation was there now.

22:25

We've been digging into some of these weird, you

22:27

know statue limitation We saw wow, look this form

22:30

just popped up again in On

22:33

that form you have to report your

22:35

foreign exchanges and then it's actually a

22:37

wide open It says the tax law

22:40

says specifically any financial instrument or contract

22:42

for investment purposes Where the

22:44

issuer or counterparty is not a

22:46

US person So when you go off

22:49

and trade on metamask, you have no idea who

22:51

your counterparty is, right? It's

22:53

anonymous So you have

22:55

to assume they're not a US person You

22:58

know So as

23:01

a result you need to report the total sum

23:03

of all that on that reform now That

23:05

form if the IRS cut so here's what the

23:07

IRS can do is they are

23:09

gathering data Why one of the data points

23:12

that bothered me was why is the IRS

23:14

still collecting transaction records for 2016 and 2017?

23:18

Kraken just turned over this data circle. Poloniex

23:21

just turned over this day like, you know

23:23

coinbase already had I We

23:25

had one client going through an audit local

23:27

Bitcoin Already has turned

23:30

over this transaction data. Basically

23:32

if you have dealt with

23:34

any exchange operates in the US IRS

23:36

has your transaction history They

23:40

they have now got Binance

23:42

under their thumb. They pled guilty

23:45

to several court cases of stuff

23:48

rest assured part of that

23:50

condition It's gonna be turning over all their

23:52

transaction history and anybody that's us to

23:54

the Americans So they have

23:57

this in very broad picture

23:59

now What the IRS

24:01

did this past year, I'm not scaring everybody,

24:03

this should be your Halloween show. Everyone

24:07

has just already shit their pants. It

24:10

gets worse. Oh

24:13

great, thank you. You're

24:16

familiar with Chainalysis and Elliptical, right?

24:19

These are blockchain research tools. These are

24:21

investigative tools. They go from

24:23

like here's a- They're working with AI to be

24:25

able to go out and do all that stuff

24:27

easily, right? Well they're working this. So those tools

24:29

right now are investigative. They go, this was a

24:32

hack, we can trace it all the way through

24:34

these different exchanges until it lands in Travis's wallet.

24:36

Okay? That's what those tools do. They're

24:38

now asking those companies to design a different

24:41

tool. It would be a portfolio tool where

24:43

they can say, look, here we know this

24:45

person, we know Joel dealt on- This

24:48

is his Binance account, his Kraken account,

24:50

his Polonius account. We know these are

24:52

his addresses. Now comb through

24:55

all the blockchains and create

24:58

a picture of all his

25:00

holdings in all private wallets and

25:02

everything. How much

25:04

did Joel own on January

25:07

1st, 2020? They

25:09

want to be able to reconstruct that. And

25:12

with that data, they can now come in

25:14

and nail people in audits and investigations. And

25:19

they have all the time in the world to do

25:21

this because there's no statute of limitations protecting people in

25:23

general. I got to

25:25

see, why would any company want

25:28

to be located in America at

25:30

this point when it comes to

25:33

the next

25:35

financial instruments that are being built are

25:37

digital in nature? It

25:40

makes total sense, but why would anybody want

25:42

to do business with anybody in America at

25:44

this point since they're so

25:48

unflexible? Well, that's

25:50

a valid question, and I think it's for politicians

25:52

to wrestle it out. I would say the main

25:54

reason is because there's so much money in the

25:56

U.S. willing to invest in this sort of thing.

26:00

You're right. That's a very good key. Especially

26:02

if you are somebody like the founder of

26:05

Bitmex and you didn't report correctly to the

26:07

IRS and all of a sudden they charge

26:09

you and arrest you and do

26:11

things like that. It's a very, it's a very scary

26:13

business. What do

26:15

you think happens in the event that

26:17

they let Trump win the election and

26:21

Republicans take over? Well,

26:23

hey, on my Twitter space,

26:25

CryptoTaxFixer, I'm always pushing that

26:28

we should be single issue voters. We

26:30

should vote on Bitcoin. Ramaswami

26:33

has got Trump talking about no

26:35

CBDCs. I think that's big. I

26:40

think it's shameful what's going

26:42

on with Elizabeth Warren. She's

26:44

really trying to beat us back into the Stone Age. Russia

26:47

and China realize that Bitcoin

26:50

is their key to reserve

26:53

currency independence from the dollar and

26:55

they're investing and we need to

26:57

as well, especially we start looking

26:59

at tier two privacy and security,

27:01

national security chains linked

27:04

off of an independent blockchain called

27:06

Bitcoin. So, you know, I think if

27:09

Trump becomes president, well,

27:11

look, I mean, when Biden became president, he

27:13

issued an executive order trying to get all

27:16

the agencies to work together with a cohesive

27:18

policy. Well, it's a

27:20

shambles, you know, Elizabeth Warren is driving

27:22

policy and so is against her, you

27:24

know, so this is chaos. I can

27:26

only hope that positive things would happen.

27:29

I think he's got some forward thinking people.

27:34

But we're at a point where we can't dilly

27:36

dally anymore about a crypto policy. The government is

27:38

falling behind both in a national security point of

27:40

view and a financial point of view. I mean,

27:42

the banks themselves are rising up to demand things.

27:45

So. It's

27:50

a wild time in the world of

27:52

the cryptos for sure. So maybe

27:54

I asked this, so, you know,

27:56

what are some of the most common

27:59

triggers for. IRS audits in the

28:01

space right? I know you talked a little

28:03

bit about some of those things But like

28:05

what are some proactive steps that that people

28:07

can use to help minimize that audit risk?

28:09

And is there something that you guys do

28:11

that's like oh this document goes in most

28:13

likely They're gonna look at and go and

28:15

all right We we're not gonna mess with

28:17

these guys because we want to go with

28:19

more low-hanging fruit And I'm just kind of

28:21

curious. What are some of those things that

28:23

makes them go? Well

28:26

the the biggest thing is the IRS gets these 1099

28:29

forms and they look at the total positive income they

28:31

want to make sure the total positive income that they

28:33

know about is Equal

28:35

is less than or equal to what

28:38

you've filed on your tax return, okay?

28:40

That's a simple test And

28:43

you'd be surprised at how many people fail that roughly about 25%

28:45

of people fail that We

28:48

have a service that IRS guard dog Which

28:50

is a branch of crypto tax audit you can go to

28:52

our website and get it Where

28:55

we actually monitor? Your

28:57

IRS accounts we check prior years to

28:59

see if there are Unreported

29:02

income that the IRS sees is greater than

29:04

what you told him about which is like

29:06

a surefire way of getting audited We

29:08

also can see if the IRS has selected

29:10

in the way whatever way they select

29:13

things tag What have you returns for an audit

29:15

in advance we can see that? As

29:17

much as six months in advance and

29:20

we can then work with you We had one client who

29:22

had even filed his tax returns. He was a crypto trader

29:24

and We he

29:26

got flagged for one year. We rapidly

29:28

worked with him to prepare six years

29:30

of tax returns. We then

29:34

We filed those and he never got

29:36

audited the audited that was scheduled for

29:38

him got canceled because the last thing

29:40

you want Is to have some auditors

29:43

having your face on their dartboard? That's

29:46

the last thing you want because it will not go

29:48

down pretty you'll go down ugly A

29:50

typical audit going through the tax court which most of

29:52

them do you know you're running up into about you

29:54

know? Three to four years, so we

29:56

have three I have three cases in US tax court

29:58

right now one of them We have absolutely won.

30:01

The IRS threw down the towel and

30:03

walked away, no change. They had been

30:05

looking, this tax payer, for 1.5 million.

30:08

They did their own game calculations. My

30:11

own in-house forensic accountants destroyed the IRS

30:13

calculations and they just simply threw in

30:15

the towel and walked away. We

30:17

have another thing going on right now. It's a

30:19

like-kind exchange court case. I

30:22

mean, this will be heard in the middle of

30:24

April, so we should probably touch bases, but I

30:26

think I'm doing very well in winning this one.

30:28

We have another tax court case, high-frequency trader, quarter

30:31

million trades in a year, and the IRS, again,

30:33

is all over the floor trying to do their

30:36

game calculations. We have a very good

30:38

track record of winning when we go to tax court. What

30:40

you can do, you asked about how you

30:42

can protect yourself. As an IRS

30:44

guard dog member, you can

30:46

have us monitor your own tax

30:49

return for as little as $12 a month. $12

30:51

a month, that's less than Netflix. We

30:56

monitor it on a weekly basis. On a

30:58

monthly basis, we'll send you a report card

31:01

letting you know how you stand with the

31:04

IRS. What you're looking for is all

31:06

thumbs up, right? If we see a red flag, we

31:08

let you know about it. You can call our staff.

31:10

We can dig in. We can tease out the issue

31:12

and see if it's something you need to address yourself

31:14

with. There is no other service

31:17

in the US like this. It's

31:19

extremely all by guard. We

31:21

offer the $12 membership, which is mere monitoring,

31:23

all the way up to full service where

31:25

we will, for no additional charge, we defend

31:27

you on your audit to appeal stuff like

31:29

car insurance or your tax return. Let me

31:32

speak to this because I've been using this

31:34

for years and there's a reason you're back

31:36

for the fifth year and a lot of

31:38

you have signed up for this service already.

31:40

If you haven't yet and you're a US

31:42

citizen, it's ridiculous that you do

31:44

not have this. Every month, I get an

31:46

email with my report card and I look

31:48

at it and I open it. I'm like,

31:50

please be all positive, thumbs up to it,

31:52

and it's great. I

31:54

sleep easy. I know that

31:57

everything's being handled. You want to follow our link

31:59

to badco.com. And

32:02

that way you can say the

32:04

bad crypto podcast has sent you

32:06

to Clinton's crypto tax audit and

32:08

it's well worth it. Yeah, that's

32:10

great stuff. I got a question

32:12

around this because AI and trading

32:15

is becoming something that's really prevalent

32:17

more and more so, right? We're

32:19

starting to see AI trading platforms,

32:21

which are going to be high

32:23

velocity trades. They're going to be like,

32:25

boom, boom, sell, buy, sell, do, do, do, do, do, do, do,

32:27

do, and they're going to be, it's going to be going off

32:30

the rails, right? So it would

32:32

seem from hearing what you're saying, if

32:34

that's happening, every single one

32:36

of those transactions is going to be

32:38

something like I'm personally not using AI

32:41

for a trader, but I thought about like, wow,

32:43

there's going to be some great ones that come

32:45

out because they're going to identify stuff pragmatically that

32:47

most people won't. But then according to

32:49

the IRS, according to what you're saying is each

32:51

one of those little microtransactions are going to

32:54

add up and create a lot of problems

32:56

for somebody potentially. Absolutely.

32:58

First of all, if that's a strategy

33:00

and you think it's going to win,

33:02

you should do it. All right. But

33:05

just realize that you have a tax

33:07

liability and it's not really,

33:09

you don't owe any more taxes just

33:11

because you're a high frequency trader, but

33:13

you have a reporting obligation and you're

33:15

going to be on the IRS's dartboard

33:17

if you don't address it. So just

33:19

budget into your whole mix of expenses

33:21

for the year, you know, getting a

33:23

professional tax return calculated for you. So

33:25

in the area of high frequency traders, we have the

33:27

highest success rates of defeating the IRS

33:31

in audits and in tax court. So you're

33:33

bringing in like a huge truckload of documents,

33:35

like here's all the transactions. Right. So

33:38

for me, I have a minimal amount of transactions. Transactions

33:41

normally I buy a coin and then

33:43

it loses value and then

33:45

I sell it in a panic.

33:47

And then I'm like, oh shit, I

33:49

thought this was the bull run. Do they have

33:51

an opposite copy trader utility trade-off?

33:54

Like, okay, I'm going to copy this

33:56

guy and do whatever the opposite of

33:58

what he's doing. Call

34:00

it the Kramer copy trade I

34:04

Will say one we have I have the most

34:06

incredible crypto game team Nobody else has a crypto

34:08

game calculator do full service calculation. We don't farm

34:11

it out We have our own a

34:13

list we had one guy came to us with five

34:15

million trades in a year. All right, he made We

34:19

have another guy came to us. He was a

34:21

DeFi trader. He had 75

34:24

wallets we had to pull the trades off us

34:26

and we did we were able to successfully do

34:28

the gain calculation These are herculean tasks You

34:31

cannot do these by a nervous person that's not to do those

34:33

by themselves Not even a good person can do it by itself.

34:35

We have we have a rigid

34:38

Practice discipline approach really a big forward

34:40

type of approach to how we do

34:42

it. So As

34:48

one guy said make money pay taxes make

34:50

more money, I think that's great for

34:52

those of us in Puerto Rico under x60

34:55

then you can trade as often as you

34:57

like and Not pay

34:59

capital gains on any of those

35:01

transactions. So that's right. That's right.

35:04

I'm waiting I'm still you know

35:06

I've got a circle of people here and

35:09

so far not a one of them has

35:11

Announced that there there's been an audit for

35:14

them I would think that that

35:16

might be unless they suspect that somebody

35:18

is cheating like not Adhering to the

35:20

terms of the agreement for x60 I

35:23

would have a hard time seeing the IRS going

35:25

after those people because they know even if they

35:28

find it That no tax

35:30

dollars erode on it well,

35:32

I think that's interesting because I think Towards

35:35

the end of 22 I think the IRS put out

35:38

a press release say they were cracking down on these

35:40

people But you and I talked like

35:42

we know you had maybe there was no there are

35:44

old stories, but nobody knew nobody's cracked out Now is

35:47

that because somebody's too embarrassed? Or

35:49

maybe they've already left Puerto Rico and

35:52

so they're not in the normal circle of communication

35:54

And they're being cracked down. You know once they

35:56

move back to the US Hard

35:58

to say a Lot of people are. The

36:00

for getting audited won't disclose that

36:02

but. But yeah

36:04

I I'd is certainly he Look fear

36:07

is the Iris is tool or eve

36:09

terms of propaganda Ironically work that cultivates

36:11

their fear machine. specially this time year.

36:15

Growth. Jobs of you are feared goes you

36:17

bad code out I am forced last tax and

36:20

least I hear what they have the same for.

36:22

Yeah the idea of help yeah. That's.

36:24

right I clinton any other final

36:26

bits of wisdom you wish to

36:29

share with the Republic of Bed

36:31

crypto Pia as we approached tax

36:33

filing. A look. If.

36:36

You have. Not

36:38

filed and attack in the past you realize

36:40

did something wrong with don't let that paralyze

36:43

you, you know. I highly recommend you can

36:45

call up our a cripple tax auditor com.

36:48

Where are you Follow League That travesties said.

36:51

You can go to to schedule a

36:53

consultation with one of my staff members

36:55

no charge and we could talk about

36:58

your situation confidently and lay out a

37:00

strategy to help you move rob a

37:02

risky place to as much safer place

37:04

and I think it'd be at the

37:07

type of thing to help you sleep,

37:09

take care of your larger exposures. Add

37:11

a put a strategy in place to

37:13

protect the your future your financial future

37:15

by not letting your passports you. And

37:18

as all. Taxes. Are.

37:21

Sexy. My. How

37:23

perfect Clinton! Thank you for your

37:25

fifth appearance. Same time next year.

37:29

It's. A deal. So

37:32

the moral of the soyuz. File. Your

37:34

taxes A and I gotta

37:36

say I'm having clinton. Bile.

37:38

My paperwork and do my taxes

37:40

is one of the smartest things

37:43

I've done because I'm gonna worry

37:45

about this, you know, statute of

37:47

Limitations deal because he's been finally

37:49

now for years. That form that

37:51

most people don't even know about.

37:53

A me who wants that surprised?

37:55

nobody. Somebody. Or

37:57

city surprise? Yeah suddenly.

37:59

right? What a great dude, helpful. And

38:01

I do tell you what, man, that getting that

38:03

email every month is helpful to see like, Oh,

38:06

here we are. Oh, look at this. Nice. We're

38:08

good. Yeah. Great stuff.

38:10

He says that, um, they

38:12

will know about even an

38:14

open file into your

38:17

account six months before you'd even get a

38:19

letter from the IRS, if they do some

38:21

sort of, you know, investigation,

38:23

just the fact that they open your

38:25

file to look at it. They

38:28

get alerted to that. And so

38:30

that's a, you want this guys.

38:32

It's, it's so inexpensive. Use

38:34

our link, please. Since you heard about

38:37

it here, bad code dot I N/tax

38:39

is the link that you want to

38:41

get to and tell Clinton that bad

38:43

crypto sent you. Especially

38:46

if you've been staying bad. Yeah. How's

38:49

the, how's the winter up there right

38:51

now? Try it's nice and warm now.

38:54

There's the super bowl parade is tomorrow.

38:56

And I think it's supposed to be in

38:59

the high fifties or low

39:01

sixties or something. So it's like way, way

39:03

good. Right. So, um, most,

39:06

the most of the crappiest, the whole cold

39:08

winter stuff, I'd say you really get about

39:10

six, six weeks of super cold winter here,

39:12

and then it's done. So

39:14

mostly, well, in, in the crypto world,

39:16

the crypto market cap has been approaching

39:19

2 trillion. We're not there yet. 1.93

39:23

as of a timestamp for 18 PM

39:25

Atlantic standard time on the 13th of

39:28

February. And Bitcoin did pass 50,000

39:30

it's back in the 49s

39:32

at this moment, but we did hit that 50,000, which

39:35

only puts us 19,000 off

39:37

of the all time high,

39:40

the having approaching in

39:42

less than 90 days. And

39:44

it's going to get crazy. We're seeing the

39:46

crypto markets coming back, uh, theorem 2,600.

39:49

We see certain NFT projects coming

39:52

to life and the Buckland

39:54

gang. It's going to be an exciting, I would say

39:56

18 months. It

39:58

will be. We've seen this before. We've seen it

40:00

a couple times before and you

40:03

know history doesn't always repeat

40:05

itself But it often rhymes and I'm

40:07

looking forward to some new poetic jingles

40:10

Awesome. Thanks everybody for for

40:12

joining us. We appreciate you.

40:14

We would love and cherish

40:16

your five-star reviews Takes

40:21

reviews and goes rob us one there. Maybe we'll

40:23

read it on the show and of course until

40:30

I The

40:45

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40:47

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40:50

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40:52

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40:54

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40:57

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40:59

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41:01

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41:04

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41:06

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41:08

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41:10

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41:13

Please understand that the trading of bitcoins and

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41:18

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41:20

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41:22

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41:24

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