LIVE Interview Crypto Tax Expert- Scott Lovingood

LIVE Interview Crypto Tax Expert- Scott Lovingood

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Can you hear me ?       – Yeah            There’s only 365 people watching right  now I’m gonna wait until this gets to at  least 500 I don’t know what all you  slackers are waiting on this is the  opportunity you guys have been waiting  on for quite a while well you did start  early you gotta give him credit I did  start early  I did start early watch this year I’m  not I’m not serious I’m just ready to  break some ground here tonight crow your  coins that’s right  what’s up Dwayne Proctor still waiting  on that call for that big TV show  brother  there will be yawning tonight we’re  gonna be talking about taxes no no no I  try to make taxes interesting and  exciting I know that’s a difficult  subject that’s our goal here is to make  it at least I’m sure what a people’s  blood pressure will go up so I don’t  think it’ll be boring and yawning sure  sure we’ll see well my I’m just I’m sure  you haven’t watched any of my videos I  tend to yawn a lot as I’m talking  because I typically do these things  later  uh-huh yeah for me this is prime work  time for me I’m just getting started  I’ll usually go to about 1 2 o’clock in  the morning so this is really getting  into it

I was up till 5 a.m. last night I just  everytime I fell asleep I woke up an  hour later and I had to get back to work  [Music]  plus you gotta you know just keep these  things hanging around you know yeah  those help what all right we’re about  400 I know there’s more I haven’t put  any links anywhere on the internet so I  probably should let me pull up my  telegram and get some people in here  real quick  there’s somebody the right attitude he  says I love Texas it means I made more  money yeah cool you can pay mine I don’t  think anybody enjoys paying anybody  else’s or even their own food I think  every American has the legal right to  reduce that as low as possible through  all legal means  oh here’s the link Thomas  figure we’ll get started here in a  couple minutes maybe one more minute  all these bot traders need to get their  tails in here for this one yeah it’s  definitely an interesting subject when  you start getting into block trading  sure does oh no this is going to be big  for me because I’m a big bot trader and  I do very well with it and it’s a reason  why a lot of people are here because  they’re also bought traders and you know  that’s that’s gonna be an important  topic tonight

well definitely spend some  time out and cover both where you are  personally for 2017 because since that  you here’s already ended what you can do  for those taxes is gonna be different  than maybe what you can plan ahead for  2018 and some moves that maybe you can  make to reduce your taxes this year  because there are some possible  opportunities out there good 457 we’re  almost at 500 500 I’d like to get at  least 500 people watching this live hey  uh can I come my dimes what are my top  picks  I don’t Bitcoin so I just help you  figure out how to pay taxes on them I  keep my own I know you got to rephrase  them you have you gotta help people  figure out how to not pay taxes on them  legally pay the least amount in tax  there you go how about  falling asleep all right we’ll go ahead  and get this thing going  all right everybody I’m back here the  crypto crow for an edition that  hopefully it’s going to help everybody  save some money and learn you know  basically all there is to know right  we’re gonna get through all of that and  one night all there is to know about  crypto taxes I’m sure you said five  o’clock in the morning right that might  be when we get done if we go through all  of it right right

so you know I’m here  with my new friend with the the link is  crypto taps prep comm and we are blessed  with a visit from Scott lovingood who is  a crypto tax expert has been working in  the tax and accounting field for 30  years and so we’re gonna grill this guy  with all kinds of difficult questions  and we’re gonna let him grace us with  his experience and knowledge and  hopefully save everybody some money  welcome well thank you sir I appreciate  it very much I’m excited to be here to  kind of clear up some things that are in  the community that are really  misunderstandings in a lot of places so  that you understand how Kryptos are  being treated in 2017 any changes that  happened in the 2018 law but they really  mean and some ideas maybe I’m going  forward I will want to say just like you  got when your disclaimer I’m not a  financial advisor so don’t take anything  I say too seriously I am a tax expert if  you hire me as our company to help you  we do have CPAs they’ll sign off why we  will stand with you on every decision we  make the information that I give you  here is for educational purposes only  not for actual tax advice take that  information to your on tax professionals  and get their advice on your specific  situation because I don’t know all the  particulars of it

so I’ll give general  information and answer everything I can  from that standpoint great I’m going to  remove this because it is a little  annoying when I remove that subscribe  every time there’s a subscriber I’m  using this new software it’s called  stream labs OBS slob and it’s  helping me with the different windows  and it’s actually pretty slick but  there’s some different overlays and  things like having this chat box live  and then there’s some other things that  I’m that are popping up when things  happen like wait a minute I don’t want  that  so anyway alright so the first question  is you know I in and we’re gonna and I’m  gonna be taking notes as well so if you  see a question in the chat box here that  you’d like to address you’re more than  welcome to but in a nutshell you know my  my initial big concern cuz I you know I  I started growing my channel ultimately  well initially with autobot trading  right with cryptocurrency auto trading  using profit trailer and it’s you know i  i’ve made a pretty nice chunk of change  us from profit trailer alone and now as  we as you probably know i’m doing a  hundred hundred and fifty trades a day  okay and every one of those trades could  be anything from a you know point you  know

just a very my newt  you know fraction of a percentage of  profit all the way up to as high as 45  percent fifty percent profit on a single  trade and so that obviously adds up but  if I were to export my metrics account  it will look it will fill a room right  so hey how does bot trading fall into  this new crypto law and give me an idea  as to some of the things that we can do  to prepare for the taxes to be paid on  this how much should we expect to pay on  this and everything else that goes along  with it okay I’ll start with one thing  you said the new crypto law there is no  new crypto law I know everybody thinks  in 2018 that they passed some things and  you made some changes and that it  changed the way cryptos being treated it  doesn’t and I’ll walk you to explain  that wine in 2014 the IRS came out with  the only publication that they had that  talks about crip does and it says it’s  treated as intangible property so  everybody thinks and it’s thought and  tried to claim that you can call use  this thing called a like-kind exchange  so the coin the coin swap means you  didn’t have to report any profits on  anything the problem is is that it’s and  that the actual code is that  10:31 like-kind exchange

it’s a pain in  the butt to do it has very very strict  rules on real estate it’s a little more  wide open but on personal property which  is where crypto might fall into it says  you can’t do things like trade gold for  silver because they’re not similar now  we both know those are precious metals  but you can’t trade American gold for  foreign gold because you can’t go us to  foreign assets so you can’t trade assets  that are not similar you can’t trade  assets that are US and domestic so if  things are of a different Association or  a different use case then they won’t  allow you to treat those so legitimately  when you go through and look at it one  of the requirements you have to do on  the like-kind exchanges you have to  specifically fill out a piece of paper  two pages actually that says here’s who  I’m trading with so let me ask you this  when you’re doing lot trading right on  in exchange who are you exchanging with  I’m exchanging with another person who’s  wanting to sell his coins to me you know  who that person is you have a name  address and phone number  absolutely no clue right and that’s  what’s required to be put on a 1031  light County exchange

so without that  data you can’t actually fill out that  form and you have to fill out you were  talking about 150 to 300 trades a day  right you have to fill out two pages  every time we’re one of those trades  even if it did qualify so I’m over the  last few weeks talk to them about 60  CPAs IRS agents lawyers and enrolled  agents who are specialists you take a  test to practice before the IRS and ask  them their opinion on this and you know  I mean he said you can do a like-kind  exchange zero absolutely zero I know  people that are actively searching for  somebody that won’t take that position  because they’ve like to take it to court  the problem is if you get ruled against  which i think is 99.999% likely to  happen you’ve now given the IRS all that  documentation of every single trades  you’ve made every place you’ve ever done  it so any information you were trying to  hide or protect or pay less in taxes on  you’ve lost that opportunity so the law  in 2018 what changed was they simply  said it only applies now to real estate  property it doesn’t include personal  property so used to you can do cars

so  let’s say you  you loved antique art right so you could  go buy a 68 Mustang and you could hold  it and then a couple years later you  decide you know what that thing’s going  up in value but don’t want to pay the  capital gains on it so you could trade  it for a 68 Corvette and I’m not a car  guy so if there wasn’t a Corvette in 68  they’ll blame me and not pay the taxes  on it because you can fill out that form  this in this piece of properties being  swapped with this piece of property the  problem is that whole section of law  doesn’t apply to crypto has never  applied to crypto and unfortunately it’s  really only coming into people’s  knowledge this year and people are like  oh it just changed but it didn’t it’s  always been that way as Americans we  have legal responsibility to report any  gains that we have for buying and  selling property it’s always been that  way if you are in the business of doing  that sometimes you can be treated  differently so there’s two ways crypto  can be treated from a trading Singapore  right is what is its investment so just  like in a stock market

i buy Microsoft  it goes up I sell Microsoft it has a $50  gain I report that now generally you  don’t do a lot of trades in the stock  market because the fees and everything  else and you don’t have the astronomical  opportunities for things to grow but on  the crypto side even though streets  where you’re going from neo to venero or  neo to whatever other coin you found on  that you think is exciting you want to  do it I’m not endorsing either of those  coins it just happens to me too that I  was talking to somebody about but I just  want to point out I wasn’t using those  and I may use other coin that’s okay I  want to make sure we realize that those  are not endorsement those just happen to  be examples that are doing so on a  personal level if I’m not in the  business of trading right I’m not  actively trading everything gets  reported as a capital gain so you have  to report every swap every move so if  you go a bit going to like Gordon  litecoin a Bitcoin cash making cash the  Bitcoin pizza I think is the newest when  I saw that came out you have to  calculate the fair market value at the  time of that tree

so I’ll give you an  example so everybody can understand what  actually it’s taxed I start out with a  hundred bucks and now I like once it’s a  toshi a Bitcoin if it’s whatever price  that so I buy this little sliver of  Bitcoin at $100 my cost basis is 100  and then Bitcoin takes one of its runs  and it goes up 20% so now it’s worth 120  dollars  I take the $120 of Bitcoin and I say you  know what aetherium looks like it’s  about to make a run I switch Bitcoin to  aetherium  well at the time I make that switch I’ve  got a twenty dollar capital gain and the  way we have to calculate that is there’s  a couple of databases out there that  actually maintain bitcoins fair market  price they go across several different  exchanges and they pull all this data in  aggregate and say all right on this day  and time bitcoin is worth this much and  that’s what you have to do you go  establish its fair market value at the  time you sell it – whatever your cost  basis is so now you got a twenty dollar  gain that’s something you could put in a  spreadsheet or figure out later  well now you’re etherium that you’ve  just traded – is $120 capital gain and  it takes a run and let’s say it builds  it just really hits one of those things  where people are excited about it and  really jumping so it goes to 240 and you  say you know what that thing’s running  this course

I’m gonna switch it back  over to neo because that’s a coin I  really like and it’s down right now so  you’re $240 worth of cerium and all the  exchanges report these things back in  Bitcoin equivalent right so when you get  the trade data out on the CSV files or  you could hook them up through the api’s  to a couple of softwares and pull them  in there it lets you look at it in  Bitcoin equivalent so you think that  bitcoin equivalent and then you have to  go back to the US dollar equivalent  using one of these databases or your  exchange that you’re on also a lot of  times publishes that information so now  my $240 of aetherium I had $120 cost  basis that’s now 120 kappa $20 capital  gain I’ll move that over and that’s a  locked-in game or it could go down you  know if you’ve been in the market the  last couple of weeks my 240 dollars of  etherium could have become 140 dollars  of it but now I’ve got a hunt dollar  capital loss and that again goes over so  I’ve gotten a $20 gain $120 gain and a  $120 loss net I’ve got a $20 game so on  a personal level yes you’re required to  report every single one of those  transactions is it a pain in the butt

absolutely 100% it is a night what we  use there’s a couple of tools out there  that can help you because it allows you  to actually hook into your api’s  on the exchanges are down low  CSV files and upload them they’re not  perfect because a lot of the data is not  consistent from the exchanges there’s a  lot of manipulation you have to  sometimes do to get it correct that’s  one thing our company does and provides  as a service is actually you get  everything hooked together we help you  massage it make sure everything matches  and fits because if you want to do it  yourself I’ll tell you the two tools  it’s MIT coin tax and coin tracking not  info they both work really well ending  on the exchanges you’re on cloning  tracking that info has a little bit  wider capability it’s also got a little  bit higher cost if you’re not using one  of those and you do choose to go with  our service you can actually get it  cheaper through us as part of our  package then you can if you go on and  buy it online so if you’re not using it  and you decide you want us to do it  think about it  so you got a question  thank you drink yeah go ahead so here’s  here’s my thing you know from a from a  box specifically about trading  perspective

yeah there you’re telling me  that there is no way a rat like so if I  here’s the cents I make of it right if I  start and you know I let’s say I buy  let’s just say I buy two Bitcoin on  coinbase okay  listen bottom it I bottom it I don’t  know 10 grand we’ll say 10 grand so I  bought two two Bitcoin for 10 grand on  coinbase I transfer that over to my bit  tricks exchange and then I’m using this  BA traitor and then within 30 days I end  up with almost three Bitcoin okay and so  I’m yeah I turned to Bitcoin into three  Bitcoin there’s no way to just basically  say okay look I made one Bitcoin and  profit off of to Bitcoin through  like-kind exchanges and just simply pay  the taxes on the damn difference you’re  saying that I have to go through with a  fine-tooth comb and and specifically  point out not only just the trades  themselves but then the dollar value of  the points on the frickin day that I  traded them and a personal level yes so  if you are not a professional trader  then  that’s the requirement so if you’re  doing this for investing and lock  training is a little bit different I’ll  walk you through some scenarios that you  can do to actually reduce your reporting  requirement and potentially reduce the  amount of taxes

bullet from a personal  level if I have a hundred trades about a  thousand trades if I’m not doing this  full-time it’s not my business if it’s  just investing it goes through it’s  called a Schedule D and they have to  actually report it line item by line  item now in the stock market there’s  guys that do day trading right they do  the same thing that a lot of crypto by  traders there they buy and sell several  lots of stocks within a day they may  have hundreds and they keep it very very  short-term they have this status called  trader tax status that allows them to do  different things and there’s a lot of  people that are a little more educated  in the crypto world they’ve decided they  they think they qualify there for that  yeah I would think similarities yeah  well the problem is it’s IRS codes 475  is the specific regulations that go with  it and it says that this tax status only  applies to people that do one thing  trade securities well the SEC has ruled  by Kevin oh stop right there if that’s  the case that all this should apply  because the FCC basically says that damn  there every crypto currency on the  market is a security and therefore  regulated by them

so they can’t pick and  choose the day that well affected they  they haven’t said that for all of them  and that’s part of the problem that’s  you know you unless you’re a token  unless you’re a utility token but even  an ICO you’re still considered from what  I gather a utility token until the  platform associated with the token is  officially launched and usable so from  from what I’m seeing just about  everything has been blanketed as some  sort of security so that the the I are  the SEC has a you know I don’t know what  you call it jurisdiction and I don’t  know if it’s like the police but they do  they have jurisdiction well and the only  reason I say that and and I think  there’s a better answer so I was just  giving trader tax status as a specific  one because they look at not only the  activity but the time involved so if you  have a bot running this for you you’re  probably not spending six to eight hours  actually watching the market right  you’re listening I wanna do all these  trace if that’s a requirement  maybe I am I’m sitting here I’m staring  at my Bob monitoring every trade for six  to 12 to 24 hours look at me do I look  like I sleep

I’m watching my BA 24 hours a day I’m  with all kinds of drugs to keep me awake  well you are the crow man so we’re not  the crows bloody crow eyes you name it  so I do think that is probably a  legitimate argument but I think there’s  a better way to do it and and I’ll walk  you through what I think is the better  way because it is identified and the  reason I say there’s a better way is  because trader tax status has such a  hard definition to get over the  requirements are pretty stringent the  IRS looks at it with a very jaundiced  eye they kind of pull out their  fine-tooth comb and magnifying glass and  let’s be honest that’s the last thing  any of us want is for the IRS to go huh  let’s go look at the crows tax return  let’s go show up in his house and ask  for all of his documentation and  everything else none of us wanted that I  would be home and get it I’ll play on  all this shit and let them go through it  because I’ll be damned if I’m gonna you  know I mean so far everything no offense  to you obviously I’m not trying to kill  the messenger here by any means but it  is the most ridiculous system of  bullshit I think I’ve ever seen like  truly and I agree with you and and you  know where all this got started was in  when the IRS did that John Doe summons  to coinbase  because they started looking at millions  of dollars moving around in this market  and like eight hundred and twenty three  people were filing it on their tax  return

the IRS went oh my goodness wait  there’s probably money let’s go after  let’s go get it yeah I don’t I don’t  disagree with that  III don’t look I don’t have a problem  paying fair taxes I do have a problem  with a an archaic system trying to adopt  itself to something for the sake of  capitalization you know to try and  basically say okay you’re making you  guys have all found new ways to make  money we want our cut but we don’t  really understand how it works enough to  create a more simplistic system to make  it easier for you to do so so what  they’re ultimately doing is pushing  crypto traders down out of fear and that  and that to me is repugnant I mean there  should there has to be an easier way  look I’m all  or paying taxes and supporting you know  everything right I’m fine with that  but there has to be a way to do this  effectively without it being absolutely  ridiculous there you have a way you have  a way I have way and it may not help you  in 2017 because a lot of it is the  documentation that you needed to  provided the systems that you already  have in place and just the thought  process that goes into it so going on  the IRS is definition right this is  intangible property

so really drop the  intangible for a second and just talk  about property so if I go to yard sales  around my town and I go in at the end of  the day and I buy all the crap that  people have left over and I take it back  and I sell it on eBay and I sell it on  Amazon and everything else I don’t have  to keep track of all those transactions  I mean I need to and it’s important to  be able to get to them but realistically  what I do is I start out with all right  I started out with $100 of capital I  bought some inventory I then sold that  inventory and I ended up with $200 so my  profit for that month is $100 I think  there’s a very legitimate claim for five  traders people that are actively trading  the markets to classify themselves as  being in the business of buying and  selling the intangible property of coins  and tokens and if you do that  then you got to keep up with your  beginning year clean inventory your end  of your coin inventory the problem you  run into is you lose the ability to take  long term gains on some of those which  puts you at a lower tax bracket but I  have a way around that as well so your  business now becomes buying and selling  right so every month you need to close  your books

you need to look at your  assets and go alright started out with  ten thousand now I’ve got twenty  thousand that ten thousand dollars in  profit that month that’s pretty simple  right you’re gonna file one form with  the government doesn’t have to include  the thousands of trades that you’ve done  it’s here’s my monthly profit month by  month just like any other business with  you right you set it up in quickbooks  online or he’ll use google sheets  whatever it doesn’t have to be  complicated month one income revenue to  begin with revenue it’s in current  inventory value that’s all you got to do  because there’s a little summarizes your  individual  growth your individual gains per trade  really so you start one Bitcoin you end  up with two well you can break it down  into 50,000 trades if you want to but  ultimately the number is the same so  that makes sense and on a business level  it’s perfectly acceptable to do that on  a personal level if you’re doing  investing in trading and you’re not at  the business level of doing it then the  other way that I talked about is the way  and that’s why for most people they’re  gonna fall into 2017 that way

cuz they  haven’t set out like a document that  says hey I’m in the business of doing  this this is my goal I’ve got the the  purpose of buying and selling these for  profit now the problem is like I  mentioned long-term gains is a much much  lower tax rate than normal income  because you’re gonna run into two things  when you list yourself as a business to  do that all your profits are now gonna  get self-employment tax but on top of  them which is the next or 15 percent so  you not only get the regular income tax  you get an additional 15 percent which  means by setting yourself up as a  business it’s going to be easier from an  accounting standpoint but you pay 15%  more in general but there’s a way around  it or a way to minimize it at least so  you don’t want to do it as a sole  proprietorship you really don’t want to  do it as an LLC because it really  doesn’t give you the benefits you want  to do it either as an S corp a c-corp or  an LLC that chooses to be tagged as an  escort the IMF’s corp i have an escort  myself right now  okay so fantastic as an escort will use  you as an example right you know that as  an S corp owner you have to pay yourself  a salary

whatever that salary is you pay  self-employment tax on and that piece of  it is that all that you pay it the rest  of it flows through to your tax return  on a k1 and there’s just income tax so  as a trader in an S corp you have your  salary which you pay the income tax the  self-employment tax on which is a little  bit extra on that but then the rest of  it flows through you just pay income  taxes on the problem is again this  long-term hold standpoint right because  at the end of the year you’re going to  do your business that way you have to  actually establish the value of all your  inventory at the end of the year and  literally say a cash down so if you  started with ten thousand and a  a hundred thousand you can’t hold any  debt and not pay taxes on that  everything has to get treated as if it  was sold day here at the end of the year  but if you have coins that you want to  hold there’s an easy way to do it  instead of paying your salary and US  dollars

but yourself in the equivalent  of that coin that you want to hold and  just document that I’ve transferred at  this point from company ownership to my  personal wallet and now you can hold it  for a year and then when you file it  you’re going to file it as the long-term  capital gain on that other form we  talked about but it’s much fewer number  of trades and you’re gonna pay 15 to 20  or 25 percent rather than 30 or 39 or 40  percent time you go to the ten percent  capital gains when you hold free well  you can actually get down to zero  depending on what your age is so if your  earned income is in the bottom two tax  brackets the long-term capital gains for  those two brackets is zero so if you’re  making fifteen thousand we’ll just say  as an example your long-term capital  gains tax rate is zero Wow alright okay  so basically it looked to summarize this  you’re basically saying that if you  because I I’m like reading the chat I  see a lot of you like I’m lost okay so  basically from from what I’ve gathered  you’re basically saying look whether  it’s through any crypto training  whatsoever you’re either doing it as an  individual or a corporation you know

you  don’t want it to be quite like an LLC it  should be either an LLC specifically  structured for crypto trading or an S  corp or a C Corp because that doesn’t an  S corp that kind of prohibits double  taxation right right and well and the  reason I don’t like an LLC is because  everything flows through to your  personal tax return and everything will  get that self-employment tax so there’s  no way to exclude any of your profits  from getting hit with that 15% whereas  in an S Corp you can take a portion of  your profits pay yourself a salary that  part pays the self-employment tax but  then the rest of it flows through to  your tax return and only pays normal  income tax so the benefit of that is and  I realize people get lost and I know  somebody said I talk faster than you  that’s probably true because that’s a  lot of stuff I get on rolls man I’m like  a fire machine-gun sometimes well and  and I do to it so I recorded so people  will be able to go back and reference it  in time coded and and there’s an apple  in the chrome called video speed  controller if you don’t have it you can  actually slow it down by tenths of a  percent so you can go to 90% 80% 70%  pause it whatever you need to do

so the  reason are like S Corp succeed Corp  specifically as Corpse are great because  they don’t have double taxation right  the portion all flows through your  personal tax return you get a w-2 of  course inevitable employment the rest of  it doesn’t it tend to be cleaner they  tend to be easier to set up they also  have some great retirement benefits you  can do a set which is a self-employment  pension and you can I don’t remember the  numbers so don’t quote me on this but I  think it’s like fifty four thousand  dollars a profit you can put into your  pension your quote if you voted wrong  but it’s in the ballpark so you can set  up one of these and you don’t have to  transfer US dollars into your accounts  all those hold coins that you want to  come into your stupid pension let it go  up and up and up with no drag on it  and then when you finally get ready to  return you got n billion dollars in this  thing who cares if paying a little bit  of taxes on it you just put it into a  trust and you can hire a really good  lawyer to state you’re a sovereign  citizen or whatever people claim and  move to a third world country and  disappear

so let me ask you this let’s  say and I’m gonna go back to my summary  cuz I know I didn’t really I didn’t  finish clarifying things I got a little  silly but the so let’s say let’s say I  did a month’s worth of BA trading let’s  say I did it for a year okay and then  the profits that I made from that years  were the Bott trading I then hold for  the next year does that help me or does  it matter it doesn’t matter in most  cases the only place that would help you  is in a C corporation which is what we  think of typically as big corporations  and an S corp or an LLC everything flows  through to your tax returns so it  doesn’t get to hold on to anything it  literally at the end of the year  the tax return in S corp and an LLC fowl  is for informational purposes only pays  no tax it simply says here’s our profit  here’s what  redistributing income and then that gets  reported on your personal tax return  where you pay tax but in a city  corporation the reason they can be  beneficial as they can actually do  what’s called retained profits they  don’t have to distribute those profits  now they do get double taxation which is  something that we’ll talk about

so as a  seat corporation you can do the same  thing you make money you report your  inventory same concept the C corporation  files a separate tax return now the  great thing in 2018 is that C  corporations had their tax rate to drop  down to like twenty one percent so if  you’re making five hundred thousand or  one hundred million dollars a year doing  this kind of stuff the corporation  probably makes a lot of sense because  the income that it’s being taxed at is  only at twenty one percent not at thirty  nine point six which is what it’d be on  your personal tax return the second  thing you can do as a c-corp is you  don’t have to distribute those profits  identity here so you don’t have to pay  dividend taxes or anything else you can  hold on to those earnings and let them  grow your business as you keep going  there are some fringe benefits that you  can get from a C corporation as well you  can set up a 401k and do a company match  so your 401k literally can put crypto in  it if you have the right company set it  up and there’s not a lot of companies  that will do this

you’ve got to go look  for them and find them but you can do a  company match to so you put your 14,000  in out of your page which reduces your  taxable income the company matches  14,000 of it I don’t remember what the  limits are so again don’t quote me on  that some of this that make up like go  long which is the fun part of doing  these things because you know you can  like you later legal advice or tax  advice because the concept to write the  numbers may be a little off I screw up  numbers sometimes too man it’s okay I  get it  I don’t memorize this stuff I used to in  the first couple years I can quote it  all with tax brackets and crap and I  figured out no one cared and it changed  every year so why memorizes Google it’s  your friend you could go look up maximum  matching contributions for more o 1k so  then you got these coins in your 401k  and they grow tax-free until you take  them out which is the great benefit of  it you can also do some other things  like medical benefits or some other  things inside a c-corp you’ll need to  talk to a specialist to do that to make  sure that you set up your fringe  benefits the right way and all those  things but those are some  options and some things to do that as a  business you wouldn’t be able to do on a  personal level

so from a training  standpoint you’re doing this as a  business were treated as a business you  want to go set up an escort for you want  to follow your funds to it now I will  tell you this it does kind of limit some  of the exchanges you can because not all  of them allow institutional exchanges if  you’re going to be on some of these  exchanges that don’t and you’re going to  do it on your personal accounts you need  to make sure and really document very  clearly that you’re acting as an agent  of your company and not in your personal  fashion so that those trades you report  back and you’ll need to keep that  documentation rock-solid because if you  ever do get audited the IRS is gonna be  looking for a way to split you guys  apart your company and yourself they  want you to be responsible for that but  if you’re acting as an agent of the  company then you can do it you can be  able to do that okay so all right man  this is great  I’m act I’m loving this I’m gonna look  here through some of the the chat  questions just to get an idea as to what  people are thinking and saying I saw  somebody while you’re looking through  that I saw somebody mention mining

so if  you don’t mind I’ll talk about your  questions  all right so mining is treated  separately that’s not treated as a  capital gain because you’re actually in  the business right so it’s actually  gonna go already on a Schedule C which  is where a sole proprietor does or you  can put it in an LLC S Corp C Corp  whatever you do but because the reality  is is even though we like the word  mining in our community it’s not what it  is you’re solving math problems to  verify transactions and updating  Ledger’s right that’s what the  distributed ledger is in the blockchain  you’ve got to verify that transactions  happen you got to update them so the  next ones right you’re providing a  service you just happen to get paid in a  coin so you report your revenue again at  that fair market value of whatever that  coin was at the time and then when you  sell it again it goes back to capital  gains or loss or you can keep it in your  business and say I’m in the business of  doing both solving these problems doing  this mining and also selling this  product that I get later but if you want  to get it into long-term capital gains  you need to transfer that asset from  your business to your personal and again  documentation is key

I had this coin in  my business I sold it to myself at bear  market  you so your business would report that  income and then you would have that as  your cost basis going forward so mining  expenses can be taken off the  electricity you know get some kilowatt  meters or some other ones that you can  plug in if you got a bunch of rigs  running the cost for the GPUs the rigs  that you’re building themselves if you  have to print a building to do it if  you’re doing it in a big time it’s like  any other business  anything that is legitimately part of  making your business money and making it  more efficient can be included in your  tax return  you just got to document it and know  what it is so I one of the things that  I’ve seen now I don’t know how familiar  you are with bit connect but obviously a  lot of people have recently lost a shit  ton of money investing in lending and  bit connect can all those losses be used  as write-off against future games yes  and no and I’ll caveat that a little bit  the way the IRS looks at those kinds of  things is there has to be infinitive  proof that you are never going to be  able to get a recovery of that you know

okay make your next well mechanics coins  still trading right so right take it  Emily aren’t you actually from what I  saw a couple of days ago in a freaking  uptrend I mean who buys a coin for a  company that is going belly up and it’s  disappearing with everybody’s money but  if you’re trading it making money  super great but so you yes you will but  the timing of it maybe y’all though in  two different situations again one is  you’re set up as a personal trainer and  you’re not doing it as a business that  person is going to probably have to wait  longer and they’re gonna have to be able  to document it better the problem right  now is how do you get your freaking  information out you can’t log into big  commands you can’t get access to the  trades and data what was the value of  your coins what evidence do you have  that you had it so you have to first be  able to prove that you owned it then  prove that you lost it so there’s two  steps whereas if you were in the  business of doing this remember we  talked about beginning your inventory  end of your inventory you evaluate them  at fair market value

Bitcoin is fairly  easy on that one I didn’t hear you  simply run your numbers and you go well  you know all my coins on Bitcoin went to  zero because I have no access to a ma’am  no worth I can’t get to them so I had a  business level it’s relatively easy you  can do it and it’s all straightforward  on the other side on the first two level  there is what’s called a loss limit so  this year it’s kind of been a bloodbath  last couple of weeks in the last couple  months actually in that coin so if you  got in at the peak right if you bought  Bitcoin at 20 and you’re set at 10 or 11  right now you’re hurt you’re down 9  grand and let’s say god forbid the  market just stays flat the recipe or  goes up just a little bit you decide you  know what  I’m tired of it I’m not gonna deal with  anymore and you sell your coin at 12  you’ve now got an $8,000 loss what you  think that’s great I need to take $8,000  off my taxes so not so fast the IRS  they’re evil mean people let’s just be  honest I mean I know that’s out in  public now and that’s probably not good  in my job position but we’ll let it go  with that facts your face

man it’s okay  yeah you’ve got this $8,000 walls  there’s a limit to how much you can  claim each year so if you had an $8,000  game you can claim all of it you’d be a  zero but if you had no other games to  offset it is just that one coin yard and  you’re down eight grand you have 3,000  you can take off this year and then the  other five thousand rolls the next year  and then next year you can take another  three thousand two thousand Falls the  next year it’s almost such a bend over  and take it system and it drives me nuts  in here you know I’m just gonna rant for  a second to me when I you know what I  got into cryptocurrency you know I  always preach like it to me  cryptocurrency is the disruption of  everything like and and that’s that’s  why I have been so ridiculously  passionate about it and and  realistically you know it’s the  blockchain as a whole is is really cut  it says it’s supposed to be a system to  be able to just stay away and remove the  government controls and you know the  fact that this is all you know I you  know

sometimes I just can’t help but to  sit and laugh about just just all of the  ways you know well you know we talk as a  country and look I’m a patriot  to an extent I you know I just as a  matter of fact I just watched thank you  for your service  with my  and may not you know it you get fused up  and yeah I get fused up when I look at  you know that the people man who are in  the military now who have served in the  military you know a lot of members of my  family have been in the military and  we’re all fighting everybody’s fighting  for something we’re fighting for these  freedoms and all these this greatness  that we are supposed to appreciate you  know but then I look at all these other  countries who you know maybe they have  regulation sure they have taxes they  have on they have similar systems but I  feel like the American public in general  is just just milked just constantly milk  day after day after day and you know  like these soldiers you go off the fight  and they come back with one last limb or  one last argument and and we’re you know  our government is sucking up all this  tax money all of this money from the  populace and we can’t even take care of  our veterans that come home and need  medical help physical treatment all  these other things

like well you know  what burns my ass so much is you know  the fact that the government is  constantly sucking all this cash out of  our asses as we’re forced to bend over  and take it and it’s just where’s it  going  it would not bother me so much to have  to jump through all these hurdles and  hoops and paying these taxes if I felt  like it was going somewhere outside of  some fat-asses pockets sitting in a  skyrise smoking a cigar banging his  hookers and snorting his coke I’m sorry  but that that’s where I draw a problem  okay and so sorry my reign is over I  just had to get that out I’m calm now  but uh yeah you are ready for this  that’s the crow effect no I’m just  kidding let me agree with you and when I  look at our government and the waste  that goes on in it it drives me bananas  I am a libertarian by Nature my goal is  to see what can we do to reduce our  government to the smallest level  necessary but I’m also a pragmatist so I  deal with reality and sometimes that’s  an uncomfortable thing when we were  talking earlier before we went live that  when first company I went to work for  they had a training program where we had  this guy come on and it was actually  called freedom week raid

he talked about  this concept of being free people and  the government not being involved and he  refused to pay taxes and I know a lot of  people think that’s a legit  an option and I’ll tell you why it’s a  bad idea the FBI raided his house  several times he ended up spending a few  years in jail unless you’re ready to  fight them and literally go off the grid  every possible way you’re better off  trying to figure out how do I fix my  affairs so that it’s the easiest for me  to manage and I pay the least in taxes  legally that’s why we’re talking about  the S corp the C Corp some of the things  that you can do to shelter money one of  the other things you can do is there’s a  thing called a checkbook IRA or  self-directed IRA you can literally put  money in a retirement account that way  and invest it in crypto again there’s  not a lot of people that do it but it is  possible to do so getting all the  emotions about that is it really because  I’m actually launching an investment  fund right now and I have okay seven  seven figures worth of capital  investment getting ready to go into this  thing and I have you know my lawyers  been we’ve been filing filing after  filing and doing all kinds of stuff in  preparation for the past week so

and  I’ve had several people say hey you know  can I can I invest IRA some sums into  the fund and you know what what sorts of  things can I do and so the only problem  with that is you can’t really touch any  of that until you’re like retirement age  right like you know well you can but you  get hit with a penalty so you can put  money into an IRA and you can withdraw  it early but if you’re under fifty nine  and a half you get hit with the taxes  you own it plus a ten percent penalty so  you know depending on what kind of  growth rate you expect Bitcoin you know  and other coins to do it may make sense  but you need a specific type of IRA you  can’t do it in a traditional or Roth  because those have very limited  opportunities you need what’s called a  self-directed IRA and I’m actually  interviewing a guy tomorrow to talk  about how do you get started on all  those things and once I get it if you  want me to I’ll send you a link to the  recording I’m gonna make because I think  it’s an opportunity I’ve got one myself  I actually started a business with it  with some friends when I left my company  I took a 401 K I rolled it into an IRA a  self-directed IRA so that I could go do  it they allow you to do a lot of things  but then they also have some very  specific rules and regulations

I’m not  an expert at them so odd you know go  find and talk to somebody that actually  knows them  but those are the things that are  important to do it you can also put some  in like a life insurance policy there’s  things that you can do so that if you do  die your family gets your crypto  somebody asked me the other day about  doing a trust you can do a revocable  living trust and to actually put your  LLC or your S corp ownership into that  trust so that if you die it’s a lot  easier for your family to get a hold of  it those are a lot of things none of us  want to think about but death comes to  all of us even in crypto it’s one of  those things that happens no matter how  much we want to so the reality is we  have to deal with an IRS that has  unlimited authority they’re the only  institution other than maybe the CIA  that you are guilty until proven  innocent so when they send you a letter  that says Carl you owe us this much  money it’s not up to them to prove that  you owe it they’ve determined you owe it  it’s your job now to prove that you  don’t it’s a pain I’ve dealt with those  kinds of audits before and if you don’t  have solid documentation like Karlie

I  didn’t write like a word like this like  a it’s like a dictatorship kind of thing  where it’s just you know whatever the  leader says you that’s just that’s just  how it is suck it up and deal with it  yep and they’ve got access to your bank  accounts and you know what we often  think this is an American thing right  then the American government is just  beating down on crypto why don’t know if  you guys realized but yesterday or the  day before South Korean government came  down on their exchanges as well and said  no more anonymous trading if you don’t  have what’s called kyc and AML on them  they can’t trade anymore they can’t take  money so a lot of us are familiar with  that right we go to set up an account we  gotta put our passport put our ID put a  little sign up that says hey this is me  on this date  there’s a reason kyc know your customer  AM L any money laundry they’re doing  that to make sure that funds aren’t  flowing through in terrorism some of you  guys may be old enough to remember when  you could get a Swiss banking account  and the US government didn’t know you  owned it

it was private well they broke  the Swiss banking cartel because of  these kinds of regulations if any of us  think that they’re not gonna do the same  thing to the exchanges that operate in  any country you don’t think coinbase is  eventually gonna cave I know there’s our  deal  all right you know in my opinion I you  know I believe that I believe that a lot  of these exchanges have already decided  to pony up documents on on everybody I  mean what what they’re they’re making  millions of dollars a day they’re not  gonna risk losing all that for something  that they already know is coming down  the pipe they these guys running these  exchanges I’m sure knew a lot of this  stuff that’s happening now they knew was  coming months ago if not more as my is  my opinion and and again like I I’m not  against having to pay taxes on my  cryptocurrency games that’s I’m fine  with it  I just don’t want to have to create  fifteen different corporations and  however you know staff of thirty people  to keep all this shit organized so that  I can pay some asshole taxes on five  grand you know what I mean

like III have  to spend a fortune just to pay a  ridiculously high cryptocurrency tax you  know on that that’s what I’m trying to  figure out how to avoid here so I got a  couple questions for you sir man far  away and I’m gonna I’m gonna be I’m  gonna play kind of a devil’s advocate a  little bit I’m not coming at you  specifically or your climate completely  far away okay I love you so I I come to  you and I say okay here’s my situation  mister mister accounting expert by  mister tax expert and I’m interested in  using your company how do I know that me  coming to you isn’t going to be cause  for you to lay out a whole laundry list  of bullshit that I have to pay you to do  for me so that you’re properly profiting  off of my efforts to try and stay away  from paying as much taxes as possible  how do I know you’re working for me and  not necessarily using my situation to  benefit yourself fantastic question I  can answer that at least for our company  two different ways one is every tax  person has a fiduciary responsibility  that’s part of our relationship when you  buy a enter into that contract with us  that we are working on your behalf

the second thing is at least on our  website we have flat pricing with very  clear detailed on if you qualify in  these buckets here’s the pricing that  you’re going to be at as far as the  other things like setting up companies  everything else we don’t do all that  stuff uh the lawyers that we will refer  you to we can’t get kickbacks from  moments illegals so there are no  referral fees I gain no benefit by  sending you to somebody else you’re  welcome to take the advice I get and go  ask somebody else and say does this make  sense so I’m not selling any of those  things I’m trying I’ve always looked at  it ever since I’ve been in the taxi  industry is how can I help my clients  pay the least amount legally with the  least amount of aggravation because  those are kind of balancing things the  more complicated you get the less you  can pay in taxes you know these guys  like Apple and IBM and all these places  that have corporations in Ireland where  they flow money through and all that  stuff that’s been in the news they’ve  got whole departments the first company  I worked for he had an entire group of  40 people that’s all they did look for  loopholes in the law to move a plan to  do this to do that to save him tax  dollars

he hated paying Uncle Sam or  anybody I’ve ever seen but for me and  you or a one or two person operation we  don’t have those kinds of resources so  for me to tell you go set up 15  corporations I’m not gonna do it because  one it’s crazy you’re not getting a lot  of benefit from it so it’s always  risk/reward where could in my mind  I’ll give people options to here’s an  option that’ll cost you this much to do  and this is the benefit you should get  from it here’s another option that you  can do or you can do nothing and here’s  what you’ll pay I don’t really care I  because each one of these things you  know yourself setting up an S corp right  there’s specific regulations you have to  follow on each state annual filings that  you have to do you’re paying yourself a  salary you gotta have somebody to the  payroll you’re not willing to do all  that stuff don’t go the approach of  filing an escort but it’s gonna give you  minimal benefit for the pain-in-the-butt  that you don’t want to deal with sure  whereas on an S a sole proprietor or a  Schedule C here’s what it’s going to  cost you you’re gonna pay this much in  regular taxes you’re gonna pay this much  in self-employment taxes

you got to  figure out yourself is the savings worth  the aggravation  so highway out for people here’s your  options if you don’t like my advice go  find somebody else and talk to them and  take my scenarios today I might say does  this make sense so on so from from from  from you know I’ve been self-employed  pretty much since high school right you  know I started my first company out of  high schools web design company I was in  the music business I did web design  oh I used to be an MMA fight promoter  for six years I’ve done lots of  different things and you know I  understand well you know how much I make  on paper in terms of you know how much  my income was and how many how much I  had to write off for various reasons you  know or two totally different things  like that the end result is a completely  different number than you would might  you know somebody might expect right so  rate I assume that the same applies to  crypto so let’s say you know unless I’m  wrong but let’s say I have let’s say I  have crypto CRO incorporated and I made  three hundred thousand dollars in crypto  profits

okay in 2017 and then I bought a  company car and my company car had been  to be a three hundred thousand dollar  Lamborghini how does that offset what I  owe in taxes in other words and it  doesn’t have to be that extreme but you  get the idea  if I make a hundred thousand dollars in  profit off of my taxes and I’m doing  this through let’s just say it’s an LLC  let’s just say it’s it’s a it’s an S  Corp it doesn’t matter but let’s just  say for the sake of argument I have a  corporate entity of some kind or an LLC  and I’m writing off all my expenses  every time I eat dinner I you know I  take my wife out to dinner that’s a  business expense because we talked about  the company planning like whatever right  we’re writing off everything how much  does that help with overall taxes in  Poteau I can’t help a lot and it depends  on some specific things like one of the  things they changed in 2018 is the  entertainment expense no longer gets to  be a deduction so take it if I have to  pay more this year yeah taking your wife  buddy doesn’t count anymore so they have  very specific rules on some things this  is also the reason you’ll see people buy  these really big trucks or big SUVs  because they’re over a certain gross  weight and if they fit into those  categories you can take more  depreciation early

so if you’re into  that category honestly you need to talk  to somebody that understands those kinds  of things there’s another thing you can  do that if you’re on the personal side  so I’m gonna split it again personal  business kind of business you have to  cash out you’re valued in  here this won’t help you but on the  personal side let’s say you got coins  that have gone to crap right you bought  one on a pump and dump scheme and you  just happen to buy at the pump and you  got a left with the dump but no things  worth like two bucks and you got $5,000  in it what into the year sell this  different thing even if you take a loss  on it even if it cost you a little money  you now get to count that $5,000 of loss  the other thing is you know this past  year we had the market go from 20 to  what we in the year about 16 17  somewhere in that neighborhood well you  could have sold all your coins at 16 and  bought them back immediately and  captured that $3,000 loss if you’d have  bought some at high levels and no too  low levels so in the stock market you  can’t do that because there’s a thing  called a wash sale right

if you sell a  stock of Amazon and you buy it back  within I think it’s 30 days the diarist  says that really didn’t happen you  didn’t make a sale you can’t change your  capital gains and capture that loss but  on crypto you can on crypto there is no  wash sale because they aren’t securities  no I’m going to be this is the class on  a day I mean really well it depends on  the group that’s over it the SEC has  gone after companies with their icos  because they’ve been marketing ma’am as  securities which is very different than  the way the IRS treats them so I realize  they’re both part of our federal  government is this why when when a  cryptocurrency is an IC o—- stage it’s  considered a security and there are four  people in the United States that are not  accredited investors can’t buy them at  IC o—- however once they’ve hit  exchange is well then at that point it’s  okay are they at that at the time they  hit a security or in exchange are they  no longer considered a security well  it’s complicated and and the reason a  lot of i ce o–‘s aren’t available to  Americans is because the companies don’t  want to deal with the possibility  they’ll get classified as a security

because the IRS I mean not the IRS the  SEC has gone after a couple of companies  because of the way they marketed their  icos as being securities and they didn’t  follow the proper rules for selling  securities to regular Americans now  there’s a couple of bills in Congress  that are trying to change that so that  regular Joe’s like me and you  a lot of your viewers can buy those but  they’re in place to prevent people from  getting caught on scams  typically this accredited investor I’m  gonna put that in quotes has enough  money to qualify so they’re hoping it  has enough business sense well we all  know that just because you have dollars  doesn’t mean you have sentence so it’s  there to protect people but those people  still get scammed as well a lot of them  just say you know what I don’t want to  deal with that part of the regulation so  I won’t register in the u.s. I want him  take that effort so I can market it any  way I want to so they haven’t classified  them as securities yet they may and if  it does a lot of people we’ve been  talking about I’ll get thrown out the  window because the different set of  rules will start applying

that’s why I  said it’s a very fluid engagement but  they just decide you know what it ain’t  worth dealing with it just like a lot of  foreign banks will not let Americans  open accounts there because they don’t  want to deal with the headaches they  just made it as here today we love you  guys well take your money when we hit a  market but you know what we’re not gonna  let you get in early because screw you  we don’t want to have to deal with it so  it’s not illegal for an American to buy  it but it may be illegal for that  company to sell it in a certain point  that’s I’m glad you just finished with  that because that’s exactly the point I  wanted to make is I’ve been reading  through some of the comments here and  it’s something that I’ve wanted to say  for a while but I didn’t want to so you  know because a lot of people are afraid  of buying ico coins right because  they’re afraid well the government that  these companies aren’t willing to sell  them to me that maybe it’s illegal for  me to buy it it’s not that it’s illegal  for us to buy them these companies just  probably didn’t pay $100,000 worth of  regulatory fees to be able to sell the  US that’s basically what you know it’s  really on the company

that’s not on the  buyer it’s not on the consumer and if  the SEC is really there to protect us  well if we muscle through and we figure  out a way to get these ICO coins  ourselves that’s not that it’s an  illegal act on our part  it’s the companies who could be faulted  for basically providing an outlet or not  being stringent enough in their security  to keep us out now and I can see it  makes more sense for you know the SEC  well the SEC doesn’t really benefit from  taxes right I mean so I don’t know how  much that matters because something can  well if they’re gonna start taxing the  hell out of everything it probably  believes some of these guys to let  everybody  rips off of these icos during the 2018  year while there’s still plenty of  opportunity but I guess it’s a sec  doesn’t give a shit so yeah I guess  that’s a mood argument right the SEC has  got a responsibility to protect  investors and that’s why they’re  approaching it these companies that are  marketing these products to investors  that don’t qualify according to SEC  regulations that’s their goal is to  protect investors and I know the worst  thing you can ever say is someone knocks  on your door and says hey I’m from the  government

I’m here to help we all know  that’s a lie  so the SEC trying to protect us in this  world that is really moving faster than  any of these guys understand and can  comprehend and I think over the next  four or five years you’re gonna see  things just get flipped upside down so  much that they’re gonna have to adapt  right now they’re taking really slide  rules and trying to figure out how to do  quantum mechanic physics with it to get  the answer that they’re doing so the SEC  is a different role and it’s to prevent  these companies from marketing to  Americans you can buy anything you want  to I can go and buy Krugerrands there’s  nothing that prevents me as an American  from buying things you know in Colorado  I can now buy pot it’s state legal but  it’s illegal at the federal level so  there’s all kinds of diesel and I don’t  know quirks in our system that as a US  citizen you can buy it but it’s illegal  for that company to market and sell to  you so if you can get it through you got  a friend that lives in Thailand he buys  it and sends it to your account you  sending money through PayPal more power  to you

I’ve signed up for a couple of ideas  that are marketing to US citizens and  those are ones I love because I think  they got solid business models that are  gonna be around for a long time getting  in at ico prices is fantastic the  problem is that the companies can’t  market to u.s. citizens certain ways  because otherwise it runs across SEC  rules not necessarily IRS rules so for  for for your typical Joe right your your  typical guy who your gal who you know  they’re there let’s just say they’re new  to the cryptocurrency things well ok you  know let me start with this so I started  in cryptocurrency in 2017 so and and  with this with the change of you know I  guess like kind exchanges or you know  basically saying crypto is now property  or whatever the hell you know and that’s  obviously retroactive  so you know I now so now without ever  having been given the opportunity to  prepare for what’s coming I’m now  expected to adapt to it and somehow be  accurate with it and so I’m not sure  exactly how the hell that’s supposed to  work I don’t think they are either and  I’ll be honest I mean I’ll go through  this process with several customers  already going through all their trades  and exchanges and coming up with it

and  I’ll be honest it’s the it’s the  fuzziest math I’ve ever seen but again  it’s how do I prepare the best  information I can the most accurate way  I can but they also have a thought  process that’s behind it because you’re  always preparing for one thing if I get  audited can I prove what I did and  that’s the key can I lay out and say I  did this to the best of my ability do  you have better evidence now a lot of  people say oh the IRS can track any of  this stuff  yeah I think you know it’s it they can  they’ve hired a company called chain  analysis I’ve talked about before yeah  these to go out there and identify and I  actually had a couple of emails with the  guy today cuz I was looking to see if  there were tools that can help me with  customers like with Vick connect if you  don’t have access to your data how do  you prove what happened in there right I  was wondering did they have tools that  could get if I gave him a wallet address  could they get it and it basically said  we don’t have a tool like that available  to the public which says that they may  have a tool like that they want to use  it

that’s what they’re being paid for  right and literally you know there’s  tools out there today either scan and  others where I can take a wallet and I  can go see the activity and then I can  start tracing it mean a bunch of  investors go through mine I was talking  to couple looked very very big whales  who want basically does enter my fund  and I you know I was telling on my track  record for investments and they said  send us your ether roll let’s check this  out and they’re you know they’re like  don’t feel like you have to take  anything out or no that was that we  started with just basically breaking  down they wanted to see other portfolios  that I was working on for people and  they’re like don’t feel like you have to  read out anything or take out any losses  I’m like I have no losses like  everything I’ve done is great so then we  looked at the audacity for the ether  roll so I sent them there and that’s  when well like everybody holy shit like  you know because you can see every trade  I’ve made  and they knew that I wasn’t blowing  smoke so that was that actually having  that was a huge testament and helpful to  me so

I’m actually glad that that exists  but yeah you can track everything  incoming and outgoing so so take this to  another level and I feel like there’s a  lot of I don’t want to say that a lot of  this has been doom and gloom for people  but I think it’s it’s it’s basically  shown people how complex of a situation  the tax system is right now and I think  it’s probably scaring a lot of people so  what what are it is there is there an  easy solution for your typical your bot  trader your your typical swing trader or  your typical ico investor so like with  icos which is primarily my bag like  that’s what I focus on ninety-eight  percent of my effort goes into I cos I  go out i purchase an IC o—- I and I  hold my coins that’s it micro I kind of  coined the term CRO your coins the whole  CRO your coins thing is holding them for  a year to get out of pan of shit ton of  taxes right so I curl my coins for a  year that’s it now I used to do some  swing trading where you know I would  swing trade Bitcoin Bitcoin cash against  each other things like that and but I  got so busy I stopped doing that but  there are still people who obviously  swing trade day trade there are people  who still bought trade I still want to  bond trade but I want to make sure that  I you know

is there an easy solution and  is it possible for you to give kind of a  cost estimate based off of different  scenarios like if this is what your  practice is to be fully prepared for  2018 this is roughly what you might  expect to pay you know a tax specialist  and preparing these moving forward in  each year sure like I said you can go to  our website and check out our check out  page we’ve got kind of flat prices they  will probably stay fairly similar to  next year unless things get much more  complicated for a typical guy who is  I’ll say not actively trading not bought  trading not doing hundreds of trades a  day but you know a thousand or so trades  a year that’s what three or four a day  that’s probably fairly active for a lot  people and his own a reasonably limited  number of exchanges we’ve got a flat  rate 750 books and includes getting you  access to our tool helping you walk  through the process doing your state and  federal return the whole nine yards  consulting advisory on what you can do  how to prepare it if you are not trading  kind of on the other side of that where  you’re actively doing it you’re having  100 200 trades a day and you’re gonna be  getting into that thousands or five  thousands or ten thousands you know

it’s  gonna be twelve fifteen hundred dollars  depending on the market you’re in so if  you know if those prices shock you then  maybe you don’t need to be actively  trading in these kinds of things and I  know that’s hard for a lot of people to  hear but anytime you get into a business  where you’re moving those kinds of  volumes if you’re not making the profit  to pay for a good lawyer a good tax guy  and and good help you’re not really in  business until you get to that point so  if I’m using profit trailer okay which  is the big software package that I use  and a lot of my viewers use let’s say I  are using that and maybe I start off  with a thousand bucks right and I’m  using it and I’m consistently using it  daily and I connect my bit tricks  exchange because I primarily trade on  metrics and I know that a lot of my the  people do too and so I can either export  my bit ryx trades for the year into an  excel sheet and hand them off to you or  I can plug my I’m kidding it’s an option  I get it’s an option or I could plug my  exchange in pin my API key into coin  tracking which basically getting  everything you need to know right there  right for the most part

so if I if I  started with a thousand bucks and over  the course of an entire year about  trading I’ve got my coin tracking system  set up to my API for bid tricks  calculating all of my trades keeping a  log of all of that activity let’s say I  turn that thousand dollars into which I  mean what’s possible I don’t know let’s  be fair a thousand bucks let’s say I  maybe I’m turning two grand a month in  profit that grows exponentially with  compounds of gains so I don’t know let’s  say I turn a thousand bucks  realistically over the course of a year  and oh I don’t know let’s be fair and  say 50 grand  okay which which I I have made I’ve made  almost point to Bitcoin in a matter of  four days but I also start with a bigger  budget so you know I’ve  in a very choppy kind of way because I  do a lot of experimenting with settings  and things like that to show people so  let’s just say you know out of out of a  three a three month period I ultimately  made almost a Bitcoin in profit okay  in my bar trading so if I were to take  that data I mean let’s say you know  Bitcoin goes up to 20 grand if I’m  paying you 1200 bucks to keep my ass  legal and out of jail for tax evasion or  tax problems

it doesn’t mean that you  have to stop bot trading it doesn’t mean  you have to get out of crypto it just  means you’ve got a new fee like you have  a fee that you have to pay and you need  to account for each year I mean to me  1200 bucks doesn’t sound like a whole I  spent I have to spend 750 bucks per  company and I have multiple LLC’s  including my escort so I pay my tax guy  750 bucks per company every year so to  add another 1200 bucks to everything I  do in crypto that doesn’t necessarily  sound like a huge deal provided you guys  are very very good and I don’t pay  anything at the end of the year one  thing that is important is you’re right  paying those fees where that is it’s  insurance in a lot of cases because  that’s one of the things we do is  everything is signed off by a us-based  licensed CPA and they’re taking  responsibility so if there is an audit  they stand there with you with it so you  get that automatic protection that goes  on it  so there were two scenarios you gave  that one is like the average guy just  getting started outright he’s going to  be doing that on the capital gains the  other one is you being more active and  apply trader right

that’s your business  where do you talk about those you’re  much better off setting those up through  an S corp or a c-corp and then you would  find a corporate tax return and we do  have different prices for those but if  you’re keeping up with coin tracking to  keep up with your incoming inventory the  profits you pull out and though  the counting is relatively not  complicated because you don’t have to  report all those individual trades you  keep all that data and if the IRS guy  ever shows up you just go here prove  that I’m wrong right you got all the  data you’ve kept up with it month to  month and you can do it so really an  active trader but now the second one you  mentioned was like a long-term you want  to CRO your coins right get icos and  hold them for a year you probably don’t  want to stick those in your company you  want to keep those personal so she hit  that long-term capital gains so here’s  what you have to be careful that’s why I  talk about discipline early on right  you’ve got to be very cognizant of what  you’re doing you got a document what  you’re doing and not everybody’s gonna  have the mindset to do this which is why  they’ll get in the trouble when the IRS  shows up on their seat

so let’s say your  company happens to buy one of these icy  O’s and you go crap I didn’t mean to buy  that from a company I meant to buy that  personally you have to document  transferring that money from your  company to your personal wallet you need  to keep them separate do an Excel  spreadsheet or whatever with all your  wallet addresses and say these are my  company accounts these are my personal  accounts any time money switches between  those document what happened why it  happened it’s fair market value when it  did it how you’re treating it in your  accounting because what they want to do  if they ever come audit to you is you’ve  got these two things and they want to do  this with it because now they don’t have  to stop here they can keep all the way  on their colonoscopy and go all the way  up through your kidneys and your stomach  and out through your mouth until you  just die from that being in there for  way too long  mm-hmm okay so it’s all about  documentation and process as you go  through it all right so we’ve been at  this for quite a while I want to open  this up a little bit for a couple second

it’s maybe two  chat questions if there’s anything that  we may have missed in this conversation  any of you guys have any questions that  you’d like to have addressed by the good  Scott lovingood right now let me have  them and while they’re answering those  and you’re looking for them I got one  thing I want to cover because we hadn’t  talked about it but it has serious  implications that nearly everybody in  the  there’s two requirements that the  government has once called FinCEN 114  which is a financial criminal  enforcement network and the other one’s  f bar foreign bank and accounting  foreign bank account reporting if you  have more than $10,000 in aggregate  value in other words total value in  exchanges that are located overseas you  are required to file those two forms if  you do not the penalties can escalate  all the way up to two hundred and fifty  thousand dollars or half the money you  have overseas and up to six months in  jail these are not things to play with  as you have money laundering kind of  you’re hiding money yes that’s that’s  originally where it was started but  since there’s only one less than a half  a dozen of these exchanges here in the  US

if you’re owned by Nix your own  crypto key if you’re on cou coin or any  of those kinds of things and you have  more than 10 grand you have a legal  requirement even if you don’t file it  and didn’t know you were supposed to  file it the fines can run thousands of  dollars just because you didn’t do it  it’s one of those things reporting is  real adults it’s relatively simple it’s  not complicated but it’s I’ve got this  much money in this account and it’s  under my name at this exchange that’s  literally what you have to do but if you  don’t report it and they find out you  have it you can get hosed I mean anytime  they start talking about jail I take it  seriously with the IRS because their  criminal division has over 90 percent  conviction rate so if they show up with  guns in a badge and there are ice agents  to have guns and badges there they’re  criminally to prosecute you nine out of  ten you’re gonna get convicted eighty  three percent it the last time I look  actually serve time in jail so be  careful with it you’re basically just  saying if you have money it’s not on  coinbase or bit tricks or basically a US  based exchange you need to report the  fact that you’ve got over ten thousand  dollars and in overseas accounts which  that’s that’s that’s fair

I mean I  that’s fair it is but a lot of people  refuse to do it  not our client because I tell them up  front I want to file it for you whether  you want me to or not if we’re gonna  file your taxes locally because risk  reward  it’s too big a risk and too little cost  to do it look taxes or not I’m gonna  bitch and scream  and piss and moan the entire time I’m  paying my taxes like you know but it’s  it’s like it’s just yeah  there’s nothing else you can do about it  it’s either pay your damn taxes or you  go to jail like you know so I plan on  living my life and spending the profits  I make I just happen to have to share it  now which is fine but I am going to make  it a point to make sure I you know I  whether I’m working with you guys or  whoever I just pay as little as possible  I mean look the way I look at it is like  you said the IRS looks that everybody is  though you’re guilty until proven  innocent right so to me I have to prove  I’m not only innocent but I’m not even  alive so you know it’s just so and  that’s kind of the end to their yang in  my opinion so if your profit is say  under $5,000 do you have to claim that  what is the minimum that does not have  to be claimed under a dollar

I know  that’s not an answer you want but  legally as US citizens any gains we make  from these things have to be reported  now if it’s under a book chances are the  IRS isn’t coming from you if it’s under  a thousand you know you still need to  file it you have a legal responsibility  to again it’s risk reward what is the  penalty going to be if you don’t  the IRS they’re obviously going to start  with those fourteen thousand and three  hundred fifty five names they got from  coinbase that have done over twenty  thousand dollars in trades for the last  three years they’re starting with those  boys but then once they get the system  in place guess what they’re gonna do  they’re gonna roll out to everybody and  they have ten years to come back and get  you in ten that’s a long time to be  sitting there wondering crap if they  caught up with me yet and they caught up  with me yet right okay let’s see here  maybe pull one or two more mostly people  what if you buy a theory em then  exchange to Cardno and hold it in your  wallet then it goes up a lot and you  exchange back to Bitcoin then send the  Bitcoin Bitcoin base for USD

basically  that looks like three or four different  taxable events right I mean right  everywhere this is a trade we have  calculated to make a gain or a loss gain  or loss and  you just met all those up right somebody  that’s Porto Rico earlier kind of shot  by because a lot of people are  interested in it because this act 20 or  22 which number it is if you move to  Puerto Rico there are some potential  capital gains benefits if you’re going  to be doing its I’ve got a couple of  friends that actually decided to do that  last year move there they moved back to  the US simply because the environment  there isn’t conducive to having a lot of  money and keeping a lot of money the so  there are benefits to doing that like  you have to ask yourself is it really  the life that you want to live part of  the reasons that we enjoy our country so  much is the weather the country the  freedoms they get restricted a lot they  have pain-in-the-butt rules and go along  with them but so they every other  country there will this get better I  think it will but it’s going to be chaos  until it does it is gonna be chaos and I  think it’s gonna be a matter of enough  people kind of raising enough hell about  things and how bad things are managed  you know that I think that yeah it’s  just I’m not looking forward to it

I  mean I think this is definitely going to  be a growing pain my hope is that you  know as you know like you said if you  have like I have document I keep records  of everything and you in all the  exchanges you can export all of your  activity so and you know I’m not worried  about any of that stuff and you know  that there is some confusion in terms of  you know well the personal versus the  corporate and the you know blah blah  blah blah blah but you know I’ve learned  that there’s there are ways to deal with  just about any situation when it comes  to taxes and I think that you know we’re  we were all caught off guard obviously  for 2017 but you know moving forward  especially with your help in this video  I mean I have a feeling that this video  is going to be referenced by sons of  people over the coming months and so  look Scott I really appreciate all your  time tonight I mean we’ve been at this  for an hour and a half and time is flown  by because you’ve actually been very  helpful very educational and and  honestly fantastic

maybe in the future  we could do this again with some updates  on any tax laws and if you if you know  from your perspective if  new things open up do you feel that the  public should know about by all means  reach out to me let me know and I’d love  to have you on again I would love to do  that and by the way on the yawn meter I  don’t think you hit more than floor yeah  I hit even though we were talking about  I don’t think so I wasn’t really  counting but it didn’t look like it for  so we were dealing with the boring  subject of taxes and you weren’t yawning  so a lot of my money is not boring  [Laughter]  alright everybody we’re going to cut  this for the evening thank you all for  joining us we I think I hit a record  tonight with like seven hundred and  fifty something people at one point but  there’s been a pretty steady flux of  individuals throughout the entire night  so very good video fantastic content and  a lot of lessons a lot of information  learn all you guys that are watching  thank you Crowe your coins make sure you  check out crypto tax prep com reach out  to Scott individually

I’m sure he’s  happy to help I also know that you’re  gonna find links on that site for their  Facebook group where people are asking  questions and getting help and support  it doesn’t sound like it’s going to be a  bad deal folks I mean it sounded like a  lot of doom and gloom initially but I  think once you’ve kind of if you’ve  organized yourself properly in crypto  whether you’re BOTS trading swing  trading whatever you’re doing I think I  think you’re gonna find it’s not going  to be as bad as it originally sounds on  that note I am going to go back to doing  some more research  thank you Scott lovingood for your  support and joining us tonight and     Crow  Your Coins     thank you guys I appreciate it .

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