Watch This Video To Pay As Little Crypto Tax As Legally Possible

Hey, have you been staking your cryptocurrency? Have you been lending your cryptocurrency? Have you been gaming and earning some tokens in a video game? People, those are all taxable transactions. If you let me have a couple other questions. Have you traded crypto for another type of currency? Not taking it back to USD, just said, oh I'll take my Ethereum and trade, trade it for Solana. That's a taxable transaction. People, the number one question on the 1040 tax return after your name and address is have you had a crypto transaction earned any crypto or digital currency at all in the prior year? If you lie and check the box? No, that is penalties of perjury. Not good. People, this is a legitimate conversation that we have got to have. Now my name is Mark Kohler, I'm a CPA attorney, best selling author, I own cryptocurrency, I own a crypto mine. I, I love to invest in cryptocurrency but so many people don't understand how it's taxed and how it works. Well here for the next half hour I want to show a couple diagrams and I want to answer any of your questions. Tomorrow, believe it or not, tomorrow I'm doing our annual two day virtual crypto tax summit. And you can get to the website down below in the description, check it out. For 300 bucks you get two days of real tax strategies. If you're an advisor, if you're an accountant, a financial planner, a lawyer in anywhere, as a business advisor you've got to know how cryptocurrency is taxed, how NFTs are taxed, how gaming, mining, staking, defy all of that. What are the options for tax savings? Well we're going to cover that and more for two days straight starting tomorrow morning at 9:00am Pacific. But for the next 20 minutes, half hour, you got me. Please post your questions below. Whether you're on YouTube or Instagram or Twitter or TikTok or whatever platform you're watching me on now live, please post your question down below. If you want to call me out and you think I'm wrong on something, please bring it. I'm always learning new things and new strategies and I have the confidence and the heart to take any new advice if I need to learn something new. All right, so let's go through in a little example here that's kind of fun. Let's, let's talk about Johnny. Let's say Johnny here buys some Ethereum, So he buys Eth. We'll call it Eth for $1,000. All right, that's pretty cool. And let's say he decides to do some staking. So he stakes his ETH and puts it all into a staking program. And, and it pays out 4%. Okay, so that's the plan. And at the end of the process, he's made $40. He made $40 of ETH. Now he's sitting on a total of $1,040. This is taxed. I am now taxed on $40. You're like, Mark, hold it. I didn't trade the ETH. I didn't take it converted to USD. I didn't convert it into any other type of cryptocurrency. I don't care. You earned $40. It's almost like a dividend. If you own stock some people think was crypto, it's different. It's not. When you're staking and you get a reward, it is taxed the day you receive it. Why receive it in stages and over time? Yeah, that's why you need to use coin ledger or some sort of program to figure out what your earnings have been throughout the year. So now, but we're not done yet. I sit on that eth. Okay, now let's say it goes up by 20%. So let's say it increases by 20%. All right, so that's cool. Well how is that taxed? Well, we really need to look at two pieces here. Let's say the thousand dollars that you originally invested is now went up by $200 of USD equivalent and it's now worth $1200. So you have a built in gain of $200. That 40 that also went up by 20%. So it went up by $8 and it's worth 48. Cool. Well now you sell your ETH or you trade it for Bitcoin, or you trade it for Solana. You sell or trade. That is a taxable transaction. Well, how long, we have to ask ourselves, how long did you hold this ETH? And how long did you hold this ETH? You might have bought this over 12 months ago because it paid 4%. Maybe over the year, maybe over the month, I don't know. But now you've only held this $40 six months. Well, this is a long term hold, this is a short term hold. So when you go to sell this, your $200, see that built in gain, that $200 is taxed as long term capital gain, anywhere from 0 to 20%. Okay, that's not bad. The $40, though, you held less than 12 months. So that $40 is taxed as a short term capital gain. Well, guess what? The tax rates are there as high as 37%, your individual rate. So the ETH you received can be taxed differently based on how long you held it. Wow. So you're taxed when you earn the ETH as a reward, and then you are also taxed when you sell or trade the ETH based on the holding period of each type of of ETH when you received it. Wow. Okay, now some of you, that was painful. For some of you, you're geeks like me. That's pretty fun. Wow. That is super interesting, Mark. This is why we have to be aware of this. Because if you check a box on your tax return that says, I didn't have any of that, it's the blockchain. It's public. The IRS can see it too. Well, it's on a phantom wallet. Oh, that's fine. They can track where that cryptocurrency ends up someday. And if it ends up in your account, you're the one that's going to be paying the tax and the penalties. And who knows if you're relying even on your tax return when you earned all that money. You've got to take this seriously. I know some of you are like, well, I'll let my accountant deal with it. Really? You think your accountant understands this? Do you know how many accountants I teach this to? And they're like, holy crap, I don't even want a client with cryptocurrency transactions. Same. You might have to take care of this yourself and ask your accountant if they even understand this. Please get engaged. Learn this. Please come to the Crypto Tax Summit tomorrow. Click on it. If you've got the recordings for three freaking months. You don't have to be there the whole time. You can watch any one of the classes multiple times, any time of the day or night. It's tax deductible if you have a small business too, because you're learning tax strategies. All right, now that's one example of staking. The last thing I want to just throw out there, and this blows people's mind, is that when you're playing a Play to Pay, a Play to Earn video game. So I'll talk about Axie Infinity. And that's a type of game where you can earn a token called slr. I think I got that right. Some of you that play the game all the time, forgive me, but if we'll go. Susie Plays a video game and earns a token. Well, guess what that is taxed as. Let's say she earns a hundred dollars. Well, Mark, I didn't get a 1099. Doesn't matter. You're still taxed on it. Well, they have to Send me a 1099 that's on them. But if they don't send you a 1099, you still have to claim it. So I have a taxable income as a business. When you play a video game, it's earned income. It's like I went and mowed someone lawn. I got paid $100, I played a video game, I earned $100. That goes on a Schedule C on your 1040 as if it's a business. And then you sit on that token and you sit on it and it goes up in value. And then a year from now, you sell or trade the token and you go, well, I can't sell or trade it directly for US Dollars. Yeah, I know, but you're going to trade it for another token, for a different token, go from your Metamask to your Phantom. And then all of a sudden one day you end up with USD. I don't care when you end up with US Dollars. The point is, when you sell and trade that token that you earned playing a video game, you are now going to pay tax on the gain of what the token went up to. So if you got it for $100 and now it's worth $200, you're going to pay tax on that extra $100 when you sell or trade the token. What? Crazy. All right, well, let's hit some questions here and see if we can unpack this a little bit and help any of you. And I think, all right, I want to just. I can see over here on our other monitor. I just want to throw this one out. Had a question here that how do I know which tokenized have to claim. Let me see if I can read this properly. I'm going to try to translate it. When I sell my tokens, how do I know which one is long term or short term when I sell all my tokens at once? Okay, so let me diagram what this means. So it's a great question. So let's say in my wallet, I go out and I buy $100 of let's Do Solana. And I buy it on January 15th. And then I'm like, oh, this is going really well. Okay, now I'm gonna go buy. And you have to say, how much Solana did you buy? So let's say I bought a half of a Solana and then, and I know some of these prices, of course it's constantly changing, but I'm trying to get kind of close. Let's say I go out and then I buy a full Solana for $200 on March 1, and then I go buy two more Solana for $400 on Solana on June 30. And then the price changes and I go buy a 0.5 for $75. And then I buy three of them for $300. Or let's say $400, price goes up. See what's going on here? At the end of the day you have 3, 4, 5, 6, 7 Solana. 7 Sol. You might say, okay, well that's cool. Well, look at the basis is different almost on every one of these. And you take those seven soul and trade it for one eth. Whew. Well. Or no, no, no, no. I want to do this a little differently. You've got seven soul. And then you say, okay, I'm going to go sell four of them and I'm gonna. Their price has gone up and they're now worth 125 each. And so I just made $500. Okay, well, which sold did you sell first? This is the question here that they asked, which sold did I sell first? Did I sell this one, this one, and half of one of those, which would be called lifo. Last in, first out, or did I sell this one, this one? And let's see, how many did I sell? I sold four. So that's one and a half, two, three, and then half of this one. So, so then if I took these, that would be fifo. First in, first, first out. When you go to sell your cryptocurrency, you have to track which ones you're selling. The first ones you bought or the last ones you bought. And what's the basis of these and the basis of these and you sold how many? This is why software comes into play. When you report your crypto transactions, Coin ledger and others. Which other ones do we like? Coinly, Coin ledger. These are the types of programs you need to have at your disposal to track all of your wallets to find out what your gains on your staking, your defi or your capital gains are based on LIFO or fifo, you're going to check boxes as they analyze all of your transactions. I'm sorry, don't hate the player, maybe hate the game. But you got to know the rules. If you're Going to play the game. So again tomorrow, we're going to go through tomorrow and Saturday, two full days of slowing down, breaking down all of these types of transactions so that you can be better equipped to make careful and smart decisions. Do we have any last final questions?

Yeah, we have a question right here. It says if I gift crypto to a friend, do I have to pay taxes on that crypto?

Well, that's a great question, if it's appreciated. The trick is getting it transferred to them with carryover basis. A way to think about this is let's say I own a house. I have a home, it's worth $200,000. I bought it for 100,000. If I gift it to someone, they take my carryover basis. So I bought it for 100, it's worth 200 and I gift them the house. Now I might have gift tax issues because I gave him 100 grand this year. You can only give away about $18,000 or so before there's gift tax. But let's say I gift them that house. When they go sell it, they'll pay tax. Next example, let's say I have stock. Let's say I bought Microsoft stock and I bought it for $5,000 and now it's worth 10 and I transfer someone my stock. Now the problem is, is if I sell the stock before I transfer it to them, I'm going to pay tax. So I have to be able to transfer them that stock and then they get carryover basis of the 5,000. The same, the same thing with crypto. Whatever I bought it for is what the person receives it as. That's basis. So they, they have, they get carryover basis. Now again, I could have gift tax problems if I try to gift more than 18,000 and change this year. I've got to be careful with that. But you can gift it and not pay tax. But if you sell it before you gift it, you're paying tax. So any other final questions here? All right. Well folks, I know this is a deep topic. It's very challenging, it's tough, and I want to just encourage you not to give up. I love the crypto industry. I love everything about it. There's so much opportunity here, but we have to know the rules of the game. So please check it out down below. I'll be here for two full days with a team of 10 different instructors. Incredible topics, fully recorded, PowerPoints, everything. You're going to love it. Check it out down below. It starts tomorrow at 9aM cryptotaxummit.com.