A Full Step-By-Step Guide To Avoiding Crypto Taxes

All right, everybody, welcome to another week of building wealth, saving taxes, protecting our assets. My name is Mark Kohler. I'm a CPA attorney, best selling author, real estate investor, a crypto investor and just helping Main street business owners around the country the last 20 years do the same. And I'm so excited to be here with you today. I do this every week and the, the main takeaway here today is that we're going to be talking about the basics of how crypto is taxed. I'm going to hit NFTs, we're going to talk about staking, trading, a little of everything. And I'm going to. I've got a sweet little roadmap for those of you that have been following me for years. I think you're going to love this new perspective. I'm always learning myself. I'm always trying to find the edge on how to explain complex principles simply. And that's what we're going to do today. So if you're a tax advisor, you follow me already as an accountant, enrolled agent, a cpa, you may be one of my tax pros already in our network. I want you to take the way I explain it today and replicate it, use it, abuse it, steal it. Millions of Americans think crypto is not taxed. Crypto is all these fallacies and myths and I'm going to start with those and then give you a sweet little decision tree, if you will, of how crypto is taxed and two or three ways that you can eliminate the tax, save on the tax or just prepare for it. So that's our plan today. Want to welcome you if you're on there. We've got multiple platforms live Today, x Instagram, LinkedIn and Facebook and YouTube. So pose your question below. This is the people show. This is for you. I try to do this every Thursday, consistently at the same time and pose your question. I'm going to hit it. And if you're like, hold up, he's making up questions. This isn't live. No, it is. There's questions coming in from five different platforms. So don't think it's your world only. And I'm not shying away from any question. If you want to talk about your fantasy league picks for the NFL, I'll do my best. All right. First, there's some myths out there we've got to talk about. One of them is there's a. The IRS doesn't tax my crypto until I turn it back into USD or US dollar or fiat currency. So whatever say you buy Bitcoin with US Dollars. Oh, I'm not taxed until I take whatever I do out there in the ethos. When I bring it back to US Dollars, that's when I'm taxed. Wrong. For example, if I go out and buy a bitcoin for $30,000 or a part there. But let's just say I buy a bitcoin for 30,000 and then I sell it six months later and it's worth 50,000, I'm going to pay tax on the difference. All right. I think everybody gets that. Well, Mark, I bought Bitcoin for 30,000 and then about three months later I turned it into Ethereum. And that $50,000 Bitcoin, I went and bought 10 ethereums. You know, let's just say theoretically, Ethereum was trading at 5000 Ethereum, which I would love, and I go trade it. Well, I don't pay tax because I didn't convert it back to US dollar. I just took that Bitcoin worth 50 and bought 10 Ethereum coins. Yeah, you're paying tax because essentially what you did is sell or you sold your Bitcoin for 30 that you bought for 30, that's now worth 50 and got 10 ethereums, that is a taxable transaction. The IRS will tax you. Now, another myth. Well, Mark, the IRS doesn't know what I'm doing. I'm doing it in a metamask wallet or this defi wallet or whatever. They're not going to see it. People. The beauty of the blockchain is it's public. That's what we love about it. There's no deep state Wall street bank controlling bitcoin or any of the tokens. It's public blockchain. The IRS knows that they have tasks force to track the transactions. And at some day your cryptocurrency is going to end up back in a bank account of yours. Boom. The IRS just closed the loop. They got you. And so if you think you can hide your crypto transactions, and I guess theoretically you could for a while, but at some point it's going to come back to you, and that's when they close the loop. The Joe Biden administration allocated $80 billion to hire more IRS agents and create task force for multiple areas, including cryptocurrency. So you can't hide from this last point. And I'll. I'm not trying to scare you. I'm just trying to let you know that this is something that's real and it's got real dollars and real exposure to You. Because. Last point. The first question on your 1040 tax return. Your first question underneath your name. First question, did you receive any crypto for services or property, an award or reward in any way, shape or form, or sell or transact any crypto digital asset. It's called digital asset. That's the first question. If the answer is yes, and you check no, penalties of perjury, go to jail, up to three years, $250,000 penalty per transaction that you lied about, and there's no statute of limitations. It's not statute of limitations. As Jerry and Kramer talk about in Seinfeld, this means the IRS can go back as far as they want, and if they find that you lied about crypto transactions, trading, anything, you could go to jail. And the penalties and interest are going to be off the chart. Well, I didn't know. The IRS didn't teach me that. I didn't know. Ignorance is not a defense. All right, so that's how. That's how brutal it is. All right, now, with that said, if you're proactive, if you and I want to field your questions here, start typing your questions down below and whatever platform you're watching here, I'm going to hit them. Call me names, yell at me, whatever. I just like to say, don't hate the player, just hate the game. I'm trying to tell you the rules of the game. If you don't like the game, don't play it. But there's a lot of money to be made, and I love cryptocurrency, And I love NFTs and the Metaverse. You just got to play by the rules. And if you don't, you're going to end up in the penalty box. Not good. So how is crypto taxation viewed by the IRS tax code? How is it taxed? I got a new way of showing it here. I'm kind of excited here to just kind of give you a simple outlook on crypto. And I'm going to put NFTs, non fungible tokens in that mix of just general crypto. Okay? All right, so here we go. If we put crypto at the top here, there's two ways. A fork in the road, right at the beginning, there's going to be ordinary income, and then there's going to be passive income when it comes to crypto. All right, now let's go with passive first, because that's. I think most people can get their heads around that. The first. There's really three here. Trading, staking, or defy. So if I Buy and sell, that's trading. And under this you've got tokens and you have NFTs. If I buy or sell a token, I have either short term or long term capital gain. At best you're going to pay 23.8% on long term capital gain plus state. Wherever you're a resident, don't think you can hide it in Nevada. And short term capital gain can be as high as 37% fed plus state. And if you're in California, that means 50% of your transaction is going in taxes. Crazy, right? Okay, so if I buy and sell tokens, I have short term or long term capital gain 23.8% plus my state rate, which in California could be as high as 3, 13% plus 26, 36%. Okay, that's how it works. Long term means you held up more than 12 months. Now if you're staking, it can be passive and you're going to pay as high as 50% because it's short term capital gain rates. That's how it works. Which is ordinary rates plus state. DeFi is lending, which would be again passive. But it could be as high as 50% as well. Not great, right? NFTs are broken into utility tokens and collectibles. When you trade NFTs that are collectibles, the tax rate is 28% flat plus state. If they're utility, then it's short term capital gain and that again is going to be as high as 37% plus state. That's it. That's how it works. Now I'm going to give you two or three strategies to not pay that tax or minimize it. But that's how it works right now. Now, ordinary income is a creator. So I create NFTs. That's a business. It's like I'm an artist if I create a collectible nft. I'm an artist if I create a utility nft. It's like I'm a developer. Now gamers, a gamer might get paid in tokens when they play a video game that's subject to tax. You're winning, you're like an athlete. You're earning tokens. You could be doing crypto mining. I own a crypto mine. When you're mining, it's a service and you're getting paid in Bitcoin. That's how I do. I use NiceHash. I get paid in Bitcoin. You might do staking as a node operator. If you're a node operator, you're paying tax here. Now these taxes Believe it or not, if you thought this was bad, if you thought passive was bad, you're seeing 50%. 36, 37, la la la. All this crap over here, it's worse over here because you have to deal with self employment tax. It's plus, plus, all this, plus self employment tax. So if, let me just point this out right now. I'm not doing this to scare you, I'm not doing this to frustrate you. I'm trying to do this to educate you that if you know the rules to the game, there's always sometimes, always, sometimes that doesn't make sense. There's sometimes a loophole or a way around it or a way to minimize it. That's what I do as tax lawyer. Me and my team over the last 20 years have been helping clients in real estate, restaurants, ag, manufacturing, online influencers, YouTube. We help all the. You're in Hollywood, you're making movies, you're an actor, you're an athlete, you're an nil athlete. Or we help you save taxes. That's what we do. And 50% of Americans now own some form of cryptocurrency and have no idea, no idea how it's taxed. And then they're shocked if the IRS is pissed. My job is to try to prevent that. Our job, our team, we have a tax law team, we have a team of accounts around the country in our Main Street Tax Pro network. I have Main street tax pros right now in the chat where you're at, trying to help answer questions. They're awesome. I don't make any money on that. I. They're trained by me. I love them. They pay me for training. I learn from them, they learn from me. We have a tribe, we have a community. I've got books, I've got podcasts, I've got videos. I'm not going anywhere. I want to help you live your American dream. Understanding how cryptocurrency is taxed. NFTs are taxed. Staking, defi gaming. Just know the rules. So with that said, let me tell you two or three strategies here and we'll go back to the whiteboard and I'll use the same section and then we'll answer questions. Now let's go back to the passive side. You're trading, you're staking your defi. One of your first ways to save is to do wash sales. That's kind of like washing your crypto. So if there's a dip, when crypto goes down a little, sell, take the loss, rebuy it immediately. If your accountant told you you have to wait 60 days, your accountant is wrong. That's a rule in stock, bonds and mutual funds on Wall Street. You can sell your crypto, take a loss and rebuy it right immediately. It's called a wash sale. Do it. Number two, hold your crypto at least 12 months if you can, because now you get long term capital gain. That's what you want. You don't want short term. Next you can use what's called charitable remainder trusts. The charitable trust is where you donate your crypto and sell it tax free and reinvest it and grow it tax free and you get payments for the rest of your life. I've taught it before Google. Go to YouTube and type Kohler Charitable Remainder Trust. I got videos all over on it. Retain one of my lawyers. Now, I'm going to say this right now. I forgot. I'm not going to forget. This is the time to say it. Get a consultation with one of my tax lawyers. You can book one right now for an hour or a comprehensive consult. No more than 15, 1600 dollars. They'll be able to plan for the whole year if we don't save you what you pay us five times. We made a mistake. We literally save clients five to 10 times whatever they pay us on every phone call. That's how the rich get richer. You want to be rich? Get a team that helps you be rich. You're doing knocking this out on LegalZoom and TurboTax. You're going to get screwed. You want to make big money? Spend a nickel to make a dollar. Don't step over the nickel over the dollar, whatever. Okay? You know what I'm saying? All right, now the next strategy here is don't do the deal, don't do it. Do it in your Roth IRA, do it in your HSA. Do it in your 401K. You can do all of these transactions. Well, except for collectibles. You can do all these transactions in a retirement account tax free. I do a crypto mine tax free in my HSA and in my Roth. Got them both transactions. So these are some strategies you can employ and it will save you thousands. Next, over on this side, if you're making money, one word, S Corp, you're going to want to use an S corporation and run all of this income through an S corp. And by doing so we save on self employment tax and we open an entire world of tax write offs to help you build wealth and save taxes. Let me repeat over and over again. I say it all the time. LLCs do not save taxes. LLCs do not save taxes. S corporations are where we want to operate our businesses. Every dentist, doctor, landscaper, attorney, cpa, accountant, restaurant owner, online influencer, nil athlete. We're all S Corps. We're S corporations. Just because you're in crypto, don't think you're immune. Oh, well, I'm in crypto. The IRS doesn't tax it. What are you smoking? You might as well start selling cannabis too. You're in the wrong business. Right? Okay. Freaking A. All right, now if this seems a little complex, if you're like, holy shiz, Mark, I want to learn more. I know I can learn more. I need to captain my ship. We've done it three years in a row. We have a crypto tax summit. Only one in the industry dedicated strictly to taxation issues. For cryptocurrency, NFTS is for two days in Anaheim, California next month, September 26, 27, 28. Starts on the evening of the 26th. If I don't save you in taxes, your cost of a ticket, I will give your money back. I mean, I have a checkbook in my back pocket. Please come. The most expensive ticket is $1,000. 999. We're going to have panels on NFTs and business owners taking crypto. Seven to eight different speakers, 12 different topics. Continuing education credit for any of you that are accountants, lawyers, CPAs, financial advisors. Two days, we're going to have cocktail parties, lunches, networking. Get over to cryptotaxsummit.com. are we doing a discount? Are we doing our flash sale? I know. Will you check on that? See if we're doing our flash sale? I want to give away a cheaper ticket today. I want you to book right now. You can come in person. I will be there. You can talk to the speakers, you can talk to me. You're going to learn how to save money with your crypto strategies, guaranteed. Or I'll give you your frickin money back. I wasn't supposed to say that. My team, I'm not, I'm not even joking. When I start giving away guarantees, my marketing team's like, mark, please stop. But whatever. All right, so cryptotaxsummit.com two day event in September. It will change your investment life. I will make you millions in the long run. And by the way, I don't want you to get rich quick. I want you to get rich slow because that's what really works. So if I can get you a discount code, I'm going to do that here and momentarily get booked. Come. If this is complex, if it seems complex, it is, because it is. It's a little hard. So come for a couple of days, have some fun, learn some strategies. There will be a virtual ticket as well, so you can sit home in your underwear on your couch and watch and learn. You will love it. All right, well, I want to go to questions now. I'm here for you. I'm just having a good old time. I got my solo cup. It's summertime. That's what you do. You go out into the cornfield in the summer. I grew up on a farm. I didn't grow up wealthy. I grew up working hard and grew up on a farm and had a janitorial business through college, working my butt off. Sometimes I'd work all night long and then I'd end up at class at 8am I wanted to be a business owner, and I thought accounting was the cool way to go. I didn't realize there was a bunch of nerds in there. I'm a nerd. I really am a kind of the king of the nerds. That's what I love. But there's a little nerd in all of you because if you want to build wealth, you got to understand the numbers, right? So anyway, I had a janitorial business for years. I just worked so hard, and now I just want to help other small business owners on Main Street America. That's what I'm passionate about, and I want to help you. And I'm not going anywhere. So please join the community. Join the tribe. We have got to understand the tax and legal. The number one cost in your life. If you're successful in business, in finance, your number one cost in life is going to be taxes. Your second greatest cost is going to be the interest on your home loans or rental property loans. I teach strategies on how to save taxes and how to save money on your loans as well, because leverage is a great strategy. All right, well, let's hit it. Dana, what do we got? Any good questions?

Yeah, we do. We got a question From Jim on YouTube and he says, mark, if I just buy and hold and never sell bitcoin, why do I need a tax shelter such as an IRA or Solo 401K?

And first name again? Jim. Jim. Because someday you are going to sell, Jim. You are going to pay tax someday. Did everybody hear what Jim said? Now, I've got an idea for you, Jim. I'm not saying what you're doing is bad. I'm not saying it's great. I'm saying it's good. But I want to take it to great. Let's say Jim today buys $10,000 worth of Bitcoin. Okay? So I buy $10,000 of Bitcoin in his individual name. And he's like, mark, I'm going to sit and hold. I'm going to just buy and hold. I'm going to buy and hold. All right, let's play it out. This is option one. He sits on it 10 years. Some people think Bitcoin will 10x in the next 10 years. All right, cool. In 10 years, it's worth 100 grand. If the tax rates are the same, you're going to pay approximately 23.8% federal plus state. Wherever you live, when you sell, there's only nine states that are tax free. Nine states. Let's say you're in an average state at 8%. I'll go seven. I'll go seven. That's 23 plus seven. You're going to pay 30% in taxes. You're going to pay $30,000 in taxes. You get 70 grand. Okay, that's it. That's good. I like it. That's wonderful. How about we go next level? Do it at the same time. Split both strategies up. Option two, open up a Roth IRA this year. You can put 7,000 or 8,000 in based on your age. In another six months, you can put another seven grand in. So let's say you get your $10,000 in there. Now it's in your Roth IRA. It's not you, it's your Roth. See, two different investors. You wait your 10 years, it's worth a hundred grand, zero tax. That's why, Jim, I'm doing. I'm saying do both. Do both. Don't stop doing what you're doing. Just add another feature. How would it be to have an ATM that's tax free 10 years from now? I don't know how old you are at age 59 and a half. You can pull it out tax free. Now, I. I just want to say this to Jim. Jim could be 30 years old. When I was 30, I thought I was indestructible. I was going to live forever. I don't know, Jim, maybe you're a little wiser than I am. Do you know how many consultations I've had? I've done 10,000 plus consultations. I paid the price. I've had so many calls with people in their 50s that are like, Mark, I don't have a retirement. I don't know what I'm going to do. Sorry, I get a little emotional because it is so scary for people. Do you know 40% of Americans over age 50 don't even have $100,000 in savings for retirement? They're planning on Social Security. Social Security at best is poverty level. Social Security is not meant to be your retirement. That's gravy on top of good planning. So I don't know how old you are, Jim, but if you're thinking, why do I do a Roth ira? Marc, this is great, because someday you're going to sell that damn bitcoin and you're going to pay tax out the rear end, do it in a Roth and pay zero tax. Self insure your retirement. Do both if you want. That's why, Jim. That's why. Another question. We're good. Oh, and we can do our special. So what's the. What is it? Crypto tax 100. Okay, I'm going to write it down. Okay, I got a code. I got a code. Crypto flash 101. Crypto 101 flash. My handwriting is so bad, I'm going to write it again. Crypto. You guys put it down in the description too. 101 flash. You get a hundred dollars off a ticket to come to the cryptotaxsummit.com cryptotaxummit.com and people, if whatever you pay, I don't save that double, I'm gonna say it. If I don't save you two times, whatever you pay to come, I'll give your money back. You know why I say that? Because I've said it before. I think I've done it once in 10 years. Someone that sat there and just played solitaire the whole time and left because I already know there's so much kick ass information you're gonna get. You're gonna love it. I don't. I'm not afraid to say it. So. All right. Okay, next question. David.

Okay, next question. Comes from YouTube. Says I mine crypto with my gaming PC and net about $200 a year. Is it really worth me creating an LLC for it?

No. And remember, an LLC is not going to save you taxes. What you meant to ask was, would it save me to set up an S corporation? And the answer is no. Okay. And this is a great question. Damn it. I always got to remember the first name. Who is it?

Didn't come with one.

What didn't come with one? Oh, no first name. Okay, so no first name. Says I'm gaming. No, no, I'm using My laptop or my gaming PC. Gaming PC. To make. To do crypto mining. Probably using Nicehash or something like that, some app or some software. And they're making $200 a year. A year. Oh, my gosh. You got to go over to Nicehash and hit it. $200 a year doing crypto mining. You're going to claim that income. Do you know that's a small business? You should never pay tax on that because I'm going to write off your laptop with it. So zero tax. So you're making $200 a year, tax free. $200 a year, tax free. Claim the income, be honest with the IRS and pay no tax. That's all. It's easy. Okay. Do you need an S corporation? Hell no. Do you need an llc? Hell no. Whiteboard in your trifecta. You're going to be buying and holding crypto on the right side. And I might use an LLC for asset protection. So if you get sued, no one can touch your crypto. But over here, you're mining and you may have a day job. So you got a day job. W2. All right, that's cool. And then you're mining. So your crypto mine is generating $200 a year. You're going to just put that on a schedule C. No need for an LLC or. But then all of a sudden, I have a consultation with you. This is why I want you guys to have a consultation. So I'm talking to no name here, and no name says, oh, yeah, but I drive Uber. Oh, well, holy crap, you might need an S corp for driving Uber. Oh, well, Mark, I. I have a small business. Well, you already have an llc. Maybe it should be taxed as an S corp. Then do your mining in there. Don't set up a new entity for your mining, just put it in the freaking entity you already have. I only have one S Corp in my life. Mark Kohler. I have one S Corp. I do nine different things in it. So use your. Now, when do you need. The golden question that no name's really asking is, when do I need an S Corp? When you're netting $40,000 or more annually. That's when I want you to be an LLC taxed as an S Corp. So you're going to do mining Uber, sell online affiliate fees, blah, blah, blah. One entity. That's how it works. Get people, get a consultation. I have so many videos on this next question. Dana,

this next question comes from Glenn. Says, my brother bought two bitcoin for me at $1600 each years ago.

Oh, my gosh. Love your brother.

And now he won't send it to me unless he takes tax out. Therefore, he wants to send me 1.2 Bitcoin.

Okay. Your brother's full of crap. All right. By the way, sorry. I want you to send this. Can you. I don't think this is recorded. So turn on your phone. This is recorded. Well, how do they get it?

Same YouTube link?

Yep. Oh, is this recorded on YouTube? Okay. Is he watching on YouTube?

He is.

Okay, so you're watching on YouTube. This is going to go into my playlist. Whatever. So send this to your brother. First of all, I want to tell your brother, thank you for doing this. Your brother bought you two Bitcoin at 1600 a pop, and he thinks he's going to pay tax right now. Now, what he might be thinking about is gift tax. See, that's what he's worried about is gift tax, not income tax. Because if I gift someone something, I can give away eighteen hundred dollars right now, this year, and it's exempt from any sort of taxation. But if I give someone more than $1,800, then it's subject to gift tax. Or I have to fill out a gift tax return, which is a 709, and I can claim my annual. My lifetime exemption. I get so much I can gift over my lifetime. Okay, I'm getting a little complex, but I would like to answer questions here. So brother wants to give away two bitcoins to his other brother, and it's. What's bitcoin worth right now? Kirby, where were we at? Okay, so we're at $1600 is what he bought them for. Two bitcoin times two, that's $3200 in basis today. Fair market value to bitcoin is worth what? There's 61,000 each. So 61k times two. We're at 122 grand, man. Now your brother's saying. And this is the. Your brother is. Should not be. Okay. Okay. This is tricky. If he gives you the bitcoin, he's going to have gift tax on 122 minus 18. Right. So that's going to be 104. Right. So there's going to be gift tax on 104,000. Your brother's like, I don't want to pay that tax. Now if you go do a tax return on 104, find out what the gift tax is, and what you would say is, hey, bro, give me the bitcoin. Give me the bitcoin. I'll go and I'll cover your gift tax. Or that's option one. Or you could say, what is that tax going to be? And then subtract it from the 122, find out what that dollar amount is and then have him send that amount. Well, no, because if he sends that amount, the gift tax is on the 122. Can I say this? I'm going to throw this out. Your brother wants to send you $122,000 worth of Bitcoin. Bless his heart. That's great. You need a professional involved in this transaction. I'm going to recommend that you make an appointment with Darren Charrington or Max Merritt. They're 2 of my tax lawyers in my office. You can pay them for one hour. You pay the bill, tell your brother I will pay for the tax lawyer. And then you call up kkoslawyers.com and say, I need Max or Darren for one hour. And you get Max or Darren on the phone. They're my crypto taxation experts. And say, we got to figure out the cheapest way for my brother to get me this damn bitcoin. Okay? That's what tax lawyers do, is we find solutions. And tell them I need to get those two bitcoin in my name and see if they can figure out how to do it tax free. I know there's a way. I'm just, like, thinking through this. So that's what we get paid for, is to find a loophole. So make that appointment and pay for it. You're talking 122 grand. Don't be cheap. Pay for a professional to help you pull this off. This is how the rich get richer. All right, next question.

Dana, we actually have an update on this. It says that it was not a gift. Glenn paid for the two bitcoin himself, but it was in his brother's account. So I don't know if that changes anything, but.

Well, in his brother's account. What are we talking about there? I'm just going to say it's your account. It was just in your brother's email, and I. You got to get one of my tax lawyers. Get one of my tax lawyers on the phone and pound it out. All right, next question. Can anybody throw me a damn softball? What the hell's going on today? This is crazy.

Let's see. This one is. Hey, Mark, I have my account set up with Gemini, and there's tokens out there that are not on Gemini. Well, how can I get them?

Well, I have a feeling. Okay, I'm going to get asked for an update. What's her name? No name. No name. Okay. No name. Says they have a Gemini account, but they want to buy tokens that are not on the Gemini platform. I have a feeling you're talking about your Roth IRA or IRA Gemini account. If that's the case, I'll have a different answer than another way, so just give us an update. Are you talking about a Roth IRA Gemini platform account, or are you talking about a personal Gemini platform account? Let us know. Next question.

Next question. This is From Andy on YouTube. He says, what's the best way to catch up on crypto taxes if you haven't paid them in the past tax years?

Andy, Andy, Andy, Andy. Good point. So, everybody, this is very common. Andy is saying, hey, in 2022, or maybe you filed your 23 tax return already, too. So you're talking about 2023 or 2022. You check the box. No. That you had no crypto transactions and then you didn't report any. But the reality is you did. You had crypto transactions, and now you're like, holy crap. You have two or three choices. First choice is you can pray the IRS doesn't catch you and do nothing. Not what I'd probably do, but you could. Option two, you would go to. What are our providers? We like. We like Taxbit, Kirby. What else that helps track our transactions? Coin Ledger and Coinly. Coin Ledger. Coinly. Taxbit, I think, is not doing a consumer product right now. I go to Coin Ledger. Go to Coin Ledger and tell them all of your IDs on your. On your wallets and have them go back to 23 and 22 and find out what your exposure is like. How much should you report of income in crypto transactions? Coin Ledger will give you that report and then amend your tax return. Come clean, go to the IRS, file an amended tax return, a 1040. Check the box. Yes. And include all of your crypto transactions. You're going to pay some tax, you're going to pay some interest, be done with it, and never worry about again. That's option two. I'll leave it at that. Go. And I obviously go option two. I don't think it's worth the stress. The IRS is tenacious right now. They've got the money to do it. They're gonna come after the Crypto nation. They are coming. So let's deal with it. Next question.

Dana, this one comes from Jason. If you are mining into an HSA or retirement account, can you still deduct the Electricity and other expenses used.

Yes, you can. I'll diagram this very quickly, everybody. We have an entire section at the crypto tax summit on, on how to mine individually in an S corporation or how to mine in your Roth or HSA or 401k and how you do it, there's 13 steps involved. It's quite complex, but you can save a ton in taxes. If you're doing this, I will help you. But let me just show you what it looks like. You have a Roth IRA or an hsa. Let's say right here. I'm in the studio right now. Let's have fun. I'm going to say, Danan, we're going to use your 401. Kirby, we're going to use your HSA because I know you have an HSA account. I love it. And I'm going to use my Roth and we're going to go create an LLC and we're each going to throw in five grand and we're going to have $15,000 in this little LLC. We want a crypto mine. We're going to create a subsidiary to do crypto mining and we want to go buy a CPU and about, I don't know, for 15 grand we might get four to five video cards. All right, so we're going to take the 15k fund, a subsidiary, a sub, LLC, which we're going to tax as a C corp, and we're going to put our 15 grand in there, maybe 14,500. We'll leave 500 bucks in this bank account and we're going to take the 14,500 and we're going to go buy all of our crypto mine equipment and we're going to start mining. All of the expenses, electricity, any management, you know, at a server farm, whatever, any expenses, we're going to deduct. These are all a write off and then whatever comes out as profit, we're going to pay 21% in tax because it's ordinary income. There's no way around it. We're going to pay 21% in tax. The profit is going to come out as a dividend tax free and we're going to go out and buy more crypto and then we're going to sit, we're going to sit and wait. So all of the work that we're doing in the mine is going to flow down and come over here into a wallet that we're just going to sit and wait. This is the real money. This is what our crypto mine is generating. You get all the tax write offs in the process, and then you pay a 21% corporate tax because you want to block UBIT. All right, that was. That was freaking a work of art, but that's how you do it. And that scene that. What I just showed you is an hour or more presentation at Crypto Tax Summit. Use the code, get registered, come learn how to make money. I'm trying to help you make money. And I'm. I don't hold back. I teach it. Next question.

Dana, Another Jason from YouTube says, I have a charitable remainder trust that own. That owns a UAE entity where I have all my crypto gains. I transfer the profit back into a truck into the trust's main account. I see nothing wrong. Do you agree?

Agree, agree. I'm going to leave it at that. Big topic. You're doing it perfect. Love it. By the way, you should be having regular meetings with your charitable trust attorney because you want to stay on top of all the issues. If you don't have one, use Max Merit, Max Merritt at KQS Lawyers. Kirby, you put that in the chat and Max is in there. Yeah, he's a real boring guy. He's a little annoying, but he will really be a big help to you. Was that my inside voice? Did I really say that? Sorry, Max, I didn't mean that.

It's okay. He's answering all your questions before you get a chance.

I love Max. He's my prodigy. The guy's amazing. All right, next question.

This one comes from Jack. What's the best tax strategy if planning on holding digital assets for multiple generations?

Roth, Roth ira. Roth ira. Because when you have a Roth and you buy cryptocurrency and it grows in value, it will come out tax free for the rest of your Life. At age 59 and a half, it'll grow tax free. And then when you die, it goes to the beneficiaries of your Roth, into their Roth, and then they have 10 more years to pull it out and they can continue trading it tax free. The Roth, the. The. The inherited Roth is the most incredible tax strategy in generational wealth. Period. Now, if you're like, well, Mark, I want to hold it for two, three, four generations, you're talking about an irrevocable trust. And holy crap, you better be worth 10 to 20 million or tone it down. I'm just being honest. But meet with any of my tax lawyers, meet with any of my tax lawyers and talk about your legacy plan and what you want to do. And if you really are on YouTube or whatever, asking me about keeping millions of dollars of crypto in a trust. You need a. You need a tax lawyer already. So get it scheduled, if that's really your plan, and we'll help you. We know how to do it. We know how to do it. All right, next.

This next One comes from YouTube. Says I hold about a total of 50k in crypto in my personal wallet. Hypothetically, the gain could be 500k or even a million when I sell next year. What would be the best thing to do right now?

Oh, my gosh. You're telling me you have. Okay, so this is your trifecta. You have 50 grand in a wallet, and no offense, you're that bullish that you think it's going to be worth 500 grand next year? That's what he said, right? Okay. Bless your heart. I hope that's the case. Whatever the hell you're buying, please call and tell me, and I'll give you some free legal advice. All right? Okay. Now you want to know what to do. I don't know your age. I don't know your income. I don't know your small business. I don't know what you do. I don't know if you own real estate. So you know what you need to do? Have a comprehensive consult with one of my crypto tax lawyers, and they'll tell you what to do specifically. But I'll give you some ideas here. Let's just assume you have some sort of 1099, some sort of side hustle in your life, which I think is critical for all of you. You've got a little 1099 side hustle. I would set up a solo 401k. We charged $1,000 super easy. I would immediately split this wallet into half. Solo Roth 401k. So take 25 grand, sell whatever the hell you've got, and have a personal wallet worth 25 grand and a Solo 401K with 25. You may say, well, do a Roth IRA. Well, you can only put seven grand in a Roth IRA. I can drop 25 in a Solo 401K Roth. And then what I would do is, now you bifurcated your life. You have half taxable and half tax free. So if you make 500 grand next year, you're making 250 grand personally, which you can use to go out and buy real estate, which I would love you to do, or other assets, and the other 250 grand grows tax free. That's probably the. The most basic general advice I would give. After that, I Need to have more facts in your personal life, but I would. The bottom line is you do not want to make 500 grand in your personal wallet, period. That's a no brainer. So we got to figure out what percentage of that we want to move into a tax free bucket and then get it there in the most efficient way. And my tax lawyers could help you do that. This is not an infomercial for you to use my tax lawyers. I'm just. You guys are asking hard questions and you need a little extra advice, that's all. Danan, maybe a couple more questions.

Okay. This one comes from Instagram. Can crypto gains offset stock losses? And then they go on to say, I went balls deep and spent 100k on some coins. It went down to 9k and I sold them because they're not going up. I just thought that second part was.

So you want crypto losses to offset. Offset stock gains? Probably because the crypto went down.

Probably, yeah.

Yes. The answer is yes, your crypto losses can offset your stock gains. It's passive. For passive. It's a. It's a type of. I. I won't quote you. Tax law. Yes. You're good. Now this is a good point for me to say this to all of you. If you don't have an accountant that understands crypto taxation, you're going to be at a disadvantage. And I don't even do my own tax return because I'm not doing them every day. So I could, and I've done that, but I. So please use us. Use a professional that's doing crypto taxation tax returns every day on 1040s. Go to March. A Kohler TaxPro network. You can do a discovery call with tax advisors around the country. There's multiple of them here online right now, in the chat, wherever you're at, if you find one that you like and they're cool. Freaking Marit's probably in there. Is Marit in there? No. She usually is. She's awesome. But if any of my tax advisors are in the chat, ask them for their phone number, do an interview, find someone that speaks your language, get a tax advisor, and then talk about this issue. What am I going to do this year? What am I going to do next year? How am I going to do it? And they're going to prepare your tax return and give you ongoing advice. It will. It will make you millions. It really will. You know, I. I want to say this to all of you out there. The crypto community is a fun one and I love it. You guys are scrappy, you hate Wall street, you hate. You hate the man, you hate the deep state. I'm with you. But you also have a little DIY in you, which means do it yourself. That's the area you need to kind of back off. And I'm not saying that to be self serving. Don't hire me, but hire someone. When I go to do a crypto mine, I don't go figure it out myself. I hire someone that freaking knows what a crypto mine does. If I'm going to go do some plumbing, I kind of hire a plumber. I've already made enough mistakes at Home Depot and Lowe's to not go do it myself. So please upgrade. Find a professional that speaks your language and it'll save you so much and it'll help you spend your time making more money. Anyway, last two questions, Dana.

All right, so let's see here. Max is answering all of them before you get.

Max, what the hell you got to give me? Throw me a bone, Max.

I got a couple, though, for you. So, one From Wiley on YouTube. He says, Can a Canadian citizen who expands their business into the US and holds a E2 visa open a Roth IRA for crypto holdings?

I don't know. Damn it, Max, answer that one. There's a reason why Max didn't answer that one. Canadians. Because of NAFTA and the treaty between the US And Canada. It is a disaster. It is tough. Hire an attorney, tax lawyer, tax advisor that understands Canadian tax law and can help you out in the US I don't know the answer to that question. Next.

And then this one comes from YouTube as well. If I were to create my LLC, would I be taxed when I move my crypto to the wallet of the llc?

First of all, I don't know why you're creating an llc. Well, sorry. Sorry. The only. You know what's crazy? I would. We do LLCs every day. You would think I would want to sell you an llc. But what is so funny is people are like, I need to create an LLC and put my crypto in it. Why? It's not going to save you taxes. Why are you doing it? Well, I need asset protection. I have a teenage driver. Okay. Are you setting up a COPE LLC in one of the three states I recommend? Well, no, I just thought I needed an llc. Did you meet with a tax lawyer or lawyer to help give you that advice? No, I was on Discord and someone said it. Maybe that's not the place. You should get legal advice. I'm not trying to be rude. I really am not. I'm trying to just wake you up here. If, if. Let's just decide that you need an LLC for asset protection or if you're creating ordinary income. Let's just decide. I'm just gonna assume you need an llc. I don't even know if you need one. Everybody doesn't. And now you say I need it. How do I move my crypto from a personal wallet to a new wallet designated to my llc? Can I do that tax free? Yes, you can. So what we do is we set up a new Metamask wallet under a email dedicated to your llc and you do not sell the crypto. It's a wallet to wallet transfer of the crypto. I do that without a sale. I can do that tax free. If you sell the crypto to fiat currency, you pay tax. All right, well, everybody, hopefully you've learned enough here that you can't do this on your own. Please come to the summit. The links down below, the discount codes below. I do it once a year. This is it. I'm not selling this all the time. It's a once a year conference. It's going to be live in Anaheim, California. I'm going to spend Sunday at Disneyland. You want to come? I'll wave to you in Disneyland. I'll share a churro with you. Churro. Churro. Come to Disneyland on Sunday and I'll see you there. If you. If you want to save money and build wealth, come to the conference. It's going to be a blast. I'm here every Thursday next week. I say that. And then next week I'm actually out on Thursday, but I'll be here after Labor Day every Thursday throughout the fall trying to help you build wealth. If you're a tax professional, you're an accountant, enrolled agents or cpa, please go do a demo. My certified tax pro network@markjkohler.com it will change your life. It is absolutely amazing. And I've got certified tax pros in the chat, wherever the hell you are. And I'm sure they will tell you it is worth it. There's nothing like it in the country. And I want to say thank you to all of you to find some time to be here today. For those of you that are watching the recording, thank you. Hopefully the chat and the. There's not any too many haters down there beating me up. I want to say thank you. I love the American dream. It's my passion. I want all of you to find massive success in your life. Don't give up. I'm not going anywhere. Please be a part of our community. And I'll see you in a couple weeks for another live session on building wealth, saving taxes and protecting it. Thanks.