Tax Lawyer Explains What the White House Crypto Summit Means for You

Foreign. Welcome, everybody. It's another exciting week in the area of tax policy. And today we're going to be talking about crypto taxation. Tomorrow, President Trump is sponsoring a crypto summit. We'll talk more about that here in a moment and watch a clip of what that's going to be about. But first, let's talk about the news and what's been happening with tax policy, if you caught it. President Trump spoke to a joint session of Congress on the 4th just two, three days ago, it was Tuesday night and shared with us a little glimpse of again, another piece of his tax policy plan. Not only no tax on Social Security, no tax on tips or overtime, he said he wants 100% expensing retroactive to January 20, 2025. Now a lot of people are like 100% expensing. What's he talking about? Well, in the Tax Cuts and Jobs act, we had what was called bonus depreciation to 100%. So if you were a business owner and you went out and bought equipment, or you could even been in real estate and cost segregating a piece of property, there's a lot of vehicle in your business. Bonus depreciation was a way to take massive write offs up front and it stimulated the economy. People were going to expand their business, buy more equipment. That feature was in the Tax Cuts and Jobs Act. Now this year we're down to a 40% bonus depreciation. Then you go to what's called 179. But anyway, the point is, Donald Trump, we know, wanted to go to 100% and we should be seeing that. And the new tax policy, the new Congress is working on it right now. But then he wanted to go back in time, which is very rare with a tax bill, where it goes back in time to the beginning of the year. Usually it's effective at the end of the year or maybe if we're lucky when they sign it. But this is crazy. If we do get bonus depreciation back to the 1st of 2025, this will be a huge shot in the arm for you business owners. So we can talk about that. I'm going to do Q and A here in a moment. But first we got to talk about crypto taxation. It is the topic du jour. Crypto's been spiking down, up, down, up. Prices are up. But let's see here. Yahoo Finance did a report on what to expect tomorrow at the crypto summit. Let's see what they've got to say and what Trump's planning.

Executives from the Biggest crypto firms are set to gather in Washington at the White House on Friday for the first ever crypto summit hosted by President Donald Trump. The expectation is for a formal announcement of a U.S. strategic cryptocurrency reserve. Sachs tweeted on Sunday, quote, president Trump has announced a crypto strategic reserve consisting of bitcoin and other top cryptocurrencies. The President's said the reserve would include more than just bitcoin listing Ethereum, Ripple, Solana and Cardano.

Well, this is going to be exciting. And down here in the ticker tape you can see some of the people that are going to be attending. This is going to be a big deal for another boost shot in the arm, as you might say for the crypto industry to legitimize it, create more of a mainstream use with crypto. We're excited to see that, which means there could be another run in prices this weekend, so we'll see how that plays out. But no matter what, crypto is here to stay. Many of you are in have cryptocurrency in your portfolio. You may even have NFTs, do some crypto mining playing in the metaverse. Who knows what role your finance plays in the crypto industry. Well, I want to cover some basics on what to expect with crypto taxation. Now we have a crypto tax summit. Our fifth semiannual crypto tax summit will be coming up this fall. There should be links down in the descriptions for that. But we love to cover this issue because there's a lot of strategy that you can use to even have tax free crypto taxation. If you do it right. Crypto trading crypto holds. Alright, let's hit a few of these points. Number one, there's this weird myth and I in the crypto industry and I apologize being the bearer of bad news, that crypto is not taxed or it's got a special tax rate. There's a crypto tax rate. No there's not. Crypto is taxed like any other asset. If you make money, earn money in crypto, you are taxed. So first of all there's no special tax rate for crypto. A lot of other people think, well if I just buy and sell crypto inside my wallet or in my exchange, I don't pay tax until I convert it back to USD. No, you're taxed whenever you make money. If I sell my soul, buy some xrp, sell my xrp, buy bitcoin, sell my bitcoin, buy Ethereum. Whatever route I take, whenever I sell or trade crypto and buy additional cryptocurrency. I pay tax on any gain. I also get to harvest any losses if it went down in price. That's how it works. Now, if some of you think, Mark, the IRS isn't gonna know it's in the ether, you know it's crypto. No, it's called the public blockchain. They have task force for this. The IRS is pursuing this. And may I show you? Can we go to my screen here? This is your tax return from last year. Right here at the top. Right here. I point this in red. If at any. Did, at Any time in 2025, did you receive as a reward payment or property or services, any sort of crypto or sell, exchange or otherwise dispose of a digital asset or financial interest in a digital asset, check yes or no. Now, if you say, no, I didn't have any crypto at all, I didn't do anything at all, I can answer no. And you're maybe lying or fibbing. You got your fingers crossed behind your back. That is perjury. You've signed your tax return. We're talking jail time. Not good. So you have to answer that honestly. Now, we could go in depth on that question of what it means, but let me just say this, and we'll take some Q and A here in a moment. If you just bought Bitcoin in 2023, held it all through 2024, didn't do anything, didn't sell any crypto, didn't buy any crypto, didn't receive any staking, didn't receive any rewards, anything you can check. No, because you didn't receive any new money, you didn't sell crypto, nothing. Read that question. But if you sold your Bitcoin and bought Ethereum, you had a transaction. If you were staking and made money, you have a transaction, you have to check. Yes. Now, there's software. How you report that? I know it can be complex. I've got lots of material on this. I talk about it more in depth than in other spaces. But you've got to make sure you have a good tax advisor that can use the right software to download your transactions from the blockchain and all of the exchanges and even cold storage, wherever it's at, any sort of wallet defi, you've got to get the right software to pull all those transactions off the blockchain and report, or you could go to jail. And the penalties and the IRS interest, they don't say, oh, you didn't know. Oh, ignorance is not defense when it comes to this. So people, you've got to take it seriously. All right? Now when you own crypto, there's really two or three ways you make money and how it's taxed. If you buy cryptocurrency and hold it a year or longer, just like stock, just like real estate, and I hold it a year, then I get special capital gain treatment, max gain 20% and then I pay state. Okay, that's cool, that's awesome. If you hold it a year, it's called long term capital gain. If you sell it before a year, it's short term capital gain. There is no special tax rate for short term capital gain. It's whatever your bracket is. So if you got a W2 day job and you're in a 22% tax bracket, 6% state, for a total of 28%. Whatever. And you buy and sell crypto, you're going to pay tax at that combined rate because it's just whatever your ordinary income rate is. That's what short term capital gains are. So when you are a trader of cryptocurrency, you're an investor, there's no trader status. You can't be. And you don't want to go try to claim trader status either. By the way, anybody that tries to sell you an LLC or become a trader, it is a rabbit hole. You do not want to go down. But buying and selling crypto, and to qualify as a trader, the rules hold a conversation. Buying and selling crypto as a trader is not a business. You can't write off your cell phone, you can't write off your home office. You are an investor. Especially if you have a day job. Over here it has to be a full time job as a trader in a significant number of transactions. And then once you make that election, it's irrevocable. Again, a long story of domino effect that you want to watch out for. So anybody trying to sell you to be a trader to get better write offs, watch out, get a second or third opinion. Well, Mark, I got staking rewards. Okay, well, I didn't sell him yet. I didn't trade them. Doesn't matter. It's like getting a dividend for owning Tesla stock. I got a dividend, I pay tax on that. So if you have cryptocurrency and get staking rewards, you pay tax on them as you get them and that's your basis. If that staking reward never goes up in value, you'll never pay tax again. But once you have that reward, it goes up in value. You'll pay tax on that piece too, as capital gain. So rewards are very, very serious. You've got to make sure you're dealing with that. Now, I would think it's okay to go under the presumption that crypto is taxed like stock. I can live with that, except for one special rule. It's called wash sales. If I own Apple stock and it goes down in value and I'm like, ooh, I want to harvest that loss, I'll sell it real quick, take a loss, and I'll just rebuy the Apple stock. And then when it goes up, that's okay, I harvest a loss in the code. You can't do that without a waiting period. I can't sell it, take a loss, and then rebuy my stock. But with crypto, there's no wait. You can sell crypto whenever it's at a loss, take the loss and ride the gain again. If it goes down and you missed it, you didn't sell it at the high, you got another loss, you can sell it and take the loss. So that wash sale rule does not apply. But other than that, it's the same story, guys. There is no special tax, no special rule to get you out of that. Now, what are some strategies here, I want to share that are super important? You can buy crypto In a Roth IRA, a Roth 401K, you'll never pay tax again. I love buying cryptocurrency in a retirement account like that. And you can form a retirement account, a Roth IRA at any age, at any income level right now. And if you go to our website directra.com you can open up a crypto Roth IRA right now, tonight, and by crypto as soon as it's funded. It's a very, very quick process. You can even do a Roth 401K. If you have a small business, set up a solo 401k and invest in crypto with your Roth. I love this strategy because you can buy, sell, trade, hold, and there's no tax along the way. Super powerful. A second strategy is a charitable remainder unit trust where if you've got highly appreciated crypto, you've never sold it. You bought Bitcoin when it was ten grand and now it's 8x9x. You can sell crypto with a huge capital gain, tax free, and it drops into a trust, a charitable remainder unit trust. You can keep investing it and you're going to get distributions every quarter for the rest of your life. You'll pay tax when you get those distributions. But you got a bigger pie that's going to pay those distributions out and you can keep investing it and growing it up. It's revalued every year. That affects the amount of the distribution. I've got YouTube videos on that as well. So if you can invest inside a retirement account, great. If you can't, the charitable remainder unit trust would be your next choice. The last one is offsetting gains with another strategy using real estate, small business investments and creating depreciation losses to wipe out your gains when you sell your crypto. And then I would recommend getting them in Roth positions as fast as you can before you reinvest. So those are the issues I want to get on the table. I'll talk about NFTs if any of you want to hit that. I want to take your questions, talk about the current news, the current situation with crypto. You've got to be on your game. That's an exciting time to be an investor in cryptocurrency and I love it. So questions here. What do we have, Dana, anything good?

Well, we have a lot of speculating about what's going to happen tomorrow and I'd love to hear your thoughts. Some people are saying that they're hoping that there is no capital gain news tomorrow. What do you think about that?

There is going to be. Let me tell you this, I don't even need my crystal ball here. I can pull it out for you. I've got a real crystal ball here, but I'll leave that alone. There will be no decision discussion of any tax. But they might discuss it. But the only people that can make a rule about capital gains for crypto taxes is Congress and they're there in the middle of it. The House and the Senate committees are going through the blueprint for the new tax legislation. The House is going to have their version, the Senate's going to have their version. And then they're going to bring it together for a reconciliation bill and put it toward for the President to sign. That's going to be another two to three month process, I think. And they're the only ones that's going to say there's no capital gains on cryptocurrency.

Why?

Why is crypto so special? If I want no capital gains on real estate, sign me up. Why the hell does crypto get no capital gains? I wish I could tell you it was even a possibility. It is not. Get over it. Whoever keeps saying we shouldn't have it, yeah, we shouldn't, but we do. And it's not going to happen. Sorry. You want to do some strategy? Start buying crypto in your fricking Roth IRA or your Roth 401K. Please, right now. Stop the insanity. Open up a custodial account with your Roth IRA in an exchange to buy crypto. You'll never pay tax again in there. It's wonderful. All right, next question. Sorry to be the bearer of bad news.

Up next, we have a question about the CRUT saying, is it better to set up a crut based on an individual's life or a married couple's life for married couple in their mid-30s?

Well, a married couple lives longer because you're waiting for the second to die. So, guys, life expectancy is less for us than the ladies. So when you do a crut, here's what's going on. The IRS is saying, okay, you got this million dollars. You bought crypto for 100 grand. Now it's worth a million. You don't want to pay tax, fine, we'll put it in a crut, Charitable Remainder Unit trust. And this trust is going to grow and it's going to kick out money for the rest of your life. Well, it has to survive with at least a 10% value when you die, which will go to charity. So it's going to. And then when you die, it's supposed to be perfectly timed. Whatever's left goes to charity. So there's tables at the IRS that say, how much does Mark get for the rest of his life to make sure there's 10% left in that trust bucket when he dies? So they look at your gender, male or female. Women live longer. And what's your age? Okay, so Mark, your ex Y. I'm not going to tell you my age. Anyway, so Mark's, I'll say Mark's over 50. So Mark's over 50. So he's going to die sooner than the 30 year olds asking this question. So that means he can take more money out because he's going to die sooner. So he gets to take more money out. And we're going to chime it based on his life expectancy in the tables at the irs. That's how the CRUT works for me. I might get an 11% payout. 10 or 11% because it can pay out that much. And if it goes up in value, great. I could even, you know, it's great. But it's going to have to expire when I expire. If you're 30 years old and you do it on both of your lives, oh, my gosh. Now that means the two of you could live 40 more years, 50 more years. So that trust can only give out so much because it's got to survive. As long as you survive. Under that model, it doesn't mean a crutch bad. You can continue to invest it and your distribution is based on the value every year, but you just have to go in with your eyes wide open. And by the way, it's completely asset protected. No one can sue you and touch it. So that's pretty cool, too. So if you're in your 30s, I'm more of the type of, let's take half of your gains, throw in a crt, take the other half, use it, reinvest it, use your retirement accounts and let's get creative with some real estate. Let's diversify your portfolio. So I probably wouldn't be as keen at putting all of it in a crt. Next question.

Next question is, what is the Roth IRA website? Or I'm assuming, how do you form an ira? Oh, you bet, Rod.

If you can get to direct@ira.com we will help you get started right away with your retirement account. In fact, I think I've got a little website here and it's going to be directra.com and I don't have a QR code with any specials here. Sorry about that. So, directed ira.com. directed ira.com and you set up a crypto Roth. Or you can even set up the 401k there, too.

Next question, when I open a Roth IRA, where are my cryptos stored exactly?

Well, you have two different options when you do crypto investing with an Iraq. The first, down and dirty fast option. And I know you're not going to like this because they're asking, where's your crypto stored? Is our fast, easy app. Well, respected partner is Gemini. I'll give you option two here in a minute. But option one is you open up your Roth IRA and that money is in a partnership given to Gemini as a custodian. Or there's an exchange and you have a Gemini app on your phone that's immediately trading your Roth ira. That's the fastest account to set up, easiest to manage, it's clean. The drawback is two things. One, it's in an exchange, and I know some of you do not like the exchange. You used Voyager in the past, maybe you got burned, I get it. But first problem is, for some of you, it's on an exchange. Number two is you can only trade what coins or tokens are on the Gemini platform. For some of you that want to do more alt investing, unique coins and Gemini doesn't have them, you're going to be frustrated. But other than that, it's cheap, it's affordable, it's accessible, it's fast, it's easy. Option two is we set up a regular Roth ira. Not a crypto Roth in partnership with Gemini, but a regular Roth ira. We do this every day. We, we set up hundreds of these every month. Is a Roth IRA that forms an llc and that LLC gets its own bank account of which you're the manager of it. And then you set up an institutional wallet. We're using Coinbase and Kraken right now. They're very generally efficient. They don't really want these little one off LLCs. So you've got to be patient in the process. But you're going to get this LLC set up, owned by your Roth IRA and then open up a wallet in the name of your llc. But it has to be an institutional wallet. Can't be in your name because it's not yours, it's your Roth IRAs. So it takes a couple extra steps. But once you have that LLC now you can hold the keys. You could invest in DEFI or other altcoins. So you want to make sure that you, that you have that type of LLC structure with a Roth ira. Now I just want to mention one last thing on NFTs and then we'll call it a day. NFTs. If you create NFTs, NFTs, it's like a business, so you get to take write offs. As a creator of NFTs. Think of an NFT in comic books. It's a digital representation of a comic book that's been turned into an nft. If you're creating the art or the comic book, that's a business, you get great write offs. But if you're trading NFTs, I'm gonna buy that NFT and sell it. Then you're gonna pay an NFT tax and that is a strict tax of 28% whether it's short term or long term. So you gotta be careful if you're trading collectibles, which would be an NFT, or if you're creating NFTs, trading and creating two different things. Well, everybody get into your wallet, double check what you've got. Get ready for the crypto summit tomorrow held by President Donald Trump. We're excited to hear what happens and thank you so much for listening this week. Next week I'll give you some more news and updates on tax policy in America and strategies that can help you build and protect wealth. Thanks so much.