Can you use wash sales to offset cryptocurrency gains? Probably

Can you use wash sales to offset cryptocurrency gains? Probably

If you invest in stocks, securities or cryptocurrencies such a Bitcoin and Ethereum, this is an important video to watch. Many have made mistakes for not understanding what a wash sale is and when it is prohibited by the IRS. You might not know this term. So I will explain what is use using a real stock. Let say you bought 1000 shares Starbucks (SBUX) @$60 per share on December 13 2017 for $60,000. On July 1, 2018, you see that the stock has dropped to $48 per share. Meaning you had a loss of $12,000. You have some other stocks that have done well, so you are looking for a way to lower your taxes. You think to yourself — hey you know what would be a good idea? Can you use your SBUX stock to realize a loss and then immediately buy it back to maintain my position? Sounds like a solid plan, right? Sounds like it should work. Can you think of any problems? Well this is where having some knowledge of the tax code would really help. This is what is technically known as a “wash sale” Wash sales are prohibited by Section 1091 of the Internal Revenue Code. Section 1091 states that your need a 30-day lag between selling and buying back otherwise, the loss that occurred will not be deductible. Now because it is a 30 day lag on both ends, you actually have to wait 61 days before buying a stock back in order to be able to claim your loss. Otherwise you will lose again. Once on the decrease in the value in stock and again, when the IRS won’t give you credit for the loss you actually suffered. So can you use wash sales to utilize cryptocurrency losses? Cryptocurrencies are bit volatile and because of this, many US taxpayers have large gains. But sometimes they are sitting on huge losses as well. The question is can you sell off the cryptos that have lost value to apply those losses against gains in order to lower your tax bill? And also, can you then immediately buy those cryptos back to maintain your market position? The answer is probably yes, section 1091 does NOT apply to cryptocurrencies. Will the IRS change its mind? Probably. There’s money to be had. Of course, the IRS can always change this rule. Section 1091 does allow the IRS to expand the “stock or securities” that trigger the wash sale rule. If the IRS passes a regulation clarifying that Bitcoin and other cryptocurrencies do fall under the jurisdiction of Section 1091, wash sales may be disallowed. It’s safe to assume that the IRS will eventually take the step to disallow wash sales of virtual currency. Personal property v. intangible property Yet, its conceivable that the tax treatment for cryptocurrency can get worse. For example, one unfavorable outcomes would be that the IRS could make the decision to treat cryptocurrency as personal-use property as opposed to intangible property. Capital losses from the sale of personal–use property, such as your home or car, are not deductible. See IRS Publication 523. Parent & Parent LLP 144 South Main Street Wallingford, CT 06492 (203) 269-6699 info@irsmedic.com https://ift.tt/1RfwK1f https://youtu.be/tWP772YAiY4 IRS Medic

FATCA Failure: The Top 10 reasons why the Foreign Account Tax Compliance Act is just awful.

FATCA Failure: The Top 10 reasons why the Foreign Account Tax Compliance Act is just awful.

TIGTA's report shows $380 million was spent for the IRS to (partially) implement the Foreign Account Tax Compliance Act (FATCA) meanwhile the revenue that FATCA was claimed to bring in never happened. In this video, we discuss the tope 10 reason why FATCA is one of the worst laws ever to pass, as it costs the government more money to implement, meanwhile making lives for Americans painful, if not impossible. The TIGTA Report: https://ift.tt/2zrxUJ1 The Top Ten Reasons why FATCA is a failure It was passed on an accounting lie. This PAYGO lie. PAYGO stands for “pay as you go budgeting” and it is supposed to keep spending bills deficit neutral. In this case, the HIRE Act of 2010 was a spending bill, so offsets needed to be found. The claims was FATCA would find about an extra billion dollars or so per year in revenue. And so how as that works out? According to professor William Byrnes and Robert Munro at Texas A&M, the revenue is not there. What you’ll see is a red herring from the government. The claim that thanks to FATCA, $10 billion in penalties collection as part of the OVDI, OVDP and streamlined programs. These were one-time payments only. But for the most part those are attributable to enforcement of the Bank Secrecy Act’s FBAR requirements, not FATCA. So why the revenue is not there, the costs certainly are. This brings us to Number 2. TIGTA puts the cost at $380 million so far. And there’s lot more work the IRS has to do to get FATCA fully implemented. 3. Risky. The government cannot provide any reliable assurance that the private financial information obtained on millions of U.S. and non-U.S. persons can be in any meaningful sense be considered secure. Imagine a data breach here. Lots of sensitive information there. What if say Turkey or Iran was looking for info on dissidents? What if they got info on someone whereabouts because of FATCA. What if that person was assassinated? 4. The cowardice of nations. Every one seems to talk tough about standing up the the US. So why couldn’t they find some courage to tell the US to get lost with FATCA? kind of sad the US bullied other countries, kind of sad that all these countries acquiesced to the bullying. They may have done so thinking that they’d get something in return. But they haven’t FATCA has been one-way sharing of information too the US. 5. Compliance vultures. This law benefits no one except those in the FATCA compliance industry. And for them, FATCA has gold. It’s been good for billions of dollars per year. 6. What was left of the 4th amendment was shredded. There exists no right to privacy. The IRS is entitled to your financial information even when there is no income to report. 7. The tribalism and dysfunction of our political system. One party passed FATCA. Another party wants to repeal it. You would figure those harmed by FATCA would be on the side of the party that wants to repeal it. But I have seen too much tribalism at play. Trashing people who you want to help you is kind of …stupid. Also, by telegraphing you will vote for the party that passed FATCA NO MATTER WHAT well…you just indicated to them that they can ignore you without any fear of consequences. If you can’t vote for for the party that wants to repeal FATCA, fine. But you don’t have to say that out loud. Make the people that doesn’t want to repeal FATCA second guess themselves. Make them think you could switch parties and never come back. 8. Triplicative reporting. So you could have a bank account that needs to be reported on an FBAR form. And a Foreign Financial Institution may be reporting this account the the US. Yet you still have to report this account again on a Form 8938 or face a possible $10,000 penalty, even though the account may actually make no income of which taxes could be due. With the Bank Secrecy Act and FATCA, three times the government learns of a foreign account. And as we learned form TIGTA report, the IRS is flooded with so much data, FATCA can’t be fully implemented. 9. The drain on IRS resources. FATCA imposed more burdens on an already understaffed IRS. This meant the IRS had to pull resources away from other areas. There is a reason why when you call the IRS for help hold times are long. There is a reason why a lien release that used to take 5 days now can take 5 weeks. There is a reason why claims for refunds take much longer. 10. Forced expatriation of US persons. This is the worst. A US citizen should have the most opportunity in the world. FATCA made that impossible. In order to continue to live their lives overseas, many Americans from retirees to US armed services veterans have had to give up their US citizenship to survive. Parent & Parent LLP 144 South Main Street Wallingford, CT 06492 (203) 269-6699 info@irsmedic.com https://youtu.be/5BqO9cbyr-E IRS Medic

The terror behind IRS Private Debt Collections: Who is really to blame?

The terror behind IRS Private Debt Collections: Who is really to blame?

The answer? It NOT the IRS that is to blame It is Congress. We try to be fair to the IRS, and in this case, the IRS got it right. They were the ones who we more fair and humane. It is Congress that rather monstrously passed this dumb dumb dumb idea. Private debt collection is something the IRS once experimented with, but it quickly realized it was a bad idea. Between 2006 and 2009, with Congressional approval, the IRS tried on their own using private debt collectors to try to collect taxes on cases that were too small to send to revenue officers or otherwise weren’t getting worked. The IRS ended this experiment realizing there was no free money. The program created more headaches than it was worth. As the IRS learned that there was a reason why these cases were uncollectable. The people they went after were dead broke. So the IRS abandoned the idea of using third party private debt collections forever and would stick to their normal collection processes that do have some important protections available for those who are financially struggling. Legislative accounting fraud is enabled by something called PAYGO budgeting. PAYGO budgeting, which stands for “pay-as-you-go,” it is a budget rule which requires new proposed spending to be offset by tax increases or cuts in mandatory spending. What this means is that if Congress wants to spend $100 on a new spending program, it has to find $100 in cuts or in additional revenues. The purpose is to keep the budget deficit low. Yet the budget deficit continues to grow. So what’s going on? The answer is that while the spending is sure to happen, the offsets, the cuts or increases in revenue rarely occur. Yet, just because those offsets never happen, the spending is not undone. No rather, nothing is done at all. it is all swept under the rug. So how does PAYGO apply in this case? Let me explain. So in 2015, there was a new proposal — this was the FAST Act, a new spending bill. And so Congress was looking around for some offsets. So someone had the idea that if only past due IRS debts were sent to private collection, it would rain free money. About a billion dollars of unpaid taxes where there just for the taking. Free money! This claim was completely accepted as true, again even though, again, the IRS tried a limited private collection program and it completely failed. Again, it failed so bad the IRS stopped doing it. Yet the program actually cost $13 million. The IRS spent $20 million dollars so far to administer the program, but it only brought in $7 million in revenue. That is, the deficit increased by $13 million. So instead of not offsetting the spending like PAYGO demands, it actually increased the deficit. But what is even worse is when you ask yourself where did that $7 million they did collect come from? These taxpayers were deemed to be the lowest priority of IRS collections. How did these seriously strapped individuals come up with $7 million. Well the Taxpayer Advocate Service did some great research. And it found that these taxpayers, if using IRS guidelines would have been placed in a hardship status. A hardship status is where the IRS deems you to be currently not collectible. So they leave you alone, although they will intercept any refunds that you may be entitled to. Under the IRS guidelines these people would not be subject to levies or the threat of levies. Yet many of these people have been sent out for private collections! So in an effort to make themselves appear as fiscal hawks, Congress mandated that private collection agencies extract money from the most vulnerable Americans, making these suffering people more vulnerable. Look I know my firm and a lot of the other good ones would be able to get tax relief for anyone facing a financial hardship. But so many people simply don’t have the resources to pay us even if we charged half our fees. It’s only the lucky ones who have friends or family to borrow from or get a gift from that get the top representation. There are legal clinics and they are great, but there’s simply not enough of them, and they are typically bound to the school year as most of them are run out of law schools. Yet here we are, Congress authorized private debt collectors to extract money from Americans who not just below the poverty line, which for a married couple is about $16,000 per year. But, according to the Taxpayer Advocate, many of the people the government collected from made less than 2 1/2 times of the poverty line. We are talking about is people who have $5000 per year to live on. Let me know what you think and what kind of solutions you would impose. I will merely offer my observation — tar and feathers always seem to work. We just got to make sure we get the right people. And in this case, it is NOT the IRS. Parent & Parent LLP 114 South Main Street Wallingford, CT 06492 (203) 269-6699 https://youtu.be/qXESF_j5BKE IRS Medic

Are cryptocurrencies currency or property? The US Treasury can't decide.

Are cryptocurrencies currency or property? The US Treasury can't decide.

Are cryptocurrencies property or currency? It’s a great question – I wish that I was able to give you clear guidance on what the United States government considers it to be. But, I can’t – and I’m a Tax Attorney. It’s not that I don’t know what the rules are. I know the rules better than most. But, I am hit with an immediate conflict that i want to share with you. That’s legal term – virtual currency. I’m throwing that term out to you for a reason. That’s a term that FinCEN (Financial Crimes Enforcement network, a division of the US Treasury) calls cryptos. Why? So that it can apply the rules of the Bank Secrecy Act to cryptocurrency. If it were to be property, the argument would that the BSA could not apply and FinCEN would be powerless to regulate. Now, consider this -- the Bank Secrecy Act was written by Congress in 1970 – requiring financial institutions in the United States to assist U.S. government agencies to detect and prevent money laundering. Bitcoin was created in 2008. So, FinCEN is using 48-year-old legislation to regulate a modern technology – to regulate cryptocurrency exchanges like banks. Even though cryptos are not banks. Not at all. Now The IRS – another division within the United States Treasury – has announced that it considers virtual currency as property. So for purposes of regulating transactions under the BSA, the government considers cryptocurrency to be currency. But, on the other hand crypto currency is to be viewed as property for federal tax purposes and applies tax principles applicable to property transactions. In other words, the IRS wants to be sure is doesn’t miss out on crypto gains it could tax and FinCEN wants to regulate cryptos, hence we are left with conflicting rules. The way that the regulation is currently imposed has caused cryptocurrency to lose the utility that it was originally intended to have. I don’t want to get into whether this is a good or bad thing. But, because most of the exchanges are in compliance with the Bank Secrecy Act – the original utility of anonymity has been destroyed. Maybe you’re ok with that – maybe you’re not. But, it’s irrefutable that the tax policy is designed to discourage the use of virtual currency from being used as it as originally intended – as currency. In order to be in compliance, the cryptocurrency user has to report every transaction he makes. In other words, the cryptocurrency user can’t walk into a cool hipster coffee shop and use cryptocurrency to buy a cup of coffee without having to calculate the capital gain or loss on the transaction. Now, this at first may seem like a minor inconvenience. But, in order to do this accurately the user needs to be able to specify the particular units of bitcoin to be used in the transaction – not exactly as practical as handing cash over the counter to the barista. It’s no wonder that certain studies report that 59% of Americans don’t report appropriate cryptocurrency-based capital gains to the IRS. I have a feeling that figure is much much higher. As of right now, in 2018, the government is applying a limited regulatory structure to cryptocurrency. Nonetheless, the government is applying an antiquated regulatory structure to cryptocurrency. It’s to be expected. The folks working within the United States Treasury are dealing with a new technology neither the BSA or the Income tax ever contemplated. Of course they are not going to be about to come up with a cohesive rule. In their defense, even the most astute regulators didn’t expect the rapid increase in the valuation of cryptocurrencies. Nor did they expect Wall Street to express such interest in investing and speculating on cryptocurrencies. So now it’s the duty of the people in the communities surrounding cryptocurrency to make their opinions known about what to do about the regulatory puzzle surrounding cryptocurrency. For regulatory purposes, should cryptocurrency be viewed as currency or property? Now confusing matters is that all currency is technically property but not all property is currency. But how should a regulatory framework be designed for cryptocurrency? Should government have any involvement at all? What should we do about the current conflicting interpretations by FinCEN and the IRS? Parent & Parent LLP 144 South Main Street Wallingford, CT 06492 (203) 269-6699 info@irsmedic.com https://youtu.be/sBj4Hqy0XQE IRS Medic

Can you cheat the FBAR? What happens if you don't file?

Can you cheat the FBAR? What happens if you don't file?

Here are some things you really should know before you decide NOT to file an FBAR. The FBAR is the Report of Foreign Bank Accounts. FBAR is also known as FinCEN Form 114. A person or entity is required to file an FBAR if they have a financial interest in or signature authority over at least one type of foreign financial account that exceeds an aggregate value of $10,000 at any time during the year. FBAR reporting is not limited to foreign bank accounts. Pensions, life insurance policies, and accounts that earn no money have to be reported. The FBAR form is a complicated form and is viewed by some as an invasion of privacy. Some clients ask whether they can get away with not filing an FBAR form. I advise those clients that FBAR penalties are steep and willful non-compliance is illegal. Therefore, to avoid legal consequences, I advise filing an FBAR form. There are six things to be aware of before not filing an FBAR. If you ever filed an FBAR, you are now in the FinCEN database. Once you are in a database, you can be tracked. People who don’t comply with the reporting obligation and don’t risk consequences are people who don’t get caught. The IRS only needs to catch you once. IRS tax examiners will ask a person about FBARs. If a person doesn’t answer honestly, he will face civil and criminal penalties. However, answering honestly will have consequences too. Failing to learn about foreign account reporting requirements can be evidence of “willful blindness.” See Internal Revenue Manual, 4.26.16.4.5.3, Paragraph 6. The DOJ also investigates people for criminal charges related to FBAR non-compliance. Criminal penalties for FBAR violations are frightening, including a fine of $250,000 and 5 years of imprisonment. If the FBAR violation occurs while violating another law the penalties are increased to $500,000 in fines and/or 10 years of imprisonment. People who have grievances against you are often very willing to offer testimony to the government. If you are not going to file an FBAR form, be confident that the people aware of your reporting obligation won’t offer testimony to the government. Income and assets can be attached to pay outstanding FBAR penalties. If you have no income or assets that can be attached, you may be able to avoid collection. However, in some jurisdictions, the IRS may be able to seize part of your spouse’s assets to pay your bill.   The statute of limitations for FBAR penalties is 6 years. However, after six years, the IRS may still be able to penalize you for other unfiled foreign reporting forms like Form 5471 or Form 8938. These penalties can be assessed for multiple years, and unlike FBARs, there is no statute of limitations on these types of penalties. A person’s best option is to file an FBAR correctly and get into a proper offshore disclosure plan. However, there are three things to consider that may take the sting away from this compliance regime:   The FBAR intel is low value to the government. By filing an FBAR, you’re merely bogging down government bureaucracy. There is no such thing as an FBAR initiated audit. No one looks at an FBAR unless a tax audit is initiated. Don’t think that filing an FBAR is a red flag to get you audited. If you are going to “come clean” with the IRS do it right or don’t do it at all. Lying to the IRS will make things worse. https://ift.tt/2kQWHfk Parent & Parent LLP 144 South Main Street Wallingford, CT 06492 (203) 269-6699 info@irsmedic.com https://ift.tt/1RfwK1f https://youtu.be/11rv3eh9f0k IRS Medic

IRS Tax Relief Programs 2018: Top questions answered

IRS Tax Relief Programs 2018: Top questions answered

Do you have a question on IRS Tax Relief I didn't answer? Put in the comment below and subscribe! I'll answer the best ones in an upcoming video. https://ift.tt/2jsz1gT The most helpful way to think about IRS tax relief services for outstanding back taxes is two ways. 1. You can not afford to pay or 2. You truly don't owe the taxes. Other types of amnesties involve limiting criminal exposure, unfiled returns, and punishment mitigation. And there is the IRS First Time Penalty Relief program that is guaranteed as a matter of right. You merely need to request it. Sometimes it simply requires a call, others instances the petition must be in writing. Additionally, the IRS is very interested in assessing large penalties for those that have unreported overseas accounts or assets, such as inheritances from aboard and pensions located abroad. The penalties can get out of control fast - starting at $10,000 per year and the capability to reach so high they could actually completely ruin somebody. And another type of tax relief is a general tax relief for when taxpayers are in a declared disaster area because of a hurricane, earthquake or some sort of natural or even man-made disaster. These amnesties normally push back dues dates to everyone in the affected region to eliminate potential penalties, yet it will negate ones requirement to cover the inherent taxes. If however, your capacity to pay was greatly decreased by natural disaster situations, or perhaps say something like a terrorist attack, this fact should be properly incorporated into a claim you can't manage to cover the tax invoice in full. Is there any tax relief available for taxpayers with psychological illness? We frequently get calls from family and friends of a taxpayer who has both tax issues and mental health issues. The largest difficulty in these cases is eliminating the fear. Cases with mentally ill clients are difficult and need more patience, but are incredibly rewarding when we can solve at least one of our clients' problems. Is IRS tax relief that a scam? There are a whole lot of tax relief firms around who advertise heavily with TV and radio advertisements, and the internet. A number are, in fact, scams and not legitimate. The tax resolution business is filled with people asserting that are "top rated tax relief firms" and "the very best tax difficulty attorneys." A number of these people making these claims aren't attorneys that's fine, a non-lawyer can assist you, but lying is dishonorable. Yet they are not called on it, closing their doors when the complaints become too big and then reopening under another name. Many these company pay for bogus testimonials or use other services to suppress negative reviews. Even the IRS doesn't govern these firms to some meaningful level, the Federal Trade Commission will be more competitive, but there is only so much they could do. The very best advice would be to exercise due diligence on who you hire, if anyone, to help you get this issue behind you. The fantastic thing is there are a lot of quite good tax relief specialists out there. A lot of these are my friends. A few are CPAs. Some are actual real tax relief lawyers. We're tax lawyers so the instances best suited for people are where: 1. There is a fear of criminal vulnerability 2. The stakes are rather significant 3. Businesses are involved 4. The problems are incredibly complicated (particularly when overseas assets or income is included), 5. Or it is a case where the client prefers to have the security of their attorney-client privilege. Can IRS tax relief differ from state to state? Absolutely. The IRS accounts for the various differences in the price of living. Yet, the differences sometimes are not enough. The reason is the IRS will require an average of a geographical area that might not be really be realistic. For instance, from the hyper-wealthy Fairfield county in Connecticut, the biggest city is Bridgeport, which can be quite cheap to live in, although a bit distressed in appearance in security. Additionally, the IRS Office of Appeals is different from region to region. The quality and standard of Appeals Officers differ greatly. It is crucial to know this going in, as there might be a way to change venue. Additionally, some states are what are known as community property states. At a community property state, the IRS could reach into half of the the assets of their non-liable spouse. This can cause quite a complicated scenario for us, particularly in the event of outstanding payroll tax liabilities. Arizona California Idaho Louisiana Nevada New Mexico Texas Washington Wisconsin Alaska is an opt-in community property state. Parent & Parent LLP 144 South Main Street Wallingford, CT 06492 (203) 269-6699 https://ift.tt/1RfwK1f https://youtu.be/U-G9KXeOg5E IRS Medic

Al Capone’s complete BULLSH!T tax evasion conviction: A look inside

Al Capone’s complete BULLSH!T tax evasion conviction: A look inside

The truth behind Al Capone’s tax evasion conviction should outrage anyone with a functioning brain. As a tax attorney and one-time criminal defense attorney, there are few bigger outrages than Al Capone’s tax evasion conviction. “You see this is why we need the income tax! To put people like Al Capone behind prison where he belongs. The other laws can’t catch him, but the good old income tax, sure helped us out of jam here. YET THE ONLY REASON AL CAPONE BECAME A SUPER GANGSTER WAS BECAUSE OF THE INCOME TAX! the Alpha and omega of Al Capone the Gangster is the 16th Amendment! There are a lot of myths out there. And I am going to show you why they just don’t stand up to scrutiny. Other laws did stop him Al Capone was put behind bars. Yeah he got pinched for a weapons charge. Served 9 months. Kind of touchable Al Capone attempted to pay his taxes but the Treasury refused to deal with him. The set him up for a conviction. Unfortunately this still happens to this day. 3. The amount of income Al Capone claim he made was enough to support his lifestyle. Further, Al Capone was a professional gambler, he owned race tracks and had substantial losses. 4. Al Capone was the scape goat for progressive malfeasance Progressives pressured the federal government that horrific poisons be added to industrial alcohol that was being re-distilled to make fairly safe for consumption. But these additional poisons were so powerful, the re-distilling process did not work (unknown to anyone) and people were becoming blind after 3 drinks and dead after that. It is estimated that 10,000 people were murdered by drinking alcohol that was intentionally poisoned. Sorry, this death count far exceeds Al Capone. So who went to prison for this? No one. Progressives like Wayne Wheeler of the The (pretty racist) Anti-Saloon league was ecstatic about this program. when informed it was killing people, he responded: “If America can be made sober and temperate in 50 years a good job will have been done.” You see if wasn’t an out of control federal gov’t that was the problem. It was the arrogance and hubris of progressive ideology. And just plain evil. To quote C.S. Lewis: “Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.” For me, I would rather be ruled by Al Capone than by progressives. At least Al Capone knows his terrible things are kind of bad. A progressive on the other hands, think their bad things are good. The Revenue Act of 1862 and 1863 were prior to the 16th Amendment but were held to be constitutional. Why? A personal income tax is a wartime measure. The thing is, the modern income tax is a wartime measure. So who are we fighting? And if our objective was to defend freedom and liberty it sure as shit seems like we lost that battle a long time ago. Parent & Parent LLP 144 South Main Street Wallingford, CT 06492 (203) 269-6699 info@irsmedic.com https://ift.tt/1RfwK1f https://youtu.be/_m1IAmRKmWA IRS Medic