Crypto’s Wild Week/ Proposed IRS Reporting Rules: Time to Move to Solo 401k/IRA LLC?

Harvard Law Attorney George Blower reviews the recent US Treasury proposal to increase IRS reporting of cryptocurrency transactions.

PROPOSAL: https://home.treasury.gov/system/files/136/The-American-Families-Plan-Tax-Compliance-Agenda.pdf

VIDEO SLIDES: https://www.mysolo401k.net/wp-content/uploads/2021/05/Crypto-Wild-Week-IRS-reporting-2.pdf

Proposed IRS Cryptocurrency
Reporting Rules

• May 2021: US Treasury proposes increased IRS reporting requirement for cryptocurrency transactions
  • Currently, crypto exchanges must issue 1099-K if more than 200 transactions & $20k in gross proceeds
• Regulatory Context: Continues increased regulatory focus (e.g. enforcement priority, 1040 reporting)
• Who would be required to report?
  • Cryptocurrency/cryptoasset exchange accounts & payment service accounts that accept cryptocurrencies
    • Note: The language of the proposal does not limit the proposed reporting requirement to transactions greater than $10,000
  • Businesses that receive cryptoassets with a fair market value of more than $10,000
    • Compare with the current requirement to report cash transactions of $10k and greater (Form 8300)
• Regulatory Objectives: Detect Criminal Activity & Tax Collection

Advantages of Crypto Investing
in Your Retirement Account

• Tax Shelter/Tax-deferred
  • Potentially tax-free via Roth 401k/Roth IRA LLC ØSimplify Taxes
• Since cryptocurrency is considered personal property for tax purposes, trading cryptocurrency or using it to purchase goods/services is a transaction subject to capital gains:
  • Transaction history including fair market value throughout to determine cost basis, etc.
  • Records to determine the length of time owned to determine if subject to short-term or long-term capital gains
  • Note: Many exchanges don’t provide this information
• Practical Impact: Increased Reporting will increase the importance of opening the crypto exchange account under the EIN of the Solo 401k/IRA LLC

Advantages of Crypto Investing
in IRA LLC vs IRA

• Access to a broader range of cryptocurrency exchanges
• Ability to store cryptocurrency in a physical hardware wallet
• Private Transactions
• Invest in other alternative investments
  • Checkbook control

Facebook

Google

Twitter

Linkedin

Diggit

Email