 Welcome everybody to digital asset news today is a little bit something different but timely and I think quite important and Not everybody's favorite, but it's taxes And I had to bring on two experts in the field because we're getting close to that time ladies and gentlemen whether you'd be a corporation or just the average retail investor taxes suck and We need this much information to can so I invited back on the show David Kemmer co-founder of coin ledger and during bass from Base law firm gentlemen welcome back to the show Thanks for having us back Rob We're always happy to answer as much tax questions as we can now that we got just like a month left before The US deadline here April 18th. I think it is. All right. See 18th perfect Jordan How's things going over there in the law firm? Things are going well, you know, it's similar to what David said. We got a month left to the deadline so for our accounting clients and tax clients that's getting Close to the to the wire and on the law firm side, it's business as usual But I you know wish want to make sure that everyone knows that even if they're not ready to file their return on the 18th They could always file an extension. They don't have to stress out and they don't have to have that Extra anxiety as long as they may you know make that payment that goes along with the extension that they would file Which I'm sure we'll get some questions on that today extensions exactly so Fantastic everything's looking pretty good. Now if you guys remember We had the exact same lineup This was about gosh was like about a month ago or so I linked this original video in the description So if we don't cover something here, we went pretty in-depth over there But as time goes on we just want to make sure everybody's all the bases are covered I know we want to hear about the fantastic world that is crypto But it's not how much you make it is how much you keep and I'm gonna tell you right now Taxes even though no one wants to pay them. They're quite important and then you can find the information Jordan is law firm. I linked his description or his the website itself in the description and not only is Jordan a lawyer is also a certified public accountant or a CPA and he has his own suite a boutique CPA firm to specialize in digital Assets since 2018 and of course David with coin ledger, which is the one that I use before we get going I just want to remind everybody that if you're looking for some answers and they're not answered here If you go to coin ledger.io link in the description But if you just go on to learn crypto taxes 101 you can take a look at all the difference. I mean Tax information based on country. So it's not just the USA Australia Canada UK, India, Ireland, Germany New Zealand Japan, Denmark and South Africa David real quick. How does that work for for the software itself? Do you guys spend make sure everything is up to snuff for all these different? districts countries or is it just Basing information or can it be integrated depending on your your location? Yeah, so good question So one that's all like content educational content So you can just go learn how to crypto taxes work in my country on the software side All of our settings are configurable in coin ledger and we map them automatically to like, you know The tax year for that specific country, you know, the US it's the tax year is the calendar year But for other countries like the UK or Australia their tax year is a little different. So that's automatically configured Yeah, other rules are also automatically configured But then depending on your country you can go in and change what your settings need to be So you can still use coin ledger to crunch your gains losses and income in your home fiat currency So yes, all that is done on the coin ledger side. So I didn't I didn't wasn't aware Was it automatic or is it like is it all IP addresses? derivatives So exactly if you come from a different country, you will see in our onboarding flow You were detecting your country upon sign up and so obviously you can change that but it will detect where you're signing up from Well, all right, so that's it a lot of good information you can check it out Of course depending on the country that you're in it plays it all out pretty pretty nicely Let's just get into the questions. I think that's what people are here for right So here's the first one. Dr. Payne Jordan Any issues with holding crypto and a hardware wallet stored in a bank vault owned and In the name of a trust which is an asset of a self-directed Roth IRA Oh, we got some we got a lot of activity going on there So high level There isn't an issue where you custody your assets within that self-directed Roth IRA Like there could be many different layers of protection as this person Dr. Payne has gone through with a cold storage wallet stored in some sort of vault That's owned in the name of a trust but it's an asset of a self-directed rock Roth IRA the key on the Transactions of that IRA account is making sure that everything is up to code, right? So you have transactions within that self-directed IRA. You don't have any Distributions to this trust you don't have any distributions to yourself personally You just continue to transact in there But if you're holding that crypto in a hardware wallet and that's stored away You're likely not able to do anything with inside of that IRA account So that would kind of be moved right the key with the iris that can bust those iris setups where people Are not really certain that they did this is obviously Moving funds from maybe that that ira account you might have like an LLC that you set up for self-custodian that ira account And then maybe you move some of those funds from that crypto exchange Maybe you got a cracking custodial, you know corporate account that is in the name of the LLC And then you move that to like a personal account or a personal wallet that looks like a distribution So that's where there could be some issues there Alternatively, we don't necessarily know if you're not just buying and holding like spot BTC and putting that away in cold storage forever We don't necessarily know certain types of transactions that you do within that IRA if that busts the structure for examples IRA accounts cannot invest in collectibles are NFTs collectibles We don't know but if they are then that could potentially bust up the IRA structure in that tax deferral structure is gone So there's no issue where you're custodian the asset Realistically, I mean putting it in a bank vault is similar to putting it in in a you know somewhere at home In storage or in a safe or in something like that It's the underlying transactions that will maybe create issues within that self-directed IRA So just have to be aware of that get proper guidance on that But I mean security for any is you know hardware wallet is important whether that's storing your keys The key the C phrase in different places whether that's actually storing the device somewhere That's just good operational security. So that's not gonna have an issue really necessarily with the underlying structure of the IRA Hey, Jordan, can you trade with it because let's let's say it's set up like this way Could you trade within that IRA and have no problems? Yeah, yeah, you can trade you have to obviously you can utilize Let's say you have that that corporate account with Like I'm using my example just to crack in for example now You're trading on a centralized exchange super straightforward super easy plug in the data into coin ledger run a report You can see that profitability There's no gain or loss that you're reported but you might have to file a return for that You know separate entity that you created that's custodying the IRA maybe if you're doing a lot of on-chain stuff You still want to probably aggregate the data because most custodians you need to report what that fair market value is at It's at the end of the year right and that's just something that goes for tax purposes It's not that it's triggering tax. You're not triggering a liability by trading inside of that Depending on the type of activity that you're engaging in so there can be like I was saying there can be some sort of Transactions that can bust that tax deferred structure But most of the time buying Bitcoin here selling it for Cardano selling that for Ethereum selling that for whatever is available on those centralized exchanges super straightforward once you start getting the on-chain and start maybe LP or single side spaking Maybe there's a little bit of nuance there and then lastly NFTs within an IRA account that could be something that is not kosher right that could be something that's against those Those rules from the internal revenue code that specifically state you cannot directly invest in collectibles through an IRA account right Right. So there it is now if you don't want to deal with all that stuff. There was an email I just got this morning looks like I trust capital Roth IRA, which is the one that I use It looks like you guys I trust and coin lenger has partnered up David. What's going on here? Yeah, we've been working with the team there, you know complimentary services, right? They're both very tax conscious customers, right? And so, you know, we worked with it. I trust for the past six months trying to you know structure out You know kind of co-marketing relationship that works a lot for both sides, you know Our customers ask us all the time How can I save money on taxes holding and investing through in IRA account is a good way to do that And then on I trust side, you know, they have a whole bunch of customers who yes Hold crypto in an IRA account, but they also have activity outside of that account that a platform like coin ledger is going to help You know their customer base quickly report and calculate their taxes And so it was really good partnership. And yeah, those communications went out this morning. So it's fun to get that live Yeah, that is amazing. This guy good good partnerships So as a reminder, yes when you do this with I trust capital They talk about not your keys at your crypto They are taking over that they have the custody and that is the truth However, I do that because I don't put everything that I possibly have in there and I have it in a Roth IRA Now these are the things that you have to weigh amongst yourselves Whatever you want to do if you want to go a separate route and go all through those and LLC and C Corpus You can do those things or those other options for you It's all what you want to do and it really just comes down to tax deferment me myself and I gentlemen I have most of it's on a nano ledger right now. And of course, I'm gonna pay a bunch of taxes But that's just how it is moving forward. I have a small amount in the Roth IRA I think it's it's enough a little bit of maybe some people might say it's a gamble So is using an essential as exchange. So that's all we have right here now We got looks like we got a lot more questions coming in Crypto Esquire says what will be the most missed part of a crypto tax filing? I want to say like like this. I think one of the most missed parts I think is gonna be staking and staking rewards. Anybody want to take that question because to me I'm like, there's no real proper clear-cut guidance on this one Jordan David whoever wants to start with that one or if there's anything else I could start on that I mean most missed part I would say in my opinion what that questions asking is What do people forget or that's not on a return right? So what the most? Missed part would be two things one Yeah, I think staking or some similar sort of positioning where people are saying hey, yeah, this shouldn't be tax I don't have to pay tax on this until I actually sell like how some people believe that's how staking rewards should be You know treated like if you were to mine actual minerals or mine something from the earth You don't have income then you have income when you sell it Or if you were to grow apples and then you pick the apple you take it to the farmer's market You don't have income you take it you have income so that's the argument, right? We don't really have any guidance that would on the contrary, but Generally speaking staking is not the same mechanism, right as as mining But you could infer that it would be income given that that is income and specifically Stated as income upon receipt and there's been other things going around Pass around in Congress to try to make staking rewards not taxed until sold So you could also imply that maybe that's how the IRS is positioning themselves now The Jarrett case which everyone knows about That didn't do anything really there was no precedent set because it was dismissed for lack of standing because the person Already the Jarrett's already received the relief. They were seeking which was the refund They got the refund and I was smart because the iris didn't want to set precedent there or have a judge or a court set precedent there So that was good on the government for the government, right? But that could be something that's missed for sure just because it's kind of a hey Do I need to pay this do I not and I don't have specific guidance but What I would say is the most missed part of a tax filing isn't something that's Missed at all. It's something that's maybe not input in coin ledger like a wallet or an exchange And now you're missing. I know this sounds silly, but you're missing cost basis So the most missed part of a tax return is actually your basis because you're usually typically overstating income when you're not doing this activity correctly inside of somewhere like coin ledger So the most missed part is actually not tracking all of your wall It's not tracking all your history because what that's going to do is it's going to create errors in the software Not on the software's part and not necessarily on the user's part. It's just data is missing. You can't validate where this stuff came from So I would say the most missed part of a tax with a tax filing is your basis because You're not maybe having all the information you need or maybe there was some user error inside of a software like coin ledger other than that people miss things all the time on returns whether it's traditional taxes or crypto taxes, so Those are things that can be fixed with an amendment or if it's immaterial. Maybe it's not too big of a deal I would say though that Make maybe making sure that you have all of those transactions the entire transaction history Will minimize that missing cost basis Gotcha, perfect. And then uh, david same question But before we before you jump in just tell us real quick again as a refresher for everybody I give this question a lot What is a taxable event in crypto and then then go with the the most missed part? Yeah, um, so first taxable event number one anytime you dispose of a capital asset like cryptocurrency Right, you're realizing a capital gain or a capital loss depending on how the price of the asset has fluctuated since you Originally purchased it simple example. If I bought a hundred dollars of bitcoin I sold it when it was worth a hundred and fifty dollars that Fifty dollar gain is a capital gain and I'll pay some percentage of tax on that But also, you know, this some some people miss if you're earning staking rewards Getting paid in crypto that is just pure income at the fair market value when you receive it So that is also, you know a taxable event is like earning income in crypto Whether it's through staking mining referral rewards. Maybe again, you're getting paid in crypto Things that aren't taxable event is like transferring crypto from one wallet that you possess to another You know, if you have an exchange exchange base and then you transfer it to your cold wallet That's not a taxable event because you dispose of the asset. You're just you know changing where it's housed essentially Um getting to the second question. So what's the most missed part? I definitely echo Jordan Is just data, right? If you didn't sync up all of your exchanges or wallets that you use Of course, it's impossible for the software to get it all if you didn't sync it And so you've got to capture all of that if you want again that original acquisition price or your basis to flow through the reports Otherwise you're you are at risk of overstating your income because let's say again You bought bitcoin for a hundred dollars. You sold it for a hundred fifty If you're missing that original hundred dollar buy, you know, the software is just seeing that I sold it for a hundred fifty It's going to book all a hundred and fifty dollars of capital gain So you need to show that original hundred dollar buy so that it knows. Oh, it was only fifty dollars of gain um Other things I'd say, you know, we did a big survey at the start of the year kind of getting a sense of the market A lot of folks, you know, aren't privy to the fact that you know losses that they realized last year Can really help lower their total taxable income Right now, or you know, if they include that in their tax filings a lot of people are just like, oh, I lost money so i'm not going to report my crypto, you know investments or taxes and One, I mean, it's not a good position just because you're leaving money on the table And so I think that's a big one this year. A lot of people are just, you know, out of sight out of mind I lost money. I'm not going to do it, but it makes sense to you can save a whole bunch of money if you report those losses Um, you know from this year Perfect. All right, and then there's a reminder everybody that uh for right now, there's different if you want to do this Is what I use crypto trader or coin ledger. I always call it crypto trader So that's what I've been with you guys for so long for over two years I use it, uh, both years like I said when I set it up and then get it everything out and then the information gets over My cpa give me 30 minutes There is different tiers you can sign up for free if you don't need to print anything But when you do there's the options but good news link in the description looks just like this And you get 20 off with the link now if you don't use the link there's a coupon code I have it as dan. It's actually digital asset news all one word if you put that in there you get 20 off All right, so that takes care of that one question. I like this question a lot gentlemen There's a bet going on right now that bitcoin is going to 1 million I personally don't believe in any data is going to happen But who knows it is crypto, but it is a hell of a marketing play. Let me tell you But if that happened, what's the best way to take profits with minimal tax costs? Let's just say you got one bitcoin and you're sitting on that puppy right and you bought it at 20 000 goes up to a million dollars How would you get around with getting away from? Let's just say short term capital gains and let's just say we had to sit on it for long term, right? But how could you do that? What's the best way to offset some of these massive? massive cap gains we have Well, I think that you're right. I think it's more of a marketing play for Bellagio to kind of talk about BTC going to a million dollars. He's maybe not wrong with the sentiment of why This theory of we could have hyper bitcoinization and hyperinflation and all these things Certainly we talked about that we're seeing more bank stocks go under as we speak And banks going under as we speak, but let's just say that were to happen even though I don't know if we all anyone actually believes that but let's just say where to happen. What would you do? What would you do? Well, you can do kind of one or two things one if you're like david was saying Already sitting in those long term holding patterns. You're not really going to be able to minimize your gain any more than that If you're planning to sell the asset So if you're already in a long term tranche of assets you sell your one million dollar BTC In your example, you have a 980 000 long term capital gain defense I would sell it I would reserve the money that I need for tax purposes if I'm going to tax neutral state Then just worry about the federal side if I'm going to high income tax state like like I am in california Maybe it's not as good because you have an extra 10 11 percent that you have to pay which which sucks, right? But that's what I would do if it were me I would sell it and then keep the money for taxes maybe make a you know an estimated payment and then live with the rest That's there if you don't want to sell it because you're like, hey, it's not a million But I think it might go to 2 million or 5 million or something. Yeah with any investment you think there's potential upside What you could have done in the past which was very risky was leveraging some of these centralized lending platforms Barrowing against your crypto so you don't have a taxable event Then giving up the you know the custody of the asset which we've seen was was very detrimental for a lot of people And borrowing against that asset like David was mentioning what's taxable. What's not that would not be a taxable event So if I had a million dollars worth of btc, and I borrowed let's say 250 thousand dollars against that And I didn't think that it was going to go down 75 percent or so back to that 250 thousand dollar clip I wouldn't get called on my loan. I wouldn't get liquidated Then I could use that 250k as I would like whether that's paying off a mortgage Whether that's paying student debt whether that's to go on a year of trip. I don't know whatever you want to do But you have to understand that you have to pay that money back Right, so you would be betting on the appreciation to continue the appreciation of btc in that standpoint But leveraging and taking out some of that money to utilize it now knowing you'll owe it later You can't really do that with any of these centralized lending platforms anymore So you'd have to find a counterparty that maybe would be willing to do that Maybe that's private loan. Maybe that's over the counter Maybe you bridge some of that btc and you're using like a ren bridge and now you have ren btc Or you wrap your btc and you use somewhere like abe or something that now you're you're subject to smart contract risk Just like you were subject to self custodian risk or the custody risk in the centralized lending platform So that's something you could do to not trigger a liability a little more complicated What I would do if I put your something for 20k and then in 90 days I went to a million dollars I'd still sell it anyway and just pay the short term capital gain because you'd be crazy not to unless Like I said, you think one million is just the beginning point and it goes two five ten sure that's investment thesis But from a tax perspective Sell it reserve your money that you have to pay for taxes live with the after tax dollars and be happy because that would be That'd be crazy. That'd be an amazing investment I can't yeah, something like that. What about you? Dave? What do you got? I would say the same thing um I don't have many more You know loopholes of like how do you avoid it? I think you kind of just have to smile and be glad that you You know had a great investment But at some point you're probably going to face the capital gains taxes So the best thing is, you know get in that long-term tronch Right hold it for longer than a year before you sell it But if you're not confident that the million dollar price is going to hold maybe you still should just take the short term capital gains and um Yeah I would say look, this is a really great example I had a ton of clients even honestly myself included with some positions in 2021 were like november 2021 That was pretty much the cycle top for most tokens. Maybe not all but a lot Some did carry into like january of 2022 and for those people they were lucky But for maybe some of my investments that was the top and if I didn't take profit in 21 because I was like, uh We got like 45 days left. Let's just push this into a future tax here But then you see like a 20 30 drawdown Is it worth it to sell your asset 20 30 lower? Which is about what the tax liability would be where now your net after tax dollars or more Or is it worth it to sell it now pay the tax now and have more Fresh capital to invest when you do see those 20 30 50 60 70 retracement And you think people that have been doing this for a long time Like myself and a lot of clients from 2015 16 and seen multiple cycles would make that Correct choice, but then it becomes like, you know psychology like no It's going to continue to go up where I just need to wait 30 days to get into this tax year I need to wait 12 days to get to long-term holdings Sometimes like David said you just got to take your money and run and be happy with the profit So that's what I would say to this person. Um in this example Yeah, pretty well said and this is why like this is why nobody Nobody anywhere except for financial advice is going to you can really give you any financial advice You who are watching this video because there's so many different Parts that you can go down I mean it depends on like your age and your investment strategy and what your actual goals are and what you have You know as far as like bills and things like that But so like when we talk about these things, it's very broad based We can't give you any financial advice whatsoever because everybody is so different Younger people like, you know, I don't care let it ride and I'll go for it Then maybe older people like, you know what I want to finally You know go see the world and do all these things or maybe it's the exact opposite Older people say I'm going to hold on for my grandkids. There's so many different Different ways you can do it. That's why we can't really say what to do But it's an interesting one up to a million. All right, and this one was um We we talked about this in the last time that we got together On this video here and the question is of course, you know, look Yeah, I wasn't able to get my transactions from ftx. What do I do here? Because I want to have accurate information as far as cost basis. Where are we at with this one again I don't Jordan we talked about this before being an illegal part Yeah, I think Jordan's the better one Yeah, I mean I can talk about it again. We have issues with clients getting access to their ftx data Obviously, there's a proceeding going on Especially like ftx international, I don't know if people will ever get that if they used ftx international Maybe they will but ftx us Which was apparently, you know solving at the time that it was shut down and there's a whole other issue with the international entities and ftx us We're having issues and people are still having issues getting access to that data Now if they had plugged in or been scraping the information all throughout They wouldn't have this issue right because maybe they'd already have the transaction history or the api would have pulled All the data up until the point where it stopped working And if they didn't do that then they're in this pickle right where they don't have the information. What should they do? there are ways that we can kind of I would say Create like a synthetic version of what transpired in that year so that you're not sitting there not knowing what transpired at all But if you can see the amount of inflow and the amount of outflow and then maybe what was left on the exchange We could come up with a tax position so that somebody can in good faith report their ftx us activity without having the transaction history But I think this is a really good lesson on Letting people know centralized exchanges came going or doesn't matter. It could be a small obscure one Or the biggest one in the world that is on you know, every sporting arena and the major league baseball umpires Sleeves and stuff like that so it could happen anywhere I think what this is showing people is that it's very very good to use tools like coin ledger If you connect those api's and the data is coming in at all times Or if you make it a habit on a monthly weekly quarterly, whatever makes sense for you to scrape the information and download all the transaction history You won't get into this issue Most of people that we know obviously and that you know, I'm sure are starting to use more Decentralized platforms decentralized applications, which again is good to plug that information into coin ledger because they're not sending you any reports And it's very difficult to track that information But if you're still using centralized exchanges, you may not be able to get that data from ftx You may be able to get it in the future. We're not certain We can help or tax professionals can help create what happens so that you're not Not reporting anything but also I think it's a good lesson to make sure that you're you have some sort of Where you're taking that information off of the centralized exchange on a relatively frequent basis So that if this happens You're not missing much and if you are missing something Maybe it's like a week or two weeks or a month of transactions And you might have only executed like five or ten trades in that period of time. So It's not a good answer, but it's the truth Yeah, it's it's just it's not it's not a good position We're in that's just a problem and that's just the the reality the situation that we're in David Anything to add on that one. I know we talked about this in depth, but this is a tough situation No, yeah And we don't have great answers either because we're unfortunately at the limit of you know The availability of ftx's api against how we can pull data from their platform and right now that's completely shut down And then the transaction history files that they export. So, you know, if you don't have those We don't either so I always recommend people reach out to their support team And again, if that doesn't work what Jordan said is probably working with someone or To try to piece together something that makes sense in good faith effort to report that income in a logical fashion Excellent. Yeah, that's right. We're all going to take a hit. I think of this one. Unfortunately Oh, also, unfortunately, Jordan is going to have to take off in about five minutes or so He has his one month check up with his little his uh, Your son, son. Yeah with his pediatrician. So, uh, you parents out there. No, you cannot miss those appointments So we got five minutes. So I'm going to go a little bit heavier on on Jordan here For the questions and then I'll I'll filter down the ones for coin ledgers specifically As uh, as Jordan takes off. So let's see. There's one from chewy I don't know. I don't know if this maybe because I don't understand this How do you treat locking crypto in a real inquiry that receives bribes and a staking reward? I don't know if that's a real question or if that's um, well, okay All I know I think I know what they're trying to say So let's say I have assets and I lock it in a protocol, right? And I'm trying to generate yield From that whether that protocol has bribe revenue or they're bribing different places to Generate that yield Leveraging their platform protocol, whatever that's beside the point. It's the reward that you might be getting So if you call it brides and staking rewards or whatever inflows, whether it's a different native token than what you locked up Or if it's the actual underlying asset that you locked up and you're getting more Rewards from that They're good. There will be it's very similar to all these other transactions that David was mentioning the mining staking yield LP stuff there will be income upon receipt The problem is sometimes there's a lock up function and it's delayed and it may be vest over a period of time Or maybe um, you don't have access to it right away until there's a certain event that transpires If that's the case and I know for this person for chewy This is probably not answering their full question because it's not if this is kind of a broad question But if that's the case, you might not have income until you actually can grab and hold on to and control The underlying asset that you're generating as a reward But a high level the best way to look at this stuff is if I lock something up Let's say i'm staking it or I lock it up in a smart contract or I um, you know You know do something where I give something to someplace to get something in return Not just crypto related but anything what I get in return. That's a effectively a yield, right? That's like interest in a way It's not we classify things differently in the crypto space But it almost is like you're using one underlying asset asset to generate a return. That's that's interest That's yield right and so in that case you'll have income. I believe that's what this question is asking if it's not chewy feel free to message me On twitter or email me or something and ask more in depth and I can give you a better answer Because it's a little confusing the way the questions frame, but generally when you receive a reward for doing something There's income Gotcha. Okay. So again, uh ladies and gentlemen, if you're looking for The boutique or someone to really just to really get in there with your taxes and help Jordan's information is a link in the description to check that out and then before we go on There's just two more that's I think all we have time for Jordan with with you She's got it going is you talk about extensions. Just talk to us real quick about why that's important for some people How that goes how we go about that? definitely honestly, I think it's Becoming more of the norm for crypto investors and I think generally the general us population Will be mostly filing extensions in the future as well as the tax rules get more complicated and they start getting into more You know alternative investments like crypto or whatever Right And it's just not ready to file in time and if you do that and if you file it it's incorrect And you have to file it a minute return or you're just saying hey I'm gonna rely on what I filed even though. I know it's not accurate It's not a good position to be in there's no problem filing an extension an extension is all that it is Is it's it's extending the time in which your tax return is due What it's not doing is extending the time in which you have to make a payment if you owe money So it's very important that if you file an extension and you think or you know You have a projected liability whether it's like hey, I owe the federal government a next to three grand 10 grand 30 grand 50 100 whatever it is You make that payment or else there will be interest that you're charged on that now the interest is not That much it's one half of one percent at the federal level So it's very very small But the failure to file right the late filing penalty is five percent interest per month. That's the penalty So literally it's 10 times the penalty if you don't file timely filing an extension gets rid of that potential penalty You don't have a penalty for late filing unless you file now after the october 15th deadline So it gives you that six month buffer to file timely and not pick up any of these late filing penalties If you owe money and you don't make the payment The penalty of a one half of one percent so literally a point five One half of one percent point zero zero five percent would be the decimal is not Inconsequential it can be a large amount, but it's much better than the five percent for late filing So it's very important to do that you can file an extension now and still file timely But you're protecting yourself just in case you don't right? So that's why I always advocate for that When we have new clients come to the firm our general position is we're going to file an extension because we want to really understand Their attack situation if we don't want to rush it We want to ask questions we want to have meetings we want to see if we could stay here there Generally, they'll maybe have like a small business and you need to plan around that And so filing an extension is not a problem. It doesn't trigger like an audit a red flag or anything like that I think a majority of of americans are starting to realize that and we're seeing more and more extensions Being filed. So it's important to do I would do it even today if if you're not certain You're going to be able to file by the April 18th deadline Yeah, perfect. You know what else and this would be the last question But you know what else would be great is you get six per month So maybe ftx voyage or a block fi Celsius they can start to figure out what the hell they're going to do and you have You know road guidance Yeah, we talked about that on the last spot. If you have one of those situations You probably should file an extension and wait and see maybe you'll get some uh Some benefits from a tax perspective during those five six months that you have to wait Exactly and then last question then i've got to kick you out of here jordan So your wife doesn't kill me I've got she elizabeth says I got a crypto and a solo 401k that I said in 2018 I'm holding in a ledger separate from my other cryptos. Is this okay? So this is similar to the person that had the cold storage and the bank vault on by the trust Yeah, very similar structure. Yes, that's fine. You have this solo 401k. You're holding it in a ledger separate from your other crypto no commingling ever occurs no distributions or contributions that aren't booked properly You're fine. If it's simply just held in cold storage because you're saying hey what I have this It's almost like I have my you know my 401k that has positions in different equity positions But I'm just never going to touch it because I have a bunch of ethereum and btc that I just put away in cold storage You're totally fine doing that just make sure when you do liquidate that or you do try to take money out of the 401k Or you do something that's going to trigger a taxable event that it's booked properly. That's all I would say Excellent. All right. So everybody uh, you can find uh, jordan his law firm There is a link in the description. Check it out and jordan time to get out of here. All right. Take care guys. All right Thanks. All right. So now we got uh, you know now jordan's wife won't kill me Now we got that part of the way. Let's let's take into a little coin ledger questions And here's the first one. This is a little time extreme How should crypto rewards be taxed set in coin ledger? I've been told to leave the missing cost basis as ignore And also been told to set all rewards as incoming gifts With the coin base api sync. This is a tricky one. I don't know David any more information or can you yeah, unfortunately, I would need to jump into this account To not paint with broad strokes Generally speaking crypto rewards depending on what type of reward, right? Is it again from staking is it from, you know, just Coin base learn type things that's generally treated as a form of income and so You'll see that on your income report in coin ledger But there could be specific scenarios credit card rewards Or cash back type thing that uh, it would be different. So I would Advise you to connect with our support team. Maybe you already have but um, you can also Hit us up or me up on twitter Um, and I can try to help but it's it's very hard for me to give a definitive answer to that one without seeing Exactly the transaction that you're trying to classify Yeah, and then just so everybody knows as far as like forgetting help All you have to do is go into your coin ledger account It looks something like this and then the uh lower Let me get rid of this question real quick in the low right hand corner There'll be a little chat and there's two options here. You can message Uh, then you can message or I think you that in your live chat as well depending on a day, right? Yeah, if you hit message, it'll just go to our live chat queue and there's you know, folks working right now If we're not around like it's like midnight That'll send us automatically an email and then you'll get an email back when we hit you back once we're back online Cool. Great. So log in your account low right hand corner that you'll get all your information. Cool. All right And let's see. Oh, this one we talked about last time any support for cardano yoroi and nami This is of course all about cardano. Yes. So how we doing? Good good code complete. We are wrapping up our bulk tests of hundreds of thousands of cardano wallets to make sure You know, it's it ships well. And so I need to check in with lucas, but I believe that's shipping this week Um, meaning it'll be live on production. So definitely before the deadline. Um, I can get back But it's very very close again code complete. All right. You guys are busy Uh, here's one Uh Sean the automator if every one of my transactions were at a loss Do I have to report every single one or can I pick and choose in order to offset capital gains from other assets? I'm just so you need to report all of your taxable events You know those flow through to form 89 49 on your tax return which flows into schedule d reporting your income And so technically yes, you do need to report all of your transactions Um, you can't just pick and choose some and not the others Yeah, I wish we could that'd be awesome. I got another bit losses I keep my tax money back. So however, this one's actually for me, uh, dan How do you input theta in the coin ledger? It's not curling integrated coin will coin ledger ultimately include theta So remember there are the taxable events and that is when you Uh, when you sell your crypto now when you move it from, um from wallet to wallet and then also Uh, when you're paying for goods and services. So for me and my theta I sold a little bit. Ah gosh last year or two years. I don't remember but the but the bulk I I I kept with it I don't know about say about half. I can't remember But on that one because it wasn't a coin ledger at the time. I just told my cp. Look, here's what I sold it for This is approximately how much it was and I may have been a little bit off But uh, if I was a little bit off by a couple of pennies, I don't think the government's going to uh fault me Now I could get audited. So just so everybody knows like well, I thought it was $2 and 47 cents It was actually 2046 cents Not for sure. So with with crypto and digital assets. We're kind of in a gray area. That's just what I did But uh, David anything else we can talk about this with theta because it wasn't a big thing for me But maybe somebody's like trading theta all day long. I'm not sure. How did you acquire the theta rob? I stole it. No, I uh So I went on to a decentralized exchange and I bought I bought theta So it's it's an erc 20 token. I believe at that point. I don't know if it's on to its own main net now But that's how it was. Okay. That's what I'm curious about is Because number one Yeah, I would like to ask this is it's still on erc 20 because we support all ethereum assets So if you just copy paste whatever the wallet address whether us through metamask Or coinbase wallet to interact with that decentralized exchange You just import that public address and we'll pull in all the transactions associated with it Now if it is on its own chain That is where you know, you might have to manually input, you know Any sales trades buys that you had on that chain because we don't yet support theta if it's on its own block chain Essentially, there you go main net launch. This is 2021 Later part of it. So that's been a while. Yeah, so we integrate with protocols and other blockchains in the order of Essentially user requests like how to how much demand there is for that blockchain again cardano. There's a ton So, you know, we're almost done with that one. They do take a while to build because For a lot of these chains, there's not a lot of infrastructure built around them to help companies like coin ledger integrate with them And so we have to build a ton of stuff from scratch But if you want to see us integrate with it hit us up We have like a Feature request in app that you can just click and request the feature But you can also just get things in manually either through a custom csv that you create or directly an app just by Clicking like add transaction then you could you know add in deposits cells trades of those assets Yeah, I know I I did that I did do that for a couple of other ones because I got them from some exchanges That weren't supported anymore because when I got in you could you could go to a lot of different Oversea exchanges in 2017, but they shut that down So after that I just I uploaded a file I was a csv file and then it ran through and then I shipped it off to my Account there was still some some things that were a little bit off But because it was so wacky over the because I did it 278 and then 19 is why yeah, it was uh But once that was done. It wasn't too bad. Okay So beardy says I never booked profits. What are those? It's a good question beardy who has problems like all of us and then Multiple years of losses and this is a good one if you can only write off 3 000 of losses Then the rest of the loss rolls over Let's just build up balance of losses You can then write off 3k or losses annually for years And I think there's a difference between the losses in your income and losses versus your capital gains So David real quick talk about that Yes, so I think you're you're dead on whoever is asking this question. Um, and just to Put a bow on it. So, you know Capital gain is a different type of income than what's known as ordinary income And the only thing that makes it different is capital gains actually get favorable tax treatment If they're the long-term type, right? Um, if it's short term it's still a capital gain But it's actually taxed the exact same at the same rates as ordinary income And so your point capital gains and losses net against each other in the year that they happened And if you have a net capital loss, so you net it against all your losses against any gains you had You know, you can only write off 3 000 against your ordinary income That could be your income from your job, you know w2 type income The rest of those net capital losses will roll forward indefinitely into the future But keep in mind, let's say in the next year You book more capital gains those losses again will offset fully against those Other capital gains until you're in a net capital loss position once again So the good example is like let's say I had a net capital loss last year of $50,000 You know, I can take 3 000 this year 47 k roll forward But let's say bitcoin moons this year and I book some gains That all of a sudden potentially all 47 k of those losses can book against those gains against bitcoin If you let's say booked 100 k of gains in bitcoin and that's going to dramatically lower your tax bill, right? So it's obviously wise to carry forward those losses And they do roll forward indefinitely, but yes net losses can only Deduct 3 k against ordinary income per year Only 3 k, which I know it's kind of you know, the government pulling a fast one on us That's what the government's there for right exactly So so then real quick. I just want to remind everybody about that because I on this question a couple times And I was it's a confusing one. It's annoying how it works honestly, but that's how it works. That's yeah That's how it works. What are you gonna do? But um as far as like the um Oh, this wasn't it. Sorry as long as as far as the uh The customer support I do remember talking to you guys on this one because I had a question gosh Yeah, last year and it was pretty pretty fast. So it works out pretty well and then there is A question about nfts right here How does coin ledger account for nfts? And I remember there was something at the very top of your Website before and it would say something about nfts something something something Where is that when we launched a specific tool in december that was designed to help Users actually sell illiquid nfts to book capital losses Essentially tax house harvesting But the question how does coin ledger account for nfts the same way, you know, we integrate with everything else in the crypto space So, you know, if your nft was ethereum based just add in your public wallet address And we'll pull in all of your nft trades on uniswap or etc um Okay, but we treat them as assets right capital assets and those flow through into your tax reports Just like other digital assets now. We don't have guidance from the irs right now as to What nfts if any are specifically quote-unquote collectibles? So those are questions more for your tax professional, but you're still going to be able to use our data And our reports to give to your tax professional. It's the same thing It's just, you know, if you want to take the position that some nfts are collectibles Those will lead to slightly higher taxes when it flows through the rest of your tax return Gosh, hopefully that's helpful. That's yeah, that's I mean because all you got to do is just stick in your ethereum Or well now would be your cardano too because you have nfts there as well But there was you also, what's this nft tax software? Is that the one you were talking about? That's exactly what i'm talking about. It's not like a standalone product That's really for search engine marketing purposes when people type in nft tax software We won't become an option, but it's all in the same platform So we treat nf, you know, we integrate with nfts just like we integrate with all other cryptocurrencies Gotcha, and then don't you guys have an integration with other like cpa's across the country? Mm-hmm So we have a network of tax accountants You know, Jordan's one of them that we work with and that you can also consult with Yeah, and you know, we continue to build that out and that's on is that where is that? Is that when we log in? Throw all the way down to the footer of the website that that's the full directory you'll see Where is it? Find a crypto tax expert on the far right? Burp burp Yeah, look at that and so that You know is just a solid directory in case you want to find someone to again work with ask a question to um And then also within the app you can book a consultation with some of our vetted partners. That's pretty good Yeah, many guys are crushing it. Look at that. All right Trying to bring products that are helpful to people Yeah, I well it helps me because I'm I just don't like taxes. I don't like dealing with the paperwork Hey And I just like I don't want to be that guy that's like has to go through. I went through not at once And it was sucked and it's like you got to bring in all your documents You got to prove everything and you got to sit there in the office for hours and go over everything And like I I did this one time I like this will never happen again taking about a week or so and I ended up holding like another Like 300 and something dollars that was it and they're like always had some questions like you always do Was it wrapped up in like businesses you owned too? Yeah, it was businesses and it like it wasn't even that much I'm like, this is this is how I do it like but I just think that sometimes just happens random But uh, I mean once you get it in and do it the right way not so bad Dr. Payne says thanks for what you do good episode Ah Yeah, so dormant got a good question Collin ledger is not available for you take tax legislation at the minute any update when this could be available Great question. You're right. Um, we're not at this time. We need to Do a little bit more infrastructure work so that we can better support the uk's weird treatments of bed and breakfast rules And all these things about how you sort through capital gains Um, but by next year, it's you know, very likely and we have a plan We have plans to support it by next tax season for the uk. So we're coming Okay, and then here's a couple more for us. Thanks guys Um, I haven't heard anything about that. Is the wash sale exemption still in effect for 2023 real quick David talked to us about the wash sale And yeah, it's for crypto. Yeah, so the iris has explicitly defined cryptocurrency as property, right and not as securities So there's specific rules within the securities world that prevents you from booking a capital gain or loss if you've Traded a security, you know within 30 days Essentially the gain or loss washes out. So, you know, if I And what they want to do they want to prevent you from booking losses just for tax purposes And so like, you know, if I sell tesla stockas down and then buy it right back That loss that I'd incur would wash out and it would actually be as if I never Did the transaction now because cryptocurrencies again are defined as property by the iris It's consensus in the space. So I also ask professionals that the wash sale will just not currently apply to crypto There is some legislation and there's been a lot in the past of you know Congress and etc trying to close this loophole. It hasn't happened yet I have doubts that it'll happen this year But you know, we'll keep our eye on that and we're keeping our eye on all that stuff because Let's say something did get passed We would, you know, adjust our software to automatically, you know, calculate and uh Track your position so that we can assign the wash sale. So you don't have to worry about it You know the software will do it for you. Yeah, let the software do the heavy lifting Here's one from uh, david, um In other words, how does coin ledger handle coins purchased on coinbase pro? Because they've switched over in 2021 And moved the coinbase in 20 would this make a difference? Depending on the platform because if you're just moving wall to wall It shouldn't be a taxable event. It's there's maybe something I'm missing here No, so we handle it like like everything one coinbase pro is still like available to Pull data from so. Oh, okay Still if you were up a coinbase pro legacy user like I am honestly So I still integrate my coinbase pro account with coin ledger I also integrate my coinbase.com account and then you know coin ledger's record styling all of that for you So there's no special treatment. You're gonna integrate both accounts still Don't just do one or the other because if you just do coinbase.com You'll just see deposits into your coinbase.com account from coinbase pro when they merge those That transaction history from coinbase pro Okay, you got to do both or else it's not going to come out. Correct. Gotcha Okay Jared's time up to the ground. Yes, that's true And this is a good question Web three companies coming out hot any good bookkeeping crypto software for businesses in the web three space Perhaps in that works well with coin ledger I personally have not been a power user of these platforms because coin ledger You know is not transacting and crypto tons So we don't have to have the pain point for this But I do know there's platforms like bitwave like gilded that are focused on Call it more quick books for crypto native companies um You know, I'd be interested if you ever are interested If you would ever want coin ledger to get in that business, you know, that would make me You know, I've looked into it I know you have I'm just you you know what I'm waiting for so Yeah, oh, I should I have more updates on that front that I'll have to show you but uh You want to you want to talk about it now? Just I don't have it pulled up right now It would take me well, how about this so what we're talking about everybody is I thought it would be a good idea and a bunch of different people that watch the show Of how you can have a portfolio tracker that would especially people like me a dollar cost average I can say look just so you know today you are up $35 and 72 cents on these trades and then you can cumul you can make it cumulative or whatever you want to do And it would be great because it could be free It could integrate everything and then when it's time for taxes, but it's right there So David, what do we have? I mean, you know tell the whole spill the beans right now Just we'll talk behind the scenes, but how far are we? so we Number one first we have to finish tax season, but Last week the the executive team was in person together. We were out in Scottsdale And most of that week long we were together was planning all the technical Side of enabling that portfolio tracking product the designs are finished. So now it's Enabling the back end and the architecture the plumbing to really be able to create that beautiful ui. That's that's pretty much designed And I do want to get it in back in front of you rob so you can give some feedback on you know a lot of these early Stuff, but our goal is by this fall to have you know a really tight Initial portfolio tracking product that does a lot of those things you just mentioned That'd be great. Let me just roll it into the taxes. It'd be cool so So guys that's only something I want to do it is put in the comment section and then also This is what Dave was talking about bitwave and this is for web 3 if that's something that would interest you as well if you're into Uh web 3 and business transactions, maybe that's something that uh queen ledger could get into at some point not that they're not doing enough already But uh, or you don't not that you guys aren't busy, but that's it All right, there's you suffer from shiny object syndrome or you can you know, there's so many there's a lot of opportunities like all right Where should we you know invest in next and so it's always something we're thinking about That's you know, that's a good point the shiny object We we think that this is going to be the the next you know, let's just do this Let's do this and we get away from our core principles And just got to focus on what we're good at and go from that. That's so so important to any young company Right is you should actually have tunnel vision and just Be laser focused on being the best at your thing You know, maybe is the business, you know really achieved scale Then you can replicate that in different areas, but it's risky to splinter focus in all these different directions Well, I know well, that's why I keep using you guys because it makes my life easier and you're doing a good job So again, everybody there's a link in the description looks just like this again The coupon code is digital asset news not dan. I will update that for every single video I've done It'll just take me some time But that'll give you 20 off or just use the link itself But Dave, I think that's it. We've gone almost an hour And we'll do one we're gonna do another one So we everybody can I'll notify everybody when we're gonna do another one I'll come back and we'll get some questions, but a lot of good information I mean, especially about just having Extensions, what is an actual taxable event? And then of course the big news I liked is cardano and and getting that into the software So that's it for today. Did we miss anything that we need to come over real quick? But I think we're good. No, I think it was really good and You know, we're all we always love doing these. So thanks for having us as always Excellent everybody just leave a comment below like and subscribe, but that's it So David again, thanks for stopping by. We appreciate it. Thank you. See you guys. See you guys adios