 Yeah. Preparing to livestream the meeting. Oh, I want to go over that Forbes article too. Sure. Yeah. Which was interesting because you don't have to put yes if you just buy crypto. Well, yes and no. Yes and no. Yeah, there's really clear answers. But we can talk about it. So let me stop this real quick. So we are live. First of all, welcome, everybody. Welcome to Digital Asset News to get top stories and cryptocurrency digital assets, bring them on as bite-sized pieces, which we all know. We're doing a little bit of something different today. I invited my friend over here, Shihan Chandrasekara, and he is here to talk to us about taxes. First of all, before we start, how is the video quality and how is the audio quality? Video quality is suspect because I'm here in Houston and I am doing this via Wi-Fi, so we'll see. And second of all, is it loud enough? That is a big question. What's up, Mola? What's up, Ageless? What's up, Mike? Digital asset crusader? Crown steak pool, King Simon? Switzerland? What about the hack? Which hack? Okay. Well, it must be doing pretty good. Video and audio according to Adelita B is pretty good. Both look great. Well, that's great. One great thing about Houston, huh? Okay. First of all, Shihan, can you hear me? Yeah, I can hear you. So everybody, this is Shihan Chandrasekara. He is a certified CPA and he specializes in cryptocurrencies and that is why he's my go-to guy. Every time I have a question about what is going on in the landscape of crypto. So today, I wanna talk about a couple of things. First of all, he wrote a great article in Forbes where he talks about on the 1040 form and just remember everybody, this is for United States we're gonna talk about right now. I don't know where everybody else is at throughout the entire world, but these are the ones that we are used to. I can't speak to everybody, but I do know there are some fantastic tax advantages, Germany, Puerto Rico, well, that's a territory. I can't really talk about that. Malaysia, Singapore, but we don't, I don't live there. I wish I did, but here we are. So first of all, Shihan, there was a, I wanna see if I can, oh, I know I can do this. Let me share my screen. Is this article right here? First of all, let me make sure it switches over. This was the article in Forbes and there was a big question about everything that is going on as far as what we actually have to pay for for cryptocurrency and do we have to answer this question, which is on the top of the 1040 now, which talks about, hey, have you had any dealings with virtual currencies and have you bought anything like that? And I was assuming that you just had to say yes all the time, but you're saying that is no. First of all, let me get here. The question itself asked this, did you receive sell, send, exchange or otherwise acquire any financial interest in any virtual currency? That's my cool. So when I see this, I'm like, yeah, you gotta do that. But apparently you don't. So Shihan, first of all, but let's answer this question and then we'll delve into the questions being posed by everybody in the chat. Yeah, yeah. So yesterday, IRS updated this Q5 of their 46 less FAQs on cryptocurrency saying that if you just purchase cryptocurrencies using US dollars like you don't have to check yes for that question. But like that mentioned, prior to this guidance we were thinking if you purchase something that would either fall under the received category of the question or you are acquiring a financial interest. So that would lead you to say yes. But yesterday like IRS clarified two FAQs that if you just purchase cryptocurrencies you don't have to check yes. So in my opinion, it's good. If you're a privacy-focused crypto holder or a taxpayer you don't have to disclose to the IRS anything now. And that seems good to me because if you're buying a house if you buy stocks or security you don't have to disclose to the IRS. So I like this move and I wish the IRS publicly announced this when they updated this. I mean, I was the first one to catch it yesterday because I look at these things every few days but if nobody made a buzz about it then people wouldn't even know about this. Yeah, so talk to us real quick because like when I read this it says like did you acquire any virtual currencies? Cause I feel like, and this is of course just my feelings. I feel like when I buy Bitcoin I have acquired Bitcoin but it sounds like that's really not the case. And as long as we don't sell it or move it around we're not moving around but sell it then we don't have to say we don't have to tell the IRS anything it sounds like. Yeah, correct. So again, IRS has not provided definition or what's really included in that acquisition of financial interest because financial interest could be defined in a narrow way or broad as even owning an ownership interest offer LLC or a business that deals with cryptocurrency that you're indirectly owning some financial interest but you don't know. But again, IRS saying that if you just purchased cryptocurrency using USD and you didn't do anything you don't have to check yes for that box but if you did purchase cryptocurrency using another cryptocurrency which is almost like a crypto to crypto trade that would require you to say yes and that would also have some taxable transactions and implications. Great. Before we get to the first question which is from my man when where he asks how will the air drops from Flare B tax we had talked about this before but let's talk about it again. Let's tell everybody at home when it is considered a taxable event in the United States and this might be again, I don't know Switzerland, Germany, Australia might feel a little bit different over there but this is what we got over here. So when is it actually taxed for us? Yeah, yeah, by the way this conversation is very general in nature. This is don't take this as tax or investment advice. So yeah, for air drops, IRS has said if you read the 2019-24 they're going into pretty details about how the air drop should be taxed. So in the case of Flare or any air drop you got to pay taxes at the time you receive that token. That sucks. That sucks, Sheehan. It sucks that you get it. It does. So like everybody right there if you're an XRP holder like my man Mullet over there you got, I and I got Flare too. So when Flare came in I have to I'm going to be taxed on that, right? Correct. If it has a value and you're going to get taxed at that value at the time it hits your wallet. So IRS doesn't care if the price goes up or down after it hits your wallet your taxes are based on the value at the time it hits your wallet. So like Uniswap it, this is the example we used before. Uniswap hit my wallet and it was worth four bucks. And I got, I think it was 400, right? Everybody got 400? 400, yeah. So right there, 1600 bucks right at the top of the bat. If I go to sell it today, what is it? 30 bucks, 22 dollars somewhere on there? Yeah, and then you would pay the difference as a capital gate tax when you sell it, yeah. So this is what I'm thinking of and correct me if I'm wrong here. I'm thinking that as April 15th starts to approach and people are starting to like realize like how much taxes they're gonna have to pay especially for these airdrops, these are new, especially the things that are going on the things that they sold. I think people are gonna start selling off some crypto and we might see a little bit of a slump around April 15th because you know, where else are you gonna get that dough? You can let the IRS beat your door down like they did to me when I got audited but I wouldn't recommend it. That's all I'm gonna tell you. You can do whatever you want to and I am not big brother, me and she are not big brother, you do whatever you want. So just know that if you do get audited, it really sucks and you gotta bring in all your paperwork and all your receipts and it's just awful and it's gonna take you like a week or two weeks straight things out and then they're gonna find you. It could be a lot, it could be a little, mine wasn't too bad, but just saying. All right, so that is that question. Let me see what else we got. Coinbase still owes me two weeks from a month ago. I will not respond to my emails. Shocker. Well, let me, before we go on, let me just talk to you about Coinbase. First of all, I'm not a big fan of them. I'm a big fan for new people when they're getting in, just to learn about the space, right? That's cool, great. But I'm not a big fan because if you have more lawyers than you do tech support, maybe there's a problem. I'm not saying that they do. Don't sue me Coinbase, but I will just say this. They're being evaluated at billions so I'm hoping they can put some of that money more into tech support. So my man, Crypto Lee here, can get everything resolved. All right, next up from Bobby. Bobby Wreck, he says, how do you report a loan on Celsius? This is a good question because for loans, you have to collateralize for Celsius. And if you want a good rate, it's not just a collateral of like one to one. If you want to, let's say this, if you want $1,500 in your pocket today to get a really good rate, you're gonna have to give them about four Ethereum, which is four X, because Ethereum is around 1,500, somewhere $1,600 and around there. So, Xi'an, when we collateralize it and then we get a loan, how do we get tax on that? Do we get tax on that? No, no. So getting a loan against your appreciated Crypto is not a taxable event. It's pretty much like, you're getting a home equity line of credit. Let's say your property value has appreciated. So you go to the mortgage person or bank and you're getting a USD loan because to draw against that increase in value. So that's not taxable. But that's just one part. And then the second part, okay, when you spend that USD and let's say you're buying more Crypto and then you're doing more trading, obviously that's taxable, which is pretty self-explanatory. And the other thing is that a lot of people think that, all right, let me take a loan and so I don't have to pay capital gain taxes. And what I'm gonna do is I'm not gonna pay the loan and default on them. And that is actually taxable to you because when you default on the loan, what Celsius does is they're gonna liquidate your collateral. So you're gonna get tax on the capital gains when they sell your initial deposit to cover your loan. So don't do that. If you take a loan, make sure you pay back because otherwise you're gonna get taxed. Vee, imagine getting liquidated. Not only do you get liquidated but you get taxed on that liquidation, that sucks. Yeah, correct. All right, so this leads me to another question. Then I'm gonna get to Johns in a bit. So when you keep your cryptocurrency on a Voyager, on a Celsius, on a yield bearing type of platform, do we get taxed on the crypto that we get paid out for the yield? So example would be, I have half a Bitcoin on Celsius. I get paid a little bit of Bitcoin every week. And at the end, I haven't cashed out yet but I've gained more Bitcoin. Do I have to pay taxes on that additional Bitcoin coming in if I haven't sold it? Yes, because it's treated very similar to interest. So every time you receive those, each little units of Bitcoin or whatever the token, like that's is a taxable event and you would sum it up on an annual basis and you gotta pay taxes on that. So the way that IRS thinks is that any time you gain access to any type of income or increase in your wealth, that's a taxable event. So if you look at the IRS definition of income, it's like very, very broad. So it's really hard to get out of that income definition of the IRS. Right, which leads me to another point, which is what you said in the beginning, like this is a broad discussions. Don't take it as professional tax advice, even though you are a professional because it's open to interpretation. Just know that right now that even the people that actually write the laws really have no idea what's going on. They have a pretty generalization idea but to really hammer it down, it's not really everything set in stone and it's open for interpretation. So what she has a CPA thinks may be different than what your CPA thinks. So you have to make sure that you are comfortable with the decisions going forward because it's just general guidelines we talk about. Okay, next question. Do I have to pay tax on staking rewards? Which is pretty good question, especially for something like me with digital asset news, it has two different staking pools. You can check those out in the description below and people are gaining really with this pool, it's 5.4%. The industry average for Cardano is 4 to 6%. So we're doing pretty good but what about the people that are getting rewards in staking she had, same thing? Yeah, I mean, again, Iris hasn't said anything specific about staking, Iris did say how mining income should be taxed. Obviously mining is proof of work and proof of staking is if you look at the fundamentalists, it's a little different. Again, Iris hasn't said anything but in the absence of those specific laws, what we can do is just be reasonable and be conservative. So yeah, I mean, every time you earn those staking rewards that's gonna get taxed as in order income similar to mining. However, there's some movement against that tax treatment because if you're really looking to the details of the staking pools, you're earning but it's a dilution of the entire pool. So you're not really necessarily getting any income. So again, I don't wanna get into too much details but the conservative approach because we don't have, you know, these staking rewards as taxable at the time we receive it. But there are groups of attorneys and other people with big pockets they're lobbying against this tax treatment. So I don't know when it's gonna be heard by the IRS but just some background information. Yeah, so just remember, so here's a good point or it's a point, where did it go? Stephen says, exchanges are giving airdrops without my asking, I don't want them and I'm not paying tax on something I did not ask for which is a, you know, it's a pretty fair point but unfortunately you still get them and that's the deal. So I will say this. So like with Uniswap, let's take an example. So with Uniswap, I didn't ask for it but I sure I'm glad I got it. It sure is nice to get those 400 unis, right? So if I'm gonna get taxed on this, this, when was the Uniswap airdrop? This was less than a year ago, right? Yeah, definitely less than a year ago, yeah. So what that means is if you're looking at capital gains tax, it's gonna be, you know, short-term versus long-term, long-term anything over a year, short-term anything less than a year. So for me, I'm gonna pretty higher tax bracket. So I'm gonna pay on the short-term, it's gonna be, I don't know, 42%, 37% or something like that, somewhere around there, right Cheyenne? If you're in the highest tax bracket, yes. 37% yes, the highest tax bracket for short-term. So let's just say like this and just think about this for right now. I didn't do anything. I mean, alls I did was just use Uniswap and now I'm gonna owe the government roughly, you know, let's just say 33%, a third of what I got paid. So if we're looking at that, what is that? 600, 6 times 3, 18, somewhere around 600 bucks, 500, 600 bucks, something like that. But I do get to keep the rest. And I know what people are gonna be thinking in the comment section. And you're right, taxation is theft and they can't tax me. Well, again, you can go down that route and not do it but I will tell you this, it is pretty slippery slope. However, this is why it's important to have a registered CPA on your side on top of legal team, a legal person that you can actually ask because there's a lot of different things that are out there that's not loopholes but really loopholes that you can use to deduct your taxes that you're gonna get. First of all, I always recommend a 401k or Roth IRA. The second thing I like to do is with properties. There's a lot of great deductions you can use as far as depreciation values, the interest on the house, the different taxes that you have to pay for the city and local governments. And this is why, this is actually why I'm here in Houston this week is to, we closed on an investment property. Now it's to fix it up and put it on Airbnb. So this is a bigger version later on for another type of video, but this is just what we got. By the way, in the case of UNISWAP, it was your choice. I mean, you had to go somewhere and claim it. So if you didn't claim it, you didn't get access to that coins. So if you didn't really need it, you don't have to claim it. I know that there are other ad drops that it just appears on your wallet like without you even claiming it. But in the case of UNISWAP, you literally had to go claim it and if you didn't need it, you didn't have to claim it. Yeah, yeah, if you didn't have to. Unfortunately, like with the Spark token, that was like, I mean, it's gonna come in so it's kind of like, well, whatever, but UNISWAP, sure. All right, here's one. This is one from Brendan Bauer. This is a tough one, tough one. It says, how about trading BNB in addition to using it to pay fees on Binance? How should that be split up? So BNB is a coin. So I mean, again, IRIS hasn't said anything specifically on this. We are just going with this general principle. So whenever you spend BNB, that also actually creates a taxable event which is very confusing. And yeah, I mean, that's a simple answer for that. So because BNB like went from like to, just went crazy lately because of their chain and stuff. So yeah, I just, any type of spending on this portion of a cryptocurrency is a taxable event, unfortunately. Yeah, that's one of those things. Okay, tricky one. And then this is from Golden Era. It says, do I get taxed only if I convert crypto to fiat, right? No, I mean, I wish that was the case. You also get taxed when you convert one cryptocurrency to another. IRIS doesn't care whether you really received cash or not. So yeah, if you're going from crypto to crypto, that's a taxable event. Yeah, so I know what people, I mean like, I always hated taxes. And the only reason I stay up to date with them is because I just know that I got to pay them. It's like, there's always, there's always only two certain Zs in the world, right? Death and taxes. But just remember this everybody, that I don't know what your portfolio was at the beginning of this year, but it's safe to say a lot of you, the portfolio probably has gone up just a little bit as time has gone on. And then of course this channel is not financial advice, entertainment purposes only, all that great stuff. But I think, I mean, for me, I'm going to hold this for most of this year until I hit these milestones and we talk about them in the agri-strategy. But if you made, let's just say for example, you made $100,000 on $10,000, right? You put 10,000 and you got 100,000. Not a bad, not a bad little payday, right? So if you have to, maybe if later on you have to pay like long-term capital gains, that's 20%. So okay, so you got to pay 20 grand to get 80 grand? Not a bad deal, right? And then of course you deduct that 10,000. So just remember, it's not all doom and gloom, like they're going to take all the money. And I take all the money, they are going to take a little chunk here and there. All right, let's see. What else we got from Plue? He says, if we don't know what staking laws are going to be, but they make a decision about it in 2022, would I retroactively owe taxes on previous years? That's a good question. I don't know. Typically, like, you know, whenever there's a new tax slow comes are, you know, those taxes are not applicable retroactively because it's just too much burden on the taxpayer if IRS were to tell, all right, here's 150 million taxpayers, just go amend all the returns. It's not going to happen. Yeah. So that's my answer. I mean, yeah, I mean, that's a short answer for that question. Great. So if you get it in now and you're like, well, it's ambiguous. So, you know, good luck next year, then off we go, right? Okay. I like that answer. That's part's good. I'll take that. Let's see. Hit the like and subscribe. Thanks, Muller. Where else? Ah, this is a good one. I live in Europe and will be joining my boyfriend in USA as soon as this pandemic is over and the travel ban is lifted. Question. When do I get taxed when I move to the USA? And let me, I will say this, we talked about this in the Puerto Rico video where I said, hey, I'm just going to move to Puerto Rico and not get taxed anything. And then I'm going to take all the crypto with me. You're like, no, no, no, not so fast. You have to actually live over in Puerto Rico for a determined amount of time and then pay for the crypto over there and then you won't get taxed. So I'm thinking it's kind of like in that same vein or am I wrong? So she's moving from Europe to US, right? Right. But she's probably accumulated a pretty, I mean, whatever she's accumulated in as far as crypto over in Europe. It's a complicated issue because there's, I don't know what type of visa you're coming here under. You know, there's different immigration status. I don't know if you're going to be a permanent resident here or, you know, citizen. So there's so many things that's going into that, you know, equation. But typically, you know, once you become a US resident and then, you know, you had to pay taxes when you sell your property as a US resident. But again, there's so many exceptions. There are, you know, some countries that the US has special agreements with. So if one of those agreements apply to you, then you get some, you know, relief and discounts on capital gains. It's a really hard answer to give without knowing all the details. Well, so yeah, check with your CPA over there. Sorry about that one, but this, this is a good one. Where'd it go? Okay. There was this one, no, that was it. Oh, this one. So Chad, Chad Gow. He says, can I donate or gift my crypto to my kids who are under the age of 16 and have them cash out at a reduced tax rate? You can gift them. I mean, so that's by the way, that's not a donation because for the IRS donation is for charities and stuff like that. So it's a gift. Yes, you can gift them, but because they're, you know, minors, there's this thing called kitty tax. So they're going to get, they're again, it's going to get taxed under their parents, you know, tax rate. Again, there are some exceptions and et cetera. But the strategy that you mentioned is somewhat simple. If you just give your, you gift your crypto to one of your friends or anybody else who's in a lesser tax bracket than you, so then that person can cash out and benefit the rewards. But because in your situation, you're giving it to a kid who is less than 16 years old, that adds like another complexity, which is a kitty tax. So the kitty tax, so if you give it to your kid, doesn't matter as long as the dad or the mom, they're in that whatever tax bracket, 37, 25%, whatever else, the kids will get taxed on that type of thing. That's the general rule because a lot of people started doing this and that's why, you know, Iris kind of introduced that rule. But there are ways to kind of get around with it. Again, need to talk to your CPA and we need to kind of analyze all your details. Yeah, and that's a thing. There is a difference, everybody, from tax evasion and tax reduction. Tax evasion is illegal, tax reduction is legal, and you have to use those laws and regulations that are afforded to you wherever you're at. So just make sure that you are privy to them, which leads me to my next point. Digital asset crusader asked a great question. Are there any tax saving advantages, for instance, reinvesting into real estate or something else to avoid high taxes? Great question. I mean, the taxation happens when you cash out, right? So that's unavoidable. I mean, you can reduce it, but it's unavoidable. And then you have your after tax income and then after tax income, sure. I mean, you can invest in a rental property or something like that. Typically, investing in those rental properties, they come with tax advantages, like depreciation, like dimension, you get to deduct all the business expenses and you get to kind of enjoy the underlying appreciation of the property. So yeah, I mean, you had, so those are like in a monetary level transaction. You just had to kind of run the numbers and plan things. It's not like, all right, just cash it out and just put it in this property. You just had to run the entire scenario and see if you're ending up with a net positive scenario when it comes to taxes. Someone asked this, so thanks for that one, Shigen. I appreciate it. Someone just asked the question. I just lost it, but it was a good one. It's the exact same thing that happened to me. They said they lost 10,000 ADA. Can I write that off as a tax loss? I mean, you could. I mean, there's a possibility that you could, you know, as long as it's real, because if it's not real, that's called fraud, which you shouldn't do because that's a criminal offense. There's a possibility that you could take the deduction as an abandonment loss. We talked about it. We spoke about it. So look at the, I think it was the last video. So look at that video. I think we spoke about it. So there's a possibility that you could take the deduction, yes. And see, so this is the big thing, right? Not all CPAs, not all lawyers, not all doctors, not all anybody is created equal. They're not gonna know all the information, right? So like you could go, like here's a prime example. You go to one orthopedic surgeon, like fix my knee. He's like, sure, I know the latest and greatest techniques and I've been training on this one and I know what to do. And you go to somebody else or like fix my knee. Like, well, I'm kind of nervous, but I haven't done this in a while, but I'll give it a shot. So again, when you go in and talk to your CPA, just make sure that they're up to snuff with all these different rules and regulations, especially with the cryptocurrency because it's a brave new world out there. All right, and then this one's pretty good. Gambling, it's from exactly as predicted. Gambling losses with crypto tax deductible. So I guess there was maybe a gambling site that you use and you use cryptocurrency and you lost it. Okay, here's a better question. If you lose any type of money, whether that be cryptocurrency or fiat in gambling, can you deduct that one? That's a good one. So gambling income and losses have different tax rules. So generally speaking, you can only deduct gambling losses up to the gambling income. So what I mean by that is you cannot write off any gambling losses like as a deduction because it's capped to your gambling income. So let's say like you have $100 of gambling income, that means you can only deduct gambling losses up to that $100 because otherwise, people would gamble and they would deduct like in a millions of dollars saying they lost it. So there's added complexity because there's this gambling income and loss rules and then there's cryptocurrency inside it. So again, I had to look into that. Yeah, I don't blame you. Yeah, it sounds pretty awful, right? So what it is. So then as I'm looking up something in the background, so someone just wrote, hey, like Rob, this doesn't sound, this makes me want to absolutely not do anything with staking, with putting it onto Celsius, with gaining yield because of all the taxes. And believe me, I know exactly what you're talking about, it sucks because you're like, well, why do I have to do all this and I just have to do all this extra work? I'm gonna do all this extra work, this is awful. So here's what I'm gonna do. Let me just show you something. Let me share a screen. So to make your life a heck of a lot easier, this is what I use, right? CryptoTrader.tax, it has a direct API except for Voyager. I wish they would get that going, but whatever. And it will pull in all your trades, all your interest, all your other stuff. It's either, and as time moves on, they're even talking about integration with DEXes and actually for staking. So when we get this type of thing, it just makes things a lot easier. This is what I use, I use a particular straight. She-Han has a coin tracker and you can check that out over on his page, which I'm gonna link in the description of this video. Either way you wanna go, these are the ones I will recommend not to go through your spreadsheet of your thousands of different transactions and try to figure this out. It's impossible. And that is the big thing. If you're looking for a link in the description of every one of the videos, it looks something like this. If you scroll down, little flag is right here, there's a 20% off with just viewers or Dan. So that's what's going on. So yeah, I know it sucks because no one wants to do this, but I will tell you this, as time goes on, I think for me it will be worth it. You have to make that decision for yourself, of course. Anyhow, all right, let's see. She-Han, what else we got here? Let me go through there. Reinstate, real estate, go to Puerto Rico, says Destin. I think, actually, I'm gonna be going there in two weeks, but only for a vacation. And to check real estate. And to check out real estate. Yes, of course. It's like maybe do a tax reduction type of thing. Zero capital gains in Arizona, congratulations. So just transfer from crypto to gold and gold to fiat. I don't know, Dan, well, that's gonna work. Okay, so crypto thugging. I like that one. He writes this, I understand that you pay taxes on trading crypto, but you don't have to pay for that tax until you pull out in the fiat, or am I wrong? So let's talk about this again. She-Han, tell us the four times when you're gonna have to pay. Yeah, yeah. So those are, I've been actually, yeah. So I've simplified, so these are the five transactions that you need to pay taxes on. If there's a profit buy, if it's a loss, you don't pay taxes. So number one, when you sell your crypto into USD, pretty self-explanatory. Say you got a Bitcoin of a thousand bucks, selling it for 50,000, you're paying taxes on $49,000 worth of gains, right? Number two is when you trade or exchange one cryptocurrency to another. Say you're spending Ethereum to buy Bitcoin or you're buying Bitcoin using XRP or something like that. So that's the crypto to crypto trade. If there's a profit, then that's taxable. And number three is when you earn cryptocurrency, so earning could happen to interest like BlockFi or Celsius, or it could be defying income like yield farming. It could be mining income or staking income. So that's taxable. And number four is spending cryptocurrency. Say you're spending a Bitcoin and buying a Tesla or something else, that's a taxable event. And then lastly, when you get an airdrop or when you go to like a hard fork, like production number 217, people who had Bitcoin received Bitcoin cash, so that's taxable. So yeah, those are the five things. Again, I think the thing to remember is that receiving cash is not essential for the IRS to tax you. Just remember that. Yeah, okay, that's good stuff. And then, so thanks, Shiana, appreciate that. There's another one here. And this is about realized versus unrealized gains. And this is from DD crew one. He says, it's strange because the gains like in Celsius, if you don't sell are not realized gains. So are they still gains if they are unrealized? So in the Celsius, like if you're receiving those interest income, it's realized. I mean, meaning like, you have access to it. I get your point, but then unrealized, in the case of Celsius reward, those are like interest. So interest is tax at the time you receive it. So at the time you receive it, that's called realized. But in the case of capital gains, like say that you've got a Bitcoin of a thousand bucks and now it's trading at 50,000, that 49,000 is unrealized. And then you don't pay taxes on unrealized gains, but Celsius is a little different because that's not a capital gain, that's interest income. And that's taxed when it hits you in a wallet. Yeah, and that's just one of those things where you gotta just be aware of, well, is it, it's gonna be realized if I sell it out, but it is unrealized, unrealized tax losses, unrealized tax gains until you actually do something with it and that's how I kind of see it. All right. Ah, when Mullet asked, he says, speak to the wash rule, please. So wash rules, so we're talking about wash, wash rules in a security like stocks versus wash rules in cryptocurrency. Shehan, take it away. Yeah, yeah, so let me give you an example. So right now the stock market is down, right? Say that, you know, you got a Tesla stock for a thousand bucks and, you know, now it's valuing at, you know, 800. So say that you're selling it and when you sell it, you realize $200 worth of losses. And say that you're buying back the same stock on the next day. Because of the wash sale rules, Iris gonna disallow that $200 loss because Iris is thinking, okay, this guy is selling to harvest the loss for tax purposes because, you know, on the next day, he bought back the Tesla stock in. So that wash sale period is actually 30 days. So if you wanna get the benefit of that $200 deduction, you can buy back Tesla, but you gotta buy back on the 31st day. If you buy back the same stock within that 30 day, they're gonna disallow that $200 loss. Now when it comes to crypto, that's not applicable because crypto is treated as a property as opposed to a stock to security. So what this allows you to do is you can harvest taxes more aggressively and you don't have to wait that 30 day period, you can quickly get back in and benefit those taxes. That's right. And that's what I did. Actually, that's what me and my friend Jerry Hall over in Costa Rica did. He, once that news broke about XRP getting sued by, or XRP, Ripple being sued by the SEC, he sold all his XRPs, like I'm out of here. And then for me, you know, when I hit like 20 cents or something like that, I took massive losses. I sold and I bought back in. Cause I'm like, well, I can't get, I mean, anything better than this, this is great. So that's what, that's, and of course, because, you know, stocks are securities, but cryptocurrency is property in the eyes of the government, correct? Yes. Yes. Yeah. So there's that. All right. And then there's a good question. Where did they go? Welcome to America. That's right. You ready for the stock market crash? I think so. Bobby Schaut says, being a part of multiple exchanges really sucks for this tax. Yes, it does. So just make sure you use one of those integrated tax software like crypto trader.tax, like we talked about, or coin tracker with she hand there. And then make sure you get a good CPA if you have a ton of transactions cause it's going to help you in the long run. And let's see. Think of the trader sale. I'll be doing the next year. Oh yeah. So Austin Powers says, if you receive interest payments in crypto and that crypto appreciates, do you pay taxes on the interest payment and then any gains on that interest if you cash out? So in that case, there's two tax events. So number one, at the time you receive that interest, you pay taxes based on the market value of those coins. And that establishes your cost basis. And later when you sell it at a higher price, you pay taxes based on the difference between the sales price and your cost basis which you recorded on the step one. So there's two taxable events but not necessarily double taxation. Double taxation means like the same dollar being tax wise but here there's two layers of taxation. Gotcha. So we told everybody like the wet blanket story, you know, like these are the doom and glooms, that type of stuff, right? She hand let's talk about something good. So tell us some, like if you get off the top of your head the things that you see in your practice that could be considered tax deductions that people should take that are not taking. And that could be anything broad or specific to crypto that you can think of. Yeah, I think when it comes to crypto, I think every month or every quarter, I think it makes sense to kind of sit down with the CPA or look at your portfolio and see, you know, what are the coins that are in the red? Meaning your market value is below how much you paid for it. So if that's the case, like you did drop, like you can sell them and, you know, harvest those losses. And then that's gonna significantly impact your overall tax bill if you do it every month or every quarter in a systematic way. So that's something that you can do. And, you know, if you're running like a mining operation, you know, there's, you know, equipment you can deduct up to a million dollars worth of equipment. So most of the mining clients that I deal with, like they're literally they're making money, but when it comes to taxes, they have either zero or near zero taxable income because they get to write off all those equipment costs as depreciation. What's good about depreciation is that you get the deduction but it's not our cash outflow. So you're saving cash pretty much. So that's one, that's another thing you can do. Yeah, go ahead. No, I'll say that's huge. And this is what I'm always talking about as far as like small business owners. And like if you're, if you work the nine to five job, it's tough to get those tax deductions, but, you know, investment properties, small businesses, like these types, I mean, that's what, you know, mining would be small business and some are large business, but they're still businesses. Those are huge tax deductions. Okay, I don't want to break your flow there. Sorry, Xi'an. No, no, another thing is self-directed IRAs, you know, essentially you open up an economy, one of these custodians and then you, you know, create cryptocurrencies inside this thing and your gains are pretty much tax sheltered until you go retirement. So yeah, I mean, I see a lot of people doing that, you know, these are the people who kind of think about retirement and they don't want to like, you know, these are the people like, you know, even if you catch up right now, they don't have anything to do. So they would rather save that money for the retirement. Yeah, I mean, there's, there's so many things to do but those are, I would say the three like most frequently seen items. What about, I mean, cause that's, I liked that one where you talked about the miners cause they have to buy so much equipment. They have to pay for so much electricity. They're pretty much net, net, net, net zero for their taxes because they're like, well, I have all of these different deductions even though I'm making a great amount of money. And then who knows what's going to happen instead of because right now, I think they're, they're changing things over cause Michael Saylor talked about this instead of them actually selling their Bitcoin on the open market. Now they're actually talking about a lot more just taking loans against their Bitcoin and then holding onto it for the appreciation later. I think that's going to be the big game changer coming down the pipe. And yeah, that's what I got. So there was another one, somebody in the comments said they lost all their money thanks to that cred scandal. Cred, if you don't not familiar, they did a lot of shading operations and loans in Southeast Asia that really weren't well collateralized and it just went under and a lot of people lost a ton of money. So sorry about that. So Shian, can you speak to that about people who get really get screwed and scammed? Yeah, I mean, again, it could, there could be a different ways that you can deduct it. You just had to kind of dive into the exact details. I mean, it could, it may be deducted as a Ponzi scheme laws. It could be deducted as a tax law. So abandonment. Yeah, I mean, again, these are the stuff that you definitely need to talk to a CPA versus using something like TurboTax because these are like some of those edge cases. Like for example, if you make like $50,000 a year, like, you know, you don't want to make a deduction for a million bucks of lost cryptocurrency because that's a definite red flag for the IRS. So if you're working with a good experience CPA, they're gonna kind of share the experience and kind of balance things out. So, you know, so you're safe and at the same time you're getting the deduction that you deserve. Exactly. So yeah, for these types of things like my, that $20,000 ADA loss, that was a huge loss to me. And of course it's from my own stupidity. Don't feel sorry for me and everybody. It's just, I didn't do the right things. That's why I have that shield folio now, the stonebook. But yeah, if I would have kept it, I wouldn't have lost $20,000 ADA. And remember, this was, I mean, I bought this back when there was a test net, when it was the Cardano test net. So it was like worth like nothing. So I wouldn't really think too much of it. Nowadays, what are we at now for Cardano? I'm right now. 130 or something? Yeah. Cause I have them. So now I'm like, damn, I don't have a lot of money. So it's just one of those things where it's like, well, I mean, I'm going to definitely work with the CPA because I don't want them, the IRS come back and me and go, but that's a great tax loss, right? Unfortunately, it sucks, but here we are. All right. And let's see, let's get a couple more and then we'll close it out. Not sure. You know, Bruno Mazzano says something pretty good here. He says, not sure that all tax departments will be able to recheck every single swap crypto to crypto for every single user. Sometimes swap crypto to crypto will be taxed since, what about Binance Futures? So this really comes down to the fact about talking about the IRS and how they can't catch everybody. They really can't. And I, and this is a slippery slope, but I will tell you this, it is just my luck that if I try to do something shady that they would catch me. So I would not recommend that. Let's see. And then what else we got? Michael Wong says, the crypto trader tax platform won't take my Celsius taxes. It's saying that I can't read loans at the moment. What can I do? Do exactly what I did. I had the same issue because I had a loan with Celsius. I talked about one of the videos, contact them directly and say, what do I do? And they fix it on their end and they do it manually. So just reach out to them. Matthew Jones says, please talk about US citizens moving to another country, still only taxes. Well, I mean, it's kind of what we talked about with the Puerto Rico thing. If you have taxes, if you buy crypto, or you have taxes, move another country and you're still going to have all the US government. If you want to go, you know, however you want to deal with that, that is up to you though. But you will always owe unless you move first and then by crypto at the new location. Oh, you renounce your citizenship? Yeah, renounce it, right. Hey, you know what? This is a question I had, Xi'an, which was, you know, for those Roth IRAs, can you cash out a Roth IRA if you declare what's called early retirement and how does that work? So, no, so Roth IRA, I mean, obviously typically, I think, again, there's so many rules I don't remember the exact dates, but if you're cashing out after your retirement age, I think for Roth, it's 59 and a half or higher. Or it could be 70 and a half or higher, I don't remember. But the good thing about Roth IRAs is that when you cash out in a, you know, qualified distribution, like you don't have to pay any taxes. Now, if you withdraw cash earlier, there's some penalties. Sometimes it could be 5%, 10% and stuff like that, but there are some situations where like you might, you know, you want to cash out your Roth IRA. There are other situations where you can cash out your IRAs without paying the penalty. Like for example, I think when Harvey happened in Texas, and whenever you go to like a disaster, the governments are like, okay, you can cash out your, you know, IRAs and you don't have to pay the penalty because, you know, if you lose your job, this is how you're gonna live. I think it happened during the beginning of COVID as well. So there's like, so the point is that there are, general rule is that you had to achieve that retirement age to get your entire portfolio tax-free. But if you cannot wait, there could be some situations where that will allow you to cash out tax-free. If not, like it's gonna be like, you know, there's gonna be some penalties you had to pay. There's always penalties. There's always penalties, let's just be honest. All right, let's see what else we got. And then Derek Johnson says, unless on this understanding, did you say some, did you say going crypto to crypto is a taxable event, even when there is no gain? Well, it depends. If you buy Bitcoin at whatever it is today and then immediately transferred over to Ethereum, then no, probably not, because it's gonna be a direct, I mean, maybe pennies, but let's say you bought Bitcoin at 5,000 and now it's 50,000, and then you take that 50,000 and put into Ethereum and buy 50,000 worth of Ethereum, and yes, because you had a gain from there, then you transferred over. So that's what we're talking about. And Holly says, what about buys and sells through PayPal? Why need to pull each event or will they have reporting? I have no idea. Good question. So PayPal will issue you a form 1099K, but only if you have more than 200 transactions and 20,000 in Wallium in any given year. So if you don't exceed those thresholds, you're still responsible for reporting your taxes, but you're not gonna get any tax rolls from them. Just to specifically answer your question, so if you're buying something, that's not taxable, but if you're selling something, that's taxable. Again, regardless of you getting a 1099 or not, like you had to kind of crack those things and you just had to pay capital gain taxes. Got it. Yeah, maybe that's why it was so slow to roll out with PayPal, because they had to get everything in place for their tech team to actually get all these different transactions. Can you imagine, you have 363 million users and then you're gonna open it up to cryptocurrency. They buy those crypto, they start to use up the merchants and then every single transaction they had to report and give them a 1099K, that's a huge undertaking. No wonder, makes sense now. I want to take someone to roll out, that sounds awful. All right. And then this will be one of the last ones unless we get somebody who has a dying question, but Eric Paulson says, can you trade as an agent of your LLC and then write off gains against business expenses? No, because your capital gains are, it's a different type of income than your business income. So you cannot intermingle those things and if you're single member LLC, those capital gains, they just get taxed at your personal level anyway. So there's not much difference of trading inside of LLC. Gotcha. Well, that's a bummer, kind of open for that one. All right. So let me just make sure we're following up everybody here. No profit, no tax. That's right, Mollett, which is not the case for Mollett. That guy's trading like crazy, making a ton of money. And then, wow, I do want to know about this one. There's two, sorry. Kyo says, what about buying Bitcoin from an ATM? Because I mean, because that one, you don't, as I understand it, I don't think you even put your ID in there. You just kind of like put some money in and spits it out some kind of a wallet. I mean, technically speaking, those ATMs, they're supposed to scan your ID and do the KYC because otherwise they're gonna be in trouble. But I don't know, you might some other ATMs that don't require you to do that. Again, you know. Yeah, they're playing with fire if they're not doing that. Yeah, but even if they check KYC or not, it's your responsibility to report your taxes. But by the way, buying Bitcoin is not a taxable event. So you should be saved, but you should keep track of the basis, how much you paid for it. Yeah, that's it. And then that's really it. That's all we got today. So listen, everybody, I want to say thanks for stopping by. What I want to do first before we take off, it's been almost been an hour. Can you believe that? I like that. I want us to want to make sure that in the description, I will be putting this little piece here. You can get ahold of She-Han, do a consultation, that type of thing, and ask him some questions as if he has nothing else to do. But definitely set up, if you need real professional help and you got a lot of questions and like there's a lot of different things going on, a lot of moving parts, then go for She-Han here. But I will just tell you this, if you just have like a couple of transactions, you don't need CryptoTrader.tax, you don't need CoinTracker, you don't really need She-Han. If you got a couple of transactions, it's no big deal, right? But we're talking to the people that like really need help and are like, hey, heck, I got so many things going on. I got thousands of transactions. I got loans, I got this, I got that. I got deductions, I got, this is what higher level type of stuff needs. So I'm not just as best to be just to go simple. But that's what we're at right now. All right, She-Han, any departing words of wisdom for us as far as tax payers? No, I guess make sure you follow taxes. And if you have any questions, I'm pretty active on Twitter at their CryptoCPA, pretty easy to find. All right, all right, everybody. So that's it for today. Thanks for stopping by for the AMA. You can find She-Han, I'll link all the stuff in the description. And that is it for today. Thanks.