CRYPTO - PPLI and EWP - Episode 2 - The EWP Stories Video Series - blog

Cryptocurrency, Private Placement Life Insurance and Expanded Worldwide Planning

The EWP Stories Video Series

Video 2

Introduction

Welcome. In our first video of our series on crypto currencies we introduced you to our firm EWP Financial. In this video we continue with this topic, but first an important point: if you are new to asset structuring, you are probably thinking, well, EWP Financial seems like a good firm with plenty of experience, but what is EWP Financial going to do for my crypto currency? Why should I put my crypto into this type of asset structure?

The answer is simple. In a properly designed EWP asset structure, once your crypto is inside the structure, you will no longer pay any taxes on your holdings, and your reporting requirements will become minimal. This is very powerful. Below are excerpts from an excellent recent article by Robert W. Wood from Cointelegraph which discusses crypto tax reporting requirements. The author’s Six Crypto Tax Myths are listed, and to receive his answers please go to the full article.

What do you have to give up to achieve this result? The answer is very little? A small change in how your holdings are titled, and some changes to give you a more diversified portfolio.

What fees will I have to pay to achieve this outstanding result? The answer is very minimal fees. Usually about 1% of your crypto holdings annually.

Now more valuable information on EWP Financial, and how you can become one of our very satisfied clients in wherever country you might reside. We continue with our theme of financial architecture.

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The major tax myths about cryptocurrency debunked

By Robert W. Wood

More crypto tax enforcement is coming, and many taxpayers are complying going forward, and amending prior returns if they have something to clean up.

Crypto and taxes may not be a match made in heaven, but taxes seem inevitable, and the United States Internal Revenue Service (IRS) has made it clear it is going after people who don’t report. With IRS summonses to Coinbase, Kraken, Circle and Poloniex, plus other enforcement efforts, the IRS is on the hunt. The IRS sent 10,000 letters in different versions asking for compliance, but all were nudges to encourage taxpayers to be compliant.

The IRS hunt for crypto has often been compared to the IRS hunt for foreign accounts more than a decade ago. Unfortunately, it is not clear if there will ever be a crypto amnesty program emulating the offshore voluntary disclosure programs the IRS formulated for offshore accounts.

The IRS made its first big announcement about crypto in Notice 2014-21, classifying it as property. That has big tax consequences, accentuated by wild price swings. Selling crypto can trigger gain or loss and be taxable. But even buying something with crypto can trigger taxes. Paying employees or contractors does too. Even paying taxes in crypto can trigger more taxes.

We are already seeing crypto audits by the IRS, and by some states (notably California’s Franchise Tax Board), and more are sure to follow. At least now, there are tracking and tax return preparation alternatives that can make the process easier than it was in the early days. Everyone is trying to minimize taxable crypto gains and to defer taxes where legally possible.

Still, it is easy to get confused about the tax treatment and take tax positions that may be hard to defend if you are caught. With that in mind, here are some things I’ve heard, that I’ll call crypto tax myths.

Myth 1

You can’t owe any tax on cryptocurrency transactions unless you receive an IRS Form 1099. If you did not receive a Form 1099, you can check the box on your tax return that says that you did not have any transactions with cryptocurrency.

Myth 2

If you hold your crypto through a private wallet instead of an exchange, you don’t need to report the crypto on your tax returns.

Myth 3

If you hold your crypto through a trust, LLC or other entity, then you do not owe tax on the crypto transactions and do not have to report. Besides (the myth continues), income generated through LLCs is tax-free.

Myth 4

If I structure the sale of my crypto as a loan (or some other non-sale transaction), I don’t have to report the proceeds.

Myth 5

A crypto exchange is a type of trust since you can’t unilaterally change the policies of the exchange. So you do not own the crypto in your account for tax purposes and do not have to report transactions through an exchange.

Myth 6

Congress’s amendment to Section 1031 of the tax code that limits like-kind exchanges to real property doesn’t make crypto-to-crypto exchanges taxable.

Takeaways

Every taxpayer is entitled to plan their affairs and transactions to try to minimize taxes. But they should be wary of quick fixes and theories that sound too good to be true. The IRS appears to believe that many crypto taxpayers are not complying with the tax law, and being careful in the future and doing some clean-up for the past is worth considering. Be careful out there.

This article is for general information purposes and is not intended to be and should not be taken as legal advice.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Robert W. Wood is a tax lawyer representing clients worldwide from the office of Wood LLP in San Francisco, where he is a managing partner. He is the author of numerous tax books and frequently writes about taxes for Forbes, Tax Notes and other publications.

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Conclusion

In our next video, we answer three important questions that are most sophisticated clients ask us:

Is it legal?

Can they steal my money?

Will I be audited?

The answers to these questions will surprise you, so stay tuned, and thanks for watching.

If you found this video useful, please give us a like, and click on the subscribe button below. We look forward to connecting with you in Episode 3 of our crypto series

To learn how the wealthiest families in the world conduct their financial affairs, please call +1 530 692 1007, or email us at info@expandedworldwideplanning.com.

At your convenience, we can arrange a call to discuss how our unique blueprint can vastly enhance your asset structure.

Disclaimer

The opinions expressed in this video are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual on any financial structure, investment, or insurance product.