CD147: TAX PLANNING AND NEW IRS RULE WITH SATOSHI PACIOLI

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Transcription provided by Podhome.fm
Created: 12/31/2024 00:47:18
Duration: 4194.964
Channels: 1

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Happy Bitcoin Monday, freaks.

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It's your host, Odell, here for another Citadel dispatch, the interactive

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live show focused on actionable Bitcoin and Freedom Tech discussion.

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You may have noticed that I skipped the mainstream media clip this week.

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My wife and I recently had our first child.

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And when I'm doing,

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fatherly duties, I've started listening to podcasts at length again,

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and they are just

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destroyed by advertising.

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It's just and I got my hands full. I'm, like, holding the kid. I'm, like, bathing him, doing all these different shit, and I can't skip the ads. So I'm stuck in the ads.

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I'm pretty sure dispatch is one of the most listened to non advertisement funded shows.

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So a way for me to flex on all the other podcasts

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is to just

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do pure content.

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Just you listen and you just all you do is you get good actionable conversation.

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So I'm trying this out as a flex.

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Let me know what you think. If you want if you want the clips come back, you like them as a time capsule. I always like them as a time capsule too. That's why they exist in the first place. I'll bring the clips back. You can let me know by using podcasting 2 point o apps, like fountain podcasts in your favorite app store. Just leave a comment there. Throw some stats our way,

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and and we can take it from there. But I was just thinking, let's just keep it let's just keep it as clean as possible.

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But, anyway, we have a great conversation lined up. I have

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these great 2,

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tax professionals

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that are based here at Bitcoin Park in Nashville. They run a business called Satoshi Petioli,

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which is probably the best Bitcoin focused tax firm in the world. A lot of your favorite companies use it. A lot of a lot of Bitcoiners are using them on an individual basis.

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And so we have Joe here and Seth here. How's it going, guys? Good. Thanks for having us. Thank you for having us on.

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So this is one of my least favorite topics.

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But you guys said that,

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it was important

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for us to discuss this before the end of the year.

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Seth actually told me

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the day before Christmas, he was like, Matt, this is an important topic. It'd be great if we could rip,

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before the end of the year. He gave me about 7 days 7 days to to make this rip happen. So here we are live from Bitcoin Park to make it happen.

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So where should we get started?

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Yeah. I mean, I think probably the most pressing thing that we've been getting a lot of questions from people is there's a lot of information around this new safe harbor provision

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around the new IRS guidelines starting on January 1st.

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And so

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I think we're gonna try to hopefully, like, ease people's fears a little bit on it, provide some good information on what you do and don't need to do before end of the year.

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And then, obviously, like, as you have questions in the chat, feel free to drop those for areas that you wanna make sure that we cover. Yeah.

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Josep, do you wanna drive into

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the safe harbor in general, what it is,

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and kinda how

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individuals who are holding Bitcoin want to think about it. Yeah. So.

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Basically what the safe Harbor is is it's the IRS.

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Allowing or giving the taxpayers a little bit of flexibility

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to clean up

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prior your cost basis that hasn't been,

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like, you haven't sold Bitcoin yet and associated that cost basis with the sale. So you have these unused cost basis. Maybe it's FIFO, maybe it's LIFO, maybe it's FIFO, maybe you don't even know what your basis is and you still need to find it.

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Wait.

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What's FIFO? What's LIFO? What's HIFO?

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So FIFO is

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first in, first out. LIFO is last in, first out. And then HIFO,

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it's kind of a newer term, I would say.

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I see it a lot more than the Bitcoin side of things, but it's the highest in first out. So maybe you bought 1 Bitcoin in a $1,000 and then you bought another at a 100 k. You might want to sell the 100 ks first to pay less taxes than that 1,000 ks.

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So we can still do that with these prior purchases before January 1st coming up here.

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But really the main change going forward is

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a lot more reporting requirements from the IRS starting January 1st.

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And any Bitcoin that you purchase

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starting January 1st on

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will be tracked using

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FIFO. It's 1st in, 1st out.

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Yeah. So that's probably the first major change to try to highlight for people starting on January 1st.

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Previously, you had this optionality of using, hey, I bought Bitcoin at different prices. I'm gonna say I sold

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x Bitcoin and have a smaller gain versus Bitcoin I bought in 2014,

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for example. And you could just dynamically switch. Right. And so now in 2025,

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they're saying that IRS is saying essentially,

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this was always the rule that we wanted people to use, but we didn't we weren't,

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like Clear about it. Clear about it.

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And so starting in 2025,

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everyone's gonna use this going forward, at least. But with the safe harbor provision,

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assuming that you, you know, you document it, you're able to take previous Bitcoin that you've acquired

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prior to 12/31

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and use these other options as well still.

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Yeah. And I've seen a lot of people kind of freaking out, and I've actually seen a lot of misinformation

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regarding this stuff online. So,

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contrary to popular belief, you are not actually formally filing

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with the IRS right now. You're basically declaring, hey, I'm going to pick specific ID or I'm going to pick global allocation method. And that's that.

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We're not sending screenshots. We're not sending the IRS

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your entire cost history that you've ever bought. Not sending the IRS anything right now. No. You're not sending them anything right now. Where this will come in hand later on would be like 2 or 3 years down the line. Let's say you get audited.

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The safe harbor vision,

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the IRS is basically saying, you know, if if you allocate your basis

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how you want to,

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and then you use that for these sales,

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by declaring that in the next few days or we have a little bit of time for one method,

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you don't run risk of recalculation during audit. So in theory, this document

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should really only come up during an audit.

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Yeah. And that'll be a long way down the road. So we wouldn't say, like, hey. Don't worry about it. Like, you know, you don't need to do anything, but it is important to understand that, like,

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the reality is for 99% of people, no one will ever see this document besides yourself just from, like, an understanding from a privacy perspective.

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I would say So you're saying that you think the percent of Bitcoiners that will be audited in the future is less than 0.1% to Bitcoiners?

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I'd be more comfortable if we said less than 1% of Bitcoiners.

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But it's gonna be a small number. There's a there's gonna be more and more Bitcoiners. So so that number's gonna have to come down. Okay. Fair enough.

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And I think,

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I think just from a,

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the flip side of that though is the information or, you know, whatever doc whatever you're documenting with the safe harbor plan as far as

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whether it's individual addresses,

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screenshots, whatever it is, be aware that that's what they would be requesting in the audit.

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And so to be able to back up what you're Exactly.

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So just having that as understanding of, like, this is how the document's gonna be end up be being used for that relatively small percentage of people that it affects. And that's not different. Like, just because this is a Bitcoin, it doesn't make it any different. Like, tax returns are sent to the IRS,

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and they're assuming you're telling the truth. Right. And only then in an audit would it come back up. Like, during an audit, you're you're guilty till proven innocent. You basically have to back up everything that you've said to them in the past with actual evidence.

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So the IRS might say, like, hey, these are a lot

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of meals or business expenses here. Let's dive into that. But even then, you might run the scenario where you can have you can just do a sample size. Like, you might not actually have every single line item.

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But, yeah, anything that you are ultimately saying to the IRS,

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you wanna be sure that it is correct because they'll they'll dice you up.

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Okay. So freaks,

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obviously, we have,

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the rider die freaks in the nostril chat.

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We're also paying attention to the YouTube chat. I can see the YouTube chat here, but the rider dies in the nostril chat. You can get to that chat by going,

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to zap.stream/odellorsodeldispatch.com/stream.

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All the important links are atodeldispatch.com.

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So if you guys have questions as we're having this conversation, feel free to put the questions in.

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No question is too dumb.

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I

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know this is not people's favorite topic. It's probably, like,

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pretty close to the bottom in terms of my favorite topics. If I'm not my favorite topic.

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I, that's why that's why we hire people like you guys.

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Okay. So can we go through

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can we go through, like, a practical scenario? Let's go through a practical scenario. Probably the scenario that applies

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to,

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99%

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of the people that listen to dispatch.

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So

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they have let's say they have a custodial wallet on strike, so they have some Bitcoin on strike.

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Not your keys, not your coins. I don't know why you have Bitcoin there. But let's just say you have Bitcoin on strike.

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They have some Bitcoin on strike. They have some Bitcoin

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in cold storage.

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So, like, on their hardware wallet or hardware wallets with Multisig and Sparrow. So they have a cold storage wallet. And then let's say they have a hot wallet on their phone. Right? So they have 3 wallets.

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How do they what's what what is the best way for them to proceed here based on your interpretation of this rule?

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Yeah. I mean, I think there's there's been some some different guidance around it. I mean, we might even have different opinions on this. It it very much is

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a nuance tax, but also just practical conversation of, like, if you want to make it simple as for your tax size things, you could just say

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move all this into one wallet, whether that's

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Yeah. No. Don't do that. Okay.

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That that would be the simplest on the the tax side. But There I think there's, like, a rightfully Yeah. Skeptical conspiracy theory that the goal is to scare people into consolidating because that's horrible for your privacy. Right. And can we just toss out that

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can we just out that one?

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And so, like, honestly, like, 3 walls is not that complex. Right? And so it it's Let's try to simplify it a little bit for you. And so,

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what's important to know there is essentially that

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those 3 wallets are gonna have their own cost basis attached to them. Right? And so

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potentially being strategic about,

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hey. If I have Bitcoin on Stripe,

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it's probably because I am going to be selling or using it in the short term. Right? Or Yeah. As you said, why is it there? Yeah. And so maybe that You're getting ready to sell for your mortgage or whatever. Yeah. And so

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maybe that is my higher cost basis Bitcoin that I have held there. Where you just bought it. Right? Yeah. Or yeah. Or you you have it there and you plan on leaving it there or,

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whatever your situation is there, though. Like,

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the exchange Bitcoin is probably the most short term Bitcoin. Right? Right.

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Versus

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my cold storage

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is probably Bitcoin that I don't intend to sell for 1, 2, 5, 10 years. Right? Maybe you've been stacking it for 1, 2, 5, 10 years. And so that is probably Bitcoin that you have as your lower cost basis and that like, yeah, you're gonna pay some tax on it eventually, but that is years down the line. Right? And then your hot wall is maybe somewhere in between of, like, maybe I'm using that to, again, purchase things on a regular basis.

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But, like, trying to be strategic about which

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Bitcoin you're holding in each of those wallets at least. Okay. So then but then what are you supposed to do?

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You would essentially

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you would document in that kind of that safe harbor of, like, I have So first of all, let's figure out.

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You don't do anything. Let's just say

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this sounds this sounds like too much for me. It's the 30th December.

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Odell decided to have this this episode right right before the New Year. By the way, they gave us, like, very little warning. Not only did they give us very little warning, the IRS gave them very little warning. So you can blame them for that. We're just making it happen for you freaks.

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I just wanna ignore it.

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I heard someone before we started ripping

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some random person in Bickland Park say I'm just gonna outhold the IRS. Like, they're just gonna outhold the IRS. I don't wanna deal with it.

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What happens to that person if they want to sell next year?

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Yeah. So They do nothing.

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Fundamentally,

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the only downside to that is it's going to be their

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it would default to their 1st in, 1st out. So it defaults to FIFO. So you're just paying at that point, you're just paying

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your your the lowest cost Bitcoin. Well, no. Not necessarily the lowest cost Bitcoin.

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The oldest Bitcoin you own is the cost that you're selling at. Exactly. Mhmm. That might not be your lowest cost. It might not be. Yeah. Yeah. He bought in You might have bought at $70,000

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at the top of last cycle and then bought at 15,000.

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If your first set you start from the oldest. Exactly.

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So It's not that's not the worst scenario in the world. No. Absolutely not. It's just you're gonna potentially pay a little bit more taxes,

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but it's it's not the end of the world. And the other thing is, like, just as far as what you need to do and, like, the urgency on it.

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I I can't speak for that, obviously, but, like, if you do this in

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January 15,

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2025

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and you're audited in 2028,

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2029,

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you have a document, and you're like, hey. I did this in January.

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I would expect that they're gonna be like, alright. Well, you documented. That's fine.

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They could come back and say, no. It's You were 15 days later. 15 days late. I don't think that would be the case. I think it'll be like you made a good faith effort. I mean, they could also just change everything in a year. Right? Yeah. Yeah. I mean, that's probably an important thing to highlight as well. Like, this is all very new.

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It's all subject to change, I would say.

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And so

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we could easily come to the end of next year, and we're having a clearly different conversation on what the rules are.

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Okay.

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So

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we do nothing, and we just paid 5.

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You give you're basically giving the taxman the max amount of dollars.

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Right? Your lowest cost basis. Yeah. Yeah.

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Assuming your first purchase is the lowest cost basis. Yeah. I mean, unless you, like, started buying, like, a week ago, you're, like, basically giving the taxman

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unless you start buying at a $108,000

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Yeah. You're probably giving him his the most he could possibly get, and he probably won't be angry at you as a result.

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And it's probably that's not the end of the world. I I I wouldn't that it's not like there's freaks. There's a reason we didn't title this episode

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tax emergency.

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I figured

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you'd freak out enough by just seeing the words tax and IRS in your SIL dispatch feed. I didn't have to put emergency there as well. I didn't wanna, like, scare you guys. And I think this is a perfect example where if you do nothing, you're really not in this most horrible situation, but you can optimize. Right? And one of the jobs of an accountant is to try and

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optimize

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your your tax burden and and reduce legally reduce

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the amount of taxes you pay. Okay.

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So now now we're actually gonna go through the trouble because it's a day before, but we wanna make sure everything's going through.

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Am I am I correct that you're basically so I have 3 wallets. Right? You have the cold storage.

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You have the hot wallet, you have the custodial.

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You're basically saying at this point

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that I'm going to use,

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one of those 3, FIFO, like, 1st in first out, last in first out, highest in first out for each wallet you're dictating. And it's not on a per transaction basis. It's on a wallet basis.

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They can each be different. Yes. Right? I can say can I say,

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I'm doing

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HIFO for cold storage,

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LIFO for hot wallet, and FIFO for

201
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In theory, yes? As long as it's Bitcoin that's purchased before January 1, 2025. So then after January 1, 2025, everything's FIFO? Everything is FIFO. Yeah.

202
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Okay. All assuming that you purchase Bitcoin after that point. Yeah. Because this the the trouble with this is now we're looking in the past. So, like, all this data should But it's everything is FIFO on a per tax lot basis. Right? So, like, if you have a different wallet

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okay. So now let's go to I feel like I'm jumping all over the place, but I'm just asking the questions as I come up with them.

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So if it's January

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31st,

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February 15th,

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so the day after Valentine's Day,

208
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and I buy some new Bitcoin,

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And I put that in a separate wallet for my cold storage.

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And

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so my,

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my cold storage obviously has older cost basis,

213
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right? But this new one is at $95,000

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or whatever price you're at. And I sell that one.

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I can use, like, the most, like, like, is it on like, do you understand what I'm saying? Yeah. Is it, like, is my cost base is $95,000

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or is it

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first in first out across all of my Bitcoin?

218
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It will be by wallet. Yes. So

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Per wallet basis. Yeah.

220
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So could you technically, like, spin up

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a new wallet for every receipt

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and then you'd be?

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In theory, you could,

224
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essentially,

225
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you're gonna end up in the same place, though. Yeah.

226
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And that But then couldn't you select which wallet to sell? You can always select which wallet to sell from. Right?

227
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I'm not, like, trying to cheat the system. I'm trying to understand. I'm I'm trying to understand how this works.

228
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Like, are they gonna allow that?

229
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Well, so

230
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that would be assuming that you sold that Bitcoin that you purchased on February 15th. Right. And No. So then comes August 31st or whatever, and instead of selling for my cold storage, I sell from that wallet. Mhmm.

231
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My cost base is $95,000

232
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or whatever that price was. Yeah. And like because because you bought it, like, in River, for example. So River's gonna have that cost basis. Well, then I send it out to River to the self and once we go to self custody, it's a mix everything. Yeah. So it's probably an important thing to highlight.

233
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And it's

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we're talking about 2 different years here. 2025 is gonna be different than 2026.

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But you let's say you buy on river,

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in 2025.

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You're gonna have a cost basis assigned to it. They're gonna know what it is.

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You pull it off of river, hold it into self custody, and then send it back. They're not gonna know which Bitcoin you sent back to them. Right? They're not gonna know it was that Bitcoin that you purchased. So you're gonna have to give that to them again. And so it'll be up to you to report. Hey. This is the Bitcoin that I bought on this date, and I'm sending it back to you, and here's the cost basis. I caveat that with 2025 or 2026

239
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because

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in 2025,

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there's no reporting requirement by the exchange to report the cost basis to the IRS. And so the river

242
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may or may not ask you for it, but they're not gonna tell the IRS, hey. This was $95,000

243
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Bitcoin

244
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that Odell purchased from us and sold for 96,000.

245
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But in 2026,

246
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they're gonna go another piece. Yes. Yeah. This is separate from year. This Yeah. Safe harbor stuff. Right? Correct. This is a different ruling that's Like, I think in your so the safe harbor is for all Bitcoin purchased ever before New Year's here. Right. Okay. So let's finish with this. I I jumped around too much. Let's finish with the safe harbor. Yeah. So safe harbor So how do you actually prepare for that? I'm I'm taking

247
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screenshots

248
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of my individual wallets,

249
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and

250
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then I'm

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I'm stamping them and saying HIFO or LifeVoe or FIFO. Right?

252
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I think that's probably the simplest way to go about it.

253
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Let me read some of these notes.

254
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Another piece too that is a little confusing is the IRS uses the term account and wallet interchangeably.

255
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From a Bitcoin perspective,

256
00:21:08.150 --> 00:21:12.865
one account and one wallet, I think, is just your extended public address. And so,

257
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that's one way that I've thought of it, to me. Your account is your wallet. Easy as well. Well, I I feel like a lot of this is

258
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designed for people that just

259
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buy custodial and stay custodial.

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Yeah. And then everything gets more complicated for anyone who actually

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wants to keep self custody. If you've never bought Bitcoin before until, like, Thursday Yeah. Life's pretty easy. You can just tune out right now. Yeah. Like, you know how to deal with this safe harbor. I mean, it's also, like Wait till this time next year. We're gonna have a new episode of Freedom Panic.

262
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There's also all these rules are written for digital assets in general.

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So it applies to

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all the other

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cryptocurrencies.

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And so they had to make, like, these broad rules apply, whereas, like, Bitcoin doesn't necessarily fit into those bubbles all the time. Okay.

267
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So but once again, what am I doing? You're taking

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you're taking screenshots,

269
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and then you have to time stamp it. Right? It definitely needs to be time stamped. I don't know. Like, do you have to do screen like, I'm not finished, you know, sorting out my prior cost base. Well, I'm not even saying you're taking screenshots of the cost basis. You're just taking screenshots like this wallet had 20,000,000 sats in it. Yeah. Yeah. And here's a screenshot of that wallet with, I guess, addresses shown in the screenshot.

270
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Something to prove what the account is. Right? Exactly. Like, you need to be able to have something that shows here's the Bitcoin sitting in this account,

271
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and something that you can go back to for audit purposes. So screenshots are probably the easiest way to do that.

272
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You could You could sign a message.

273
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As well. That's, like, complicated.

274
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Yeah. They probably won't even know what that is. I mean, you could do an export out of a lot of wallets. Right?

275
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Like in an Excel? Yeah. Like CSV, ESP. If you're a custodian, you could definitely do that. Yeah. Or even, like I wanna say Sparrow has, like, a a good export. Okay.

276
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It's not all of them will, but certainly, like, anything like But then are you taking a screenshot of the export, or you're just keeping the x the CSV file the Excel file?

277
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It should probably be a screenshot. So you have, like, a time stamp on it. So then when they say time stamps, everyone wants us to, like, upload them to open time stamps.

278
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I'm a little bit so technically, the way open time stamps works

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is it's just taking a hash of the file, and then it's anchoring the hash in the Bitcoin blockchain. So you can prove that this file

280
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was time stamped at this time and wasn't changed. It's not actually uploading the file

281
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to the blockchain or the open time stamp servers.

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Now

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the average person can't verify that that's actually happening. You don't know if, like, Peter Todd is actually, like, keeping all the files,

284
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or, like, some, like,

285
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malicious man in the middle is in there and doing it or not. Yeah.

286
00:23:55.885 --> 00:24:07.905
My and then other people have suggested emailing it to yourself. But then, like, Gmail, like, the NSA, like, the Australians, like, everyone gets a copy of all of your wallets. So I really hate the email idea. Yeah.

287
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Because email is just, like, wide the fuck open.

288
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What about

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can some can someone I'm just thinking, like, couldn't someone just, like, print out a screenshot and then take it to their local notary and just have it, like, good old fashioned notarized?

290
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Yeah. No. I mean yeah. That certainly would work.

291
00:24:27.665 --> 00:24:41.720
It's obviously more manual. The UPS store and have them fucking stamp the day? Yeah. I mean, you certainly could do it that way. You're probably not gonna wanna do that by, like, wanna do that tomorrow. Right? That'll be done. You have a day. You have a day. New Year's Eve.

292
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UPS stores are open on New Year's Eve. I

293
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That's a great way to spend your New Year's Eve. I don't know that that will be the thing that, like, the IRS harps on 2 or 3 years from now. The time stamp. Or whether you time stamped it or not or whether they believe it. I mean, the other thing is, like, you can go back and look at that wallet address on chain and be like, hey. Like, what balance was sitting in there

294
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on that date. Right? And so you'll have blockchain support for that balance if you need to go back to and You can show it hasn't been moved. Yeah. Yeah. Or or that it was moved and when it was moved. Right?

295
00:25:14.980 --> 00:25:18.155
You just show the mempool that space or whatever. Yeah. So

296
00:25:19.255 --> 00:25:30.155
I I not overly worried about the time stamping and the documentation of when you did it. But don't you have to time stamp yourself saying I'm doing HIFO? Isn't that what you're time stamping more than the wallet?

297
00:25:31.260 --> 00:25:34.240
Yeah. You are picking like this is the so the

298
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2 the 2 main options,

299
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are specific unit allocation

300
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and global allocation.

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And so we've been advising clients that specific ID is probably gonna give you the most flexibility into the future. Where specific ID versus what? Global. So

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global,

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the taxpayer

304
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basically

305
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is picking

306
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a general justification, for example, like price per unit. So I bought 2 coins. Price was 50 k a coin.

307
00:26:04.210 --> 00:26:12.235
I'm gonna go off of that, you know, that purchase price. And then maybe you split that into 2 different wallets, and it's 1 Bitcoin for 50 ks and 1 Bitcoin for 50

308
00:26:12.535 --> 00:26:14.395
ks. The specific ID

309
00:26:15.255 --> 00:26:17.835
you're actually documenting like, hey, I've got 1 UTXO

310
00:26:18.135 --> 00:26:25.970
with 1 Bitcoin in it. And, you know, I purchased a 10 ks 15 Different call space for each UTXO? Yeah. And so like maybe you have 3 coins

311
00:26:26.429 --> 00:26:33.730
and one of them Nice. You know, you bought at $1,000 and you wanna keep it. You know, I want that coin to stay at $1,000.

312
00:26:34.110 --> 00:26:46.095
Right. Maybe you sell that one last if you ever do sell. Specific ID is gonna allow you to do that. So you can hand pick each purchase that you made is each individual purchase, unfortunately, even if it was like a 50¢,

313
00:26:46.795 --> 00:26:50.735
dollar cost average, that is one unique basis. And so it,

314
00:26:51.275 --> 00:27:01.440
if you're someone like me who did a dollar cost average a little too much. Hourly 50¢? I got a nightmare to deal with. Yeah. I mean, every single one of those lines, each individual purchase is its own unique cost basis.

315
00:27:03.820 --> 00:27:04.320
Yeah.

316
00:27:05.340 --> 00:27:06.400
Okay. Yeah.

317
00:27:07.180 --> 00:27:17.055
Wait. So this is specific ID versus global. Yeah. So the safe harbor is you're picking specific ID or you're picking global. You're telling the IRS So wallet basis or UTXO basis, basically.

318
00:27:18.235 --> 00:27:24.175
Yeah. I think that's a good way to summarize it. And, you know, the the one thing to note so the the global allocation

319
00:27:25.159 --> 00:27:29.340
that if you're gonna pick that method, technically, it does need to be done before year end.

320
00:27:29.640 --> 00:27:33.900
Specific ID, it needs to be done before your first disposition in 2025.

321
00:27:34.440 --> 00:27:43.515
Or if you go The first transaction. Yeah. Or you go the whole year, you don't sell anything. When you file your 2025 tax return in April of 2026,

322
00:27:44.455 --> 00:27:47.355
that's the last possible date that you need to make the election by.

323
00:27:52.230 --> 00:27:53.770
Hey. If you're doing no transactions.

324
00:27:54.710 --> 00:28:03.210
That's what you're saying. Yeah. Like, if yeah. If you hold out and you don't sell anything during 2025, you'll still need to dictate. Alright. I'm doing specific Legit my least favorite topic.

325
00:28:03.675 --> 00:28:04.655
Only for you guys

326
00:28:05.115 --> 00:28:07.055
and for you freaks. For the freaks.

327
00:28:08.555 --> 00:28:10.975
Okay. This is all old Bitcoin.

328
00:28:11.435 --> 00:28:13.615
How are we gonna account for old Bitcoin

329
00:28:14.555 --> 00:28:16.735
now? I mean, do we feel comfortable with

330
00:28:17.059 --> 00:28:25.880
safe harbor under a belt now? Right. You can just ignore all of this and just do FIFO going forward. You'd be fine too. Yeah. I think the situation we might run into more would be

331
00:28:26.900 --> 00:28:32.904
somebody bought Bitcoin a long time ago, and they don't know the cost base. This may be exchange as an existing But then your cost base is 0.

332
00:28:33.284 --> 00:28:35.544
Right? You just pay the tax man the full amount.

333
00:28:35.845 --> 00:28:51.880
You say, don't throw me in jail. Yeah. I mean And you take a zero cost basis. Yeah. Unfortunately, that's kinda the way it works. We're at a 100 k. Like, the difference between $50 and a zero cost basis is fucking nothing. That is the reality. Like, the the thing I have been advising people

334
00:28:52.340 --> 00:28:52.919
of, like,

335
00:28:53.555 --> 00:28:58.115
maybe the the good thing or the bad thing is, like, your cost base is gonna trend to 0. Yeah.

336
00:28:58.515 --> 00:29:07.910
I'm like, you bought it at a 1,000 or you bought it at 500. Right? It's like No one gives a shit. Right. You you might as well just pay them the maximum amount. Yeah. So number goes up, fixes a lot of things.

337
00:29:08.390 --> 00:29:10.330
It will make your tax bill go up, though.

338
00:29:10.950 --> 00:29:14.310
I mean, you make more money, your tax bills are higher. Yeah. Yeah.

339
00:29:15.110 --> 00:29:20.570
Yes. That's all. I hate taxes as much as the other person, but, like, you're you're paying you pay taxes on on profit. Yeah.

340
00:29:20.935 --> 00:29:27.115
I mean, capital gain is I beat inflation tax, basically. So Yeah. It's it's inflation savings tax.

341
00:29:28.295 --> 00:29:32.395
Mhmm. So, yeah, that's all old Bitcoin purchased prior to

342
00:29:33.190 --> 00:29:37.270
New Year's coming out of the bank. Yeah. So now there's kind of 2 parts.

343
00:29:38.790 --> 00:29:43.270
The main thing, there's a new form that these transactions will be documented on.

344
00:29:43.910 --> 00:29:49.625
And so most likely your exchange probably used a 1099 b k or the miscellaneous form

345
00:29:50.085 --> 00:29:57.304
because the exchanges didn't really have good guidance. Like, where do we put this stuff? Right? So the IRS has finally come up with the form. It's 1099 digital assets.

346
00:29:59.460 --> 00:30:06.280
And it has, you know, much more data than the 10.99 b relative to these things. You know, it's got the cost basis, the proceeds.

347
00:30:07.220 --> 00:30:10.515
You can even pick up its ordinary income, long term, short term game.

348
00:30:10.995 --> 00:30:13.335
The kicker is, you know, so if you

349
00:30:14.035 --> 00:30:21.335
if you purchase Bitcoin on January 2nd coming up here and then you sell it, you know, when we're at 500 ks at Christmas,

350
00:30:21.715 --> 00:30:23.415
there's going to be a huge gain there.

351
00:30:24.350 --> 00:30:29.970
You know, but like if you bought it on River, for example, River is going to know that you bought that Bitcoin, so they'll know the cost basis.

352
00:30:30.590 --> 00:30:32.130
But for 2025

353
00:30:32.670 --> 00:30:35.890
tax year showing up on the form spring of 2026,

354
00:30:36.430 --> 00:30:52.044
that cost basis is not being submitted to the IRS. It might show up on there. You can kind of think of it as a suggestion. Like, River saying, hey. We saw you bought this Bitcoin here. I think these match up. Here's a suggested cost basis to use. And it's probably gonna be the right cost basis because in 2025,

355
00:30:52.345 --> 00:30:56.180
everyone should be using FIFO, and they should be treating it by wallet. Yeah.

356
00:30:56.800 --> 00:31:02.820
And so that probably gonna be a And you haven't moved it off of River. Yeah. Right. Right. You're just doing the full custodial

357
00:31:03.360 --> 00:31:03.860
Yes.

358
00:31:04.240 --> 00:31:09.725
Happy suit strategy. Yes. And then the the final iteration is January 1, 2026

359
00:31:11.065 --> 00:31:11.725
and onwards,

360
00:31:12.905 --> 00:31:21.085
that cost basis is gonna be given to the IRS. So, like, right now then strike or river are just they're just sending it direct after 2026,

361
00:31:21.970 --> 00:31:33.430
they're sending what they think the cost basis is to the IRS. Yeah. Or what they know because you Well maybe you moved the point in. Well, no. They they they know it if you if you buy on the exchange and you never take it off the exchange.

362
00:31:33.825 --> 00:31:34.325
And

363
00:31:35.745 --> 00:31:42.085
then you sell it on the same exchange, then they know the cost basis. Yes. Yes. That's the easiest. But if if

364
00:31:42.865 --> 00:31:43.445
if you're

365
00:31:44.945 --> 00:31:47.684
if you're a good Bitcoiner and you withdraw Yeah.

366
00:31:48.030 --> 00:31:49.170
And then you redeposit,

367
00:31:50.190 --> 00:31:56.690
are they just gonna be reporting miscellaneous cost basis? Yeah. Right? Like Like, they're gonna have to get that from you.

368
00:31:57.390 --> 00:31:58.210
And so

369
00:31:59.070 --> 00:32:00.050
I I actually

370
00:32:00.350 --> 00:32:02.370
I expect they'll start doing this in 2025.

371
00:32:03.405 --> 00:32:17.905
But, like, in 2026, so absolutely, like, if you deposit into an exchange It's gonna pop up like you deposit. It's gonna be like, what's your cost base? I think so. You kinda like River started offering that already. Yeah. But it's optional right now. Yeah. Because they track your cost base. It's really well on there, which is nice.

372
00:32:18.710 --> 00:32:43.205
But they do that as, like, a favor right now. And as soon as it's gonna be, like, when you go to deposit, it's gonna be, like, enter your cost basis. Yeah. I think so. And it will probably be, like, we can't accept your Bitcoin or you Or you'll have a 0 or they're gonna sell you 0 you. They'll put a 0 cost basis. I mean, they could do that. Yeah. If it's kinda basis. I mean, that would be bad if you, you know, you miss that step and you bought for a 100,000, they put 0 in there on you. Oh,

373
00:32:43.585 --> 00:32:49.970
that would be great. But I I think it will be a common practice. I would expect that they're gonna try, like, at least phase it in 2025.

374
00:32:50.510 --> 00:32:55.330
Because stocks don't have this issue. No one deposits and withdraw stocks. Exactly. So, like, on stocks,

375
00:32:56.830 --> 00:33:00.050
like, Charles Schwab, like, knows your cost basis for everything. Yeah.

376
00:33:01.245 --> 00:33:08.545
And you might have bought it on 2 different exchanges, but, like, you're not gonna smooth your stock from one exchange to another. Yeah. Yeah. Like right.

377
00:33:09.245 --> 00:33:15.425
And so it's very much a unique issue with Bitcoin specifically. Like, you can hold it yourself. You can move it around.

378
00:33:16.830 --> 00:33:22.930
You could say this is the IRS trying to prevent you or make it harder for you to do that. I think it's more likely it's

379
00:33:25.870 --> 00:33:31.250
just trying to to wrap their hands around it. Like, not really understanding what they're trying to implement.

380
00:33:31.845 --> 00:33:32.345
But

381
00:33:33.765 --> 00:33:34.585
I I think

382
00:33:35.284 --> 00:33:39.065
if it you know, we have some time before this actually rolls out for 2026

383
00:33:39.365 --> 00:33:40.985
where they have to

384
00:33:42.885 --> 00:33:46.745
they have to collect the cost basis, have to report on the cost basis.

385
00:33:47.740 --> 00:33:54.400
I would expect some pushback from exchanges between now and then. Like, it's more of an administrative burden hurdle for them. Right.

386
00:33:54.940 --> 00:33:56.240
Yeah. Could there be change?

387
00:33:56.620 --> 00:33:57.360
Yeah. Absolutely.

388
00:33:57.980 --> 00:34:00.880
So how do these IRS rules get decided? Like, is

389
00:34:01.384 --> 00:34:07.245
who is is there, like, a a an elected group of people that make these decisions? Or It's a bureaucracy.

390
00:34:08.825 --> 00:34:10.045
So it's, you know,

391
00:34:10.345 --> 00:34:11.305
unelected bureau

392
00:34:11.785 --> 00:34:13.785
bureaucrats that they would say are

393
00:34:15.490 --> 00:34:18.850
Elon fire them? Like, is that within his can the executive

394
00:34:19.330 --> 00:34:23.750
I actually don't know how the have the IRS is appointed. I don't think he's a

395
00:34:24.290 --> 00:34:24.790
presidential

396
00:34:25.250 --> 00:34:30.435
Yeah. I don't actually know that. But, I mean, essentially, the IRS would say

397
00:34:30.975 --> 00:34:35.555
they are interpreting the rules from congress that congress has laid out.

398
00:34:35.935 --> 00:34:50.550
So congress can pass something that changes. Absolutely. So that would be the easiest way to kinda get this overturned of, like, congress is like, no. This is incorrect. We don't want the IRS to do that. The IRS certainly can't, like, be like, no. We're gonna ignore congress. Yeah. IRS right now is saying, like,

399
00:34:50.930 --> 00:35:08.275
this is our guidance based on the current tax rules in place. We're not creating new tax rules. So it could change. Yeah. And I I honestly, I expected to. I just I wouldn't bake your whole You should have bet on the change. Yeah. You should assume that it won't change. Yeah. And then be happy if it does.

400
00:35:09.295 --> 00:35:12.355
But I think you'll get pushback from exchanges in 2025,

401
00:35:13.760 --> 00:35:20.900
as they start to dive into this. Like, it's gonna be a hurdle for them to obviously collect it. People are gonna send them the wrong information.

402
00:35:21.280 --> 00:35:23.780
It's gonna be a bad experience for the customers,

403
00:35:24.560 --> 00:35:34.625
especially if you're someone who coined like Coinbase who just wants to, like, have a bunch of activity and trading and everything. Right? Like, I expect that they would have a big lobbying push to get this reduced.

404
00:35:35.005 --> 00:35:38.365
Who knows? Maybe they have a big enough team there where they don't care about it.

405
00:35:39.245 --> 00:35:42.705
But I would expect that they'll be pushed back in the next year, and

406
00:35:43.480 --> 00:35:49.420
ideally, we come around at the end of next year, and we're having a different conversation. But this is what we wanna kind of plan for.

407
00:35:51.320 --> 00:35:51.820
Okay.

408
00:35:53.320 --> 00:35:53.820
So,

409
00:35:56.135 --> 00:35:57.994
okay, that all may I mean,

410
00:35:58.695 --> 00:36:00.155
the conspiracy side

411
00:36:00.455 --> 00:36:01.195
of me

412
00:36:01.974 --> 00:36:08.795
is, like, this is a way to just, like, push people to stay custodial only or even better, like, buy the ETF. Like, you buy the ETF,

413
00:36:09.309 --> 00:36:15.410
you can completely ignore this episode. Right? Because Charles Schwab just knows your cost base and submits it, whatever.

414
00:36:15.869 --> 00:36:21.410
Yeah. I mean, I I guess the I mean, it's a little bit more complicated, but the flip side is, like, it doesn't have to be that much.

415
00:36:22.665 --> 00:36:25.405
Well, it's gonna be a little bit more complicated. But, like,

416
00:36:25.865 --> 00:36:28.205
the new rules in 2025, 2025,

417
00:36:28.745 --> 00:36:30.525
26, when you're using FIFO,

418
00:36:30.985 --> 00:36:38.520
like, that's not any different than if you were to buy the ETF or keep it custodially. Like, you can still move money around

419
00:36:39.059 --> 00:36:40.280
into different wallets.

420
00:36:40.660 --> 00:36:42.520
It's just gonna be on you to track

421
00:36:42.900 --> 00:36:46.680
that so that if you do convert back to fiat, you have that cost basis.

422
00:36:47.059 --> 00:36:48.680
The other thing is just, like,

423
00:36:50.444 --> 00:36:54.865
convert to fiat as little as possible. Right? Like, if you don't sell, you don't have to worry about any of this.

424
00:36:56.684 --> 00:37:03.265
Well, we we would say that, but also the same rules apply for spending Bitcoin, which is it's a little bit more complicated.

425
00:37:03.565 --> 00:37:04.065
Yeah.

426
00:37:04.720 --> 00:37:05.540
Wait. So

427
00:37:07.040 --> 00:37:10.580
yeah. I mean, I guess if you're just FIFO ing everything Yeah.

428
00:37:11.040 --> 00:37:23.295
Like, it's really not that complicated. Right? Like, you're just keeping a list of your purchases. Got your And then as you sell, you're just, like, crossing out from the list as you go up and just pay them FIFO. And that's always been the simplest. It's not the most tax advantage,

429
00:37:23.835 --> 00:37:27.215
but, like, we work What concerns me is that there's gonna be exchanges,

430
00:37:27.915 --> 00:37:28.415
and

431
00:37:30.875 --> 00:37:33.535
I I know for a fact strike won't do this because

432
00:37:33.940 --> 00:37:41.080
I'm gonna personally make sure that they handle it in the most elegant user forward way possible. But there's gonna be a lot of exchanges that are just misreporting

433
00:37:41.380 --> 00:37:50.185
cost basis and just making you look like a fraud when you're not a fraud. Yeah. And that Right? Like, there's gonna be a bunch of cross they're gonna just basically get a bunch of cross contamination

434
00:37:50.485 --> 00:37:51.385
where it's like

435
00:37:52.005 --> 00:38:06.010
a a person is actually honestly trying to pay their full tax burden. Yeah. Pay discloses the IRS a certain amount, pays a certain amount, and then the exchange is just sending them a completely different cost basis. Yeah. And I I worry about that as well. Like, right now,

436
00:38:06.390 --> 00:38:07.610
the reality is

437
00:38:08.230 --> 00:38:10.810
people already get freaked out when they see the 10.99

438
00:38:11.110 --> 00:38:20.445
b and it's got a cost basis on there. And, like, this doesn't seem right to me. And, like, we can easily say to them, like, alright. That's fine. You don't need to worry about theirs. The IRS is not giving that information.

439
00:38:20.745 --> 00:38:23.405
They're not gonna say you reported a different amount,

440
00:38:24.105 --> 00:38:35.890
and it's contradictory. Like, you just need to have your support for why you're using the cost basis you are. But, yeah, in 2026, they are gonna have a number there. And if you have a if that number is wrong,

441
00:38:37.390 --> 00:38:41.810
and you're trying to correct it, like, you're either gonna have to get a updated number updated

442
00:38:42.555 --> 00:38:43.295
form 1099

443
00:38:43.595 --> 00:38:44.095
DA

444
00:38:44.635 --> 00:38:45.535
from the exchange,

445
00:38:45.994 --> 00:38:48.255
or have that fight with the IRS,

446
00:38:48.875 --> 00:38:53.694
which no one wants to do. I think it's the least zapped episode in here for you, by the way.

447
00:38:54.635 --> 00:38:57.540
Shout out to ride or die freak Mav 21 with

448
00:38:58.420 --> 00:39:00.680
42 100 sats, the highest sap

449
00:39:00.980 --> 00:39:01.720
so far.

450
00:39:02.420 --> 00:39:03.400
Everyone just,

451
00:39:03.940 --> 00:39:07.720
focused on saving their sats. They're Yep. Higher is still now.

452
00:39:09.460 --> 00:39:15.375
Oh, I when I was laughing earlier, it's because Jevi in the live chat said, Odell legit glazing over,

453
00:39:16.075 --> 00:39:18.734
quote, unquote, no way I'm doing any of this.

454
00:39:19.355 --> 00:39:20.575
To be clear here,

455
00:39:21.275 --> 00:39:22.575
to everybody listening,

456
00:39:25.290 --> 00:39:26.190
Like, I

457
00:39:26.570 --> 00:39:27.070
I

458
00:39:27.690 --> 00:39:28.750
probably will just

459
00:39:29.130 --> 00:39:30.350
FIFO everything.

460
00:39:30.650 --> 00:39:32.990
I'll just FIFO I'll give them their max taxes.

461
00:39:34.090 --> 00:39:34.750
You know?

462
00:39:35.370 --> 00:39:36.750
Please serve with a gun.

463
00:39:37.484 --> 00:39:40.785
Don't bother me and my family. Here's your here's your

464
00:39:41.325 --> 00:39:43.984
vague. Like, I hate taxes as much as the next person, but

465
00:39:45.005 --> 00:39:57.820
screenshots and stuff, like, I that scares the shit out of me. Like, I don't want, like, online records of my Yeah. It sounds like a privacy nightmare. It sounds like a lot of people are gonna destroy their privacy over this. Yeah.

466
00:39:58.440 --> 00:40:06.460
Yeah. No. And I think that's probably a good point. When they could just pay, you know, 10% more to not just like, if that's really the equation. Right? It's like,

467
00:40:07.085 --> 00:40:09.265
are you gonna take a privacy risk to save

468
00:40:10.365 --> 00:40:15.984
10 to 30% or something? Right? I don't know what the number is. No one knows. The number is on a close by a game basis.

469
00:40:16.444 --> 00:40:34.750
And I think it probably depends on how good your privacy is today, honestly. Like like you said, like, if you're the guy who's got all their funds at the exchange, like, you don't have any privacy. Right? Yeah. If your funds are already on the exchange, then you're and this is easy. Like, you've already done a whole bunch of stuff to really keep your Bitcoin private.

470
00:40:35.285 --> 00:40:38.505
You've done, you know, coin joins, all that stuff.

471
00:40:39.205 --> 00:40:39.705
Like,

472
00:40:40.245 --> 00:40:42.905
this would be a huge step backwards for you

473
00:40:43.205 --> 00:40:43.705
for

474
00:40:44.725 --> 00:40:52.320
potentially a tax savings, but, like, even that is short term and that, like, if you're paying FIFO and you got a low low cost basis,

475
00:40:53.340 --> 00:40:58.960
you may be paying a higher tax this year, but you've met you know, it's a lower tax bill next year, for example. Right?

476
00:40:59.980 --> 00:41:03.440
Right. And so it's not the end of the world, and it's not

477
00:41:05.025 --> 00:41:07.125
if privacy is important for you,

478
00:41:08.704 --> 00:41:12.724
it's gotta come at a cost. Right? Right. And so that's always part of the equation.

479
00:41:14.625 --> 00:41:15.125
Okay.

480
00:41:18.190 --> 00:41:24.770
The chats are not really giving me any questions. Do you guys really have no questions? Do we just or do we make this complicated topic so simple

481
00:41:25.230 --> 00:41:26.850
that you guys have no questions?

482
00:41:28.270 --> 00:41:35.925
The zaps are now coming in. Thank you. Thank you, sir. I don't know who this is. The same, apparently. Yeah. I don't know. It's just a miscellaneous

483
00:41:36.225 --> 00:41:37.765
end pub. I gotta press refresh.

484
00:41:39.905 --> 00:41:41.205
The chaos 1517

485
00:41:41.905 --> 00:41:44.485
sent 42 100 sats. Thank you.

486
00:41:47.150 --> 00:41:50.130
His his comment is this Zap identifies as a nontaxable

487
00:41:50.430 --> 00:41:50.930
event.

488
00:41:52.670 --> 00:41:53.170
I,

489
00:41:54.270 --> 00:42:01.995
someone in the live chat asked what if he had BlockFi. I don't really know what he means by that, but you have no money now. Yeah. That's tough.

490
00:42:02.775 --> 00:42:04.155
Yeah. I mean, most likely

491
00:42:04.695 --> 00:42:05.195
bankruptcy

492
00:42:06.055 --> 00:42:09.835
loss event. There's, like, a 90% chance that's a troll comment.

493
00:42:10.215 --> 00:42:10.715
Yeah.

494
00:42:11.575 --> 00:42:13.595
But, yeah, I mean, there'd be a loss on there.

495
00:42:14.250 --> 00:42:14.990
Tax deductible.

496
00:42:15.450 --> 00:42:21.710
They get their money. Aren't they getting their money back through FTX or whatever? Oh, it was, like, 50% or something. Are they getting, like,

497
00:42:23.450 --> 00:42:25.070
the what was it about, like,

498
00:42:25.530 --> 00:42:28.830
US dollar value at the time FTX collapse? I thought that was FTX.

499
00:42:29.585 --> 00:42:31.285
Yeah. But FTX owns BlockFi.

500
00:42:32.464 --> 00:42:34.085
To save to save customers,

501
00:42:35.585 --> 00:42:42.644
BlockFi's Zach, while he was on he went on paternity leave as his company was going under and then sold it to FTX. And then FTX

502
00:42:43.190 --> 00:42:45.370
turned out to be a Ponzi scheme, and then everyone

503
00:42:45.670 --> 00:42:47.850
got double fucked. That was a crazy time.

504
00:42:48.390 --> 00:42:48.470
Yeah.

505
00:42:49.270 --> 00:42:51.450
Yeah. Now FTX came to the rescue.

506
00:42:51.830 --> 00:42:52.810
That's what he said.

507
00:42:53.350 --> 00:42:58.170
I didn't know that FTX bought, BlockFi. Yeah. Yeah. It was pretty hilarious, actually. I

508
00:42:59.085 --> 00:43:07.025
mean, it sucks. It sucks for the people that lost money, but I also was very loud telling people not to use block 5 or FTX so I can sleep well at night.

509
00:43:08.205 --> 00:43:11.505
Do you guys so then there's another IRS thing, which is this

510
00:43:12.039 --> 00:43:15.660
broker rule. Do you guys have an opinion on this? Have you looked at it at all? Or

511
00:43:15.960 --> 00:43:17.420
A little bit. Slightly.

512
00:43:18.279 --> 00:43:21.019
Yeah. I mean, I think broadly, we were discussing it earlier.

513
00:43:22.440 --> 00:43:25.420
A little about outside my wheelhouse, but essentially, like,

514
00:43:25.935 --> 00:43:26.675
for exchanges,

515
00:43:26.975 --> 00:43:31.155
like, it's easy. Like, they have to do reporting, but, like, the guidance

516
00:43:31.455 --> 00:43:31.955
on

517
00:43:32.495 --> 00:43:34.195
some of this stuff is requesting

518
00:43:34.975 --> 00:43:35.475
reporting

519
00:43:35.775 --> 00:43:36.995
on data that

520
00:43:38.349 --> 00:43:39.810
they don't have. Like,

521
00:43:40.590 --> 00:43:45.250
we were talking about, like, RoboSats, for example. Right? Like, in in theory, like, they fall under this

522
00:43:45.550 --> 00:43:49.010
guidance where they're not collecting information from

523
00:43:49.725 --> 00:43:53.665
users. And they're not custodial. They're not custodial. They're not holding funds.

524
00:43:54.605 --> 00:43:56.145
Just based on the IRS,

525
00:43:56.525 --> 00:43:57.025
like,

526
00:43:58.125 --> 00:44:02.570
guidance there, it's like, oh, they're in violation, but they have no ability to actually collect

527
00:44:02.950 --> 00:44:03.450
that

528
00:44:03.830 --> 00:44:04.330
data

529
00:44:04.710 --> 00:44:10.650
by design. Right? Yeah. So unless they're gonna come and say, it's illegal to do this, which is a whole separate Aren't they effectively saying that?

530
00:44:11.670 --> 00:44:18.595
They're effectively saying that, but that's not what the actual rule says. The rule says, like, hey. You can do whatever you want. Just report it. Right?

531
00:44:18.974 --> 00:44:28.435
And so it gets into, again, like, the IRS cannot make laws or cannot make rule. And so that's where I think they're gonna get a lot of pushback and and legal arguments from,

532
00:44:28.890 --> 00:44:32.190
hey. The IRS is overstepping their bounds as far as

533
00:44:33.289 --> 00:44:34.990
creating new rules versus,

534
00:44:36.410 --> 00:44:39.309
enforcing the rules laid out there by congress. So

535
00:44:40.010 --> 00:44:56.809
we could I don't know that's worth spending a ton of time on right now and that there's gonna be a lot of changes in the next couple of years before it, in theory, goes into effect. A couple suits. Like Yeah. We probably don't have to worry about it too much right now. But, I mean, what we talked about earlier, our interpretation is

536
00:44:57.990 --> 00:45:02.970
probably good luck enforcing some of this stuff. Like, I don't how do you get RoboSats? Yeah. K y z.

537
00:45:03.270 --> 00:45:09.825
Yeah. I mean, the other thing, though Like, you're you're de facto criminalizing the operators. Right? Isn't that the strategy?

538
00:45:10.204 --> 00:45:20.065
It it seems like. And and, unfortunately, we saw some of this with on the lightning side with Wallace, right, where they just said, like, we're just gonna, like, get out of the US and we're like No. You're just losers.

539
00:45:20.365 --> 00:45:21.210
And so, like,

540
00:45:35.385 --> 00:45:36.845
bad for US consumers.

541
00:45:38.425 --> 00:45:39.485
I mean, maybe the incoming

542
00:45:39.865 --> 00:45:40.365
administration,

543
00:45:40.985 --> 00:45:42.285
there's some changes there.

544
00:45:43.145 --> 00:45:48.525
I think the rhetoric from Trump and his team is that they don't want innovation to go offshore. So

545
00:45:49.140 --> 00:45:56.280
I would yeah. And there's gonna be and Elon are just gonna save us. Right? You can just ignore the whole episode and just Trump and Elon will save us.

546
00:45:57.940 --> 00:46:00.039
Do you guys have an opinion on

547
00:46:01.395 --> 00:46:18.790
the corporate transparency stuff? Do you Couple. Do you pay attention to that? Did you see that they there was an injunction and then they overturned it again? Yeah. You you have to the beneficial owners of LLCs need to be docked with Vinsen, I think. Yes. It's with VINSON. So right now, it's off. Right? Yes.

548
00:46:19.170 --> 00:46:24.070
Yeah. What do you mean? It's back on? No. No. It's off. Yet. As of when? Like stopped.

549
00:46:24.370 --> 00:46:26.710
It was I think back December 30

550
00:46:27.730 --> 00:46:29.510
23rd, it was back on.

551
00:46:30.174 --> 00:46:38.755
I did today. It's back on. No? Did you Is there a new update today? I said it was probably gonna be back on. Wallworth? And that's just something just happened, like, in the last few hours.

552
00:46:39.055 --> 00:46:41.714
Oh, I got a text this morning that it was back on.

553
00:46:42.830 --> 00:46:49.970
I might need to update my information. Need to As of We saw it being, like, July. We're just back and forth. As of 26th, it was off.

554
00:46:50.510 --> 00:46:51.570
And today's 30th.

555
00:46:51.870 --> 00:46:54.210
Yeah. So I I might be out of date at this point.

556
00:46:54.924 --> 00:47:01.505
Yeah. I think it's back on. So so you guys weren't aware that it's back on? No. That's my understanding. The 5th circuit court brought it back.

557
00:47:02.365 --> 00:47:02.865
Yeah.

558
00:47:03.325 --> 00:47:08.464
They they were always the like, they I don't know. I'm not made the injunction. Lawyer, not an accountant.

559
00:47:08.845 --> 00:47:10.600
I'm not a a judge. I

560
00:47:10.900 --> 00:47:14.280
don't know. Yeah. Let me check. Let's check their website.

561
00:47:15.380 --> 00:47:18.200
Did they update it on their website? Oh, I'm glad I asked.

562
00:47:20.980 --> 00:47:30.025
Jim Crider asked, if I elect HIFO, can I later make a specific election for a particular lot? For instance, wanna give Bitcoin to a charity and want to get the lowest cost basis.

563
00:47:31.925 --> 00:47:32.985
I assume no.

564
00:47:34.820 --> 00:47:40.200
What was the if he he starts with He elects HIFO, and then he later wants to

565
00:47:40.660 --> 00:47:49.240
not use HIFO, I guess. The way I interpreted that was no. So the the election that you're making, whether to do specific ID or global, is irrevocable.

566
00:47:49.940 --> 00:47:50.440
So,

567
00:47:52.875 --> 00:47:54.095
let's see. In that scenario,

568
00:47:55.595 --> 00:47:56.975
he could just set aside

569
00:47:58.155 --> 00:48:01.135
some Bitcoin. Maybe he will do that and give it to charity,

570
00:48:01.675 --> 00:48:08.190
down the line, and he can go ahead and assign the cost basis that he wants, presumably the lowest one for that amount.

571
00:48:08.810 --> 00:48:10.109
Even if he chose Haifa?

572
00:48:13.770 --> 00:48:14.750
No. Because

573
00:48:15.290 --> 00:48:18.430
that that the choice does need to be made

574
00:48:18.885 --> 00:48:22.505
now. And you have to be consistent. Right? Yes. Yeah. This change is irrevocable.

575
00:48:22.885 --> 00:48:23.365
So

576
00:48:25.285 --> 00:48:27.705
just on the POI stuff,

577
00:48:28.965 --> 00:48:32.025
the last update on their website is from December 27th

578
00:48:33.030 --> 00:48:39.610
saying it's it's a voluntary submissions only. Maybe their website is just not updated. Okay. So it's back off. The TBD.

579
00:48:39.990 --> 00:48:42.810
I'm saying it's back off right now. Yeah. Back off.

580
00:48:43.590 --> 00:48:51.205
But, yeah, I would check that, you you know, whenever you listen to this, it probably will. Before before that, they had moved the deadline back to January 13th anyways.

581
00:48:51.744 --> 00:48:58.965
So any any between between now and January 13th, I would just keep an eye on it and not do anything before that deadline. It's obviously

582
00:48:59.330 --> 00:49:01.190
the best guidance we could give right now.

583
00:49:01.570 --> 00:49:03.510
Okay. And now I have another question.

584
00:49:03.810 --> 00:49:09.030
Why wouldn't you just select when would it be a bad selection to just do HIFO everything?

585
00:49:09.490 --> 00:49:13.270
All your existing wallets. Is there any bad situation to have HIFO?

586
00:49:14.234 --> 00:49:17.775
How is that I'm can't I didn't even know HIFO was a thing. Yeah.

587
00:49:19.035 --> 00:49:22.654
Honestly, no. The rare, like, exceptions there is

588
00:49:22.954 --> 00:49:26.734
if you have a year where you're don't have a ton of income come in

589
00:49:27.090 --> 00:49:32.870
and you can get, your your capital gains that you're paying is at a 0% cap capital gains rate,

590
00:49:33.410 --> 00:49:37.030
then you could use a lower cost basis, and it doesn't hurt you. Yeah.

591
00:49:37.730 --> 00:49:48.765
But is hypel legit? Is that actually, like, a thing? Like, people do it and don't get audited? Absolutely. Yeah. I mean, it isn't it basically a specific ID you're picking? It's the same model they came, but yeah.

592
00:49:49.625 --> 00:49:51.484
No way. I mean, people have used it.

593
00:49:53.464 --> 00:49:56.845
It seems like Do people use it for stocks and shit too?

594
00:49:58.349 --> 00:50:02.289
Not a 100% sure. No. So the difference is

595
00:50:03.069 --> 00:50:05.490
Bitcoin is not a security. Right? Yeah.

596
00:50:06.109 --> 00:50:07.569
So I like to make that point.

597
00:50:08.910 --> 00:50:10.530
The Irish treats it as property.

598
00:50:11.735 --> 00:50:14.635
And so because they treat it as property, you can

599
00:50:15.735 --> 00:50:16.875
choose different,

600
00:50:20.295 --> 00:50:24.715
different Bitcoin that you're purchasing at different times. And so you have more flexibility there

601
00:50:25.350 --> 00:50:26.330
with that classification

602
00:50:26.630 --> 00:50:31.130
as property than you would with a, like, a security, for example. Yeah.

603
00:50:31.670 --> 00:50:33.210
And one thing to note,

604
00:50:33.990 --> 00:50:36.010
wash sale rules do not currently apply

605
00:50:36.310 --> 00:50:36.970
to cryptocurrencies.

606
00:50:37.415 --> 00:50:40.955
So This way, what a wash sell rule is. Yeah. So in traditional

607
00:50:41.655 --> 00:50:49.835
finance, you know, you you buy the S and P 500 ETF at the top. And then after Powell makes his comments, it drops. So then you sell it at a loss. Right?

608
00:50:52.470 --> 00:50:58.250
If with Bitcoin in mind, you're probably trying to lower that cost basis. Right? So you won't be able to do that with security because,

609
00:50:58.630 --> 00:51:06.890
there's basically a You don't have to wait you wait 30 days. 30 days. It does not apply for Bitcoin currently. And then they got rid of it. Doesn't it apply now or no?

610
00:51:07.805 --> 00:51:21.184
I have heard in Canada you can't do that. But as of right now, you can wash sale your Bitcoin. So You can just immediately buy it back? Yeah. So you bought it at the top in 2021? I thought they got rid of that last year or somehow. They've been talking about it forever.

611
00:51:21.565 --> 00:51:33.609
And As of right now, it's still live. You mentioned there's a box on the form where, like, it seems like they're getting the bracelet. It has a box that says wash sale disallowed. So But that's not the rule yet. So Yeah. And, like

612
00:51:34.150 --> 00:51:39.475
Yeah. So why do they have the box? What's the box? They're gonna change the rule one day. Yeah. So there's a couple of

613
00:51:40.415 --> 00:51:50.755
So you're supposed to check off the box after it's not allowed or No. So, like, that won't be anything on our side. That's just saying, hey, in the future, we're probably gonna change the rules and wash sales will apply to Bitcoin.

614
00:51:52.260 --> 00:51:54.680
Okay. But but, again, that will have to be

615
00:51:55.220 --> 00:51:58.280
No. If you separate. If you use FIFO or LIFO in the past,

616
00:51:58.660 --> 00:52:07.125
hypothetically, and then you wanted to switch to HIFO for the safe harbor, you can just switch? Yeah. There's no problem with that. So, really, the best advice is everyone should just

617
00:52:07.665 --> 00:52:20.460
choose HIFO. Yeah. As long assuming that you have, like, your cost base is in order, you can you go back and get the information that you need. Document your wallets offline. Yeah. Write down, I choose HIFO. Yeah.

618
00:52:21.559 --> 00:52:27.740
And then somehow time stamp that. Yeah. So, I mean, I guess you could mail it to yourself like snail mail. Right?

619
00:52:28.599 --> 00:52:28.920
Right.

620
00:52:29.480 --> 00:52:30.945
You could. Yeah. That would be Yeah.

621
00:52:31.345 --> 00:52:36.005
You know, keep it in the envelope. Right? The other thing that you you see a lot of,

622
00:52:36.785 --> 00:52:40.485
it'd be interesting to get your perspective on it. Like, a lot of people will use,

623
00:52:41.505 --> 00:52:44.165
tax software, coin tracker, stuff like that,

624
00:52:45.119 --> 00:52:48.099
which is good from, like, a quick and easy calculation.

625
00:52:49.039 --> 00:52:52.740
You're obviously giving all your information to 1 third party.

626
00:52:54.960 --> 00:53:02.355
Obviously, it's just a trade off like anything else, but, like, there's I would say there's significant downside to use that as well. What are your thoughts?

627
00:53:02.974 --> 00:53:06.515
Yeah. Obviously. It's, like, fucking horrible for your privacy. Yeah.

628
00:53:06.815 --> 00:53:07.715
I mean, it's

629
00:53:08.175 --> 00:53:08.675
yeah.

630
00:53:09.215 --> 00:53:33.695
There's trade offs everywhere. The most convenient stuff will probably be I mean, like, if you care most about your privacy, like, you should probably use, like, a composition notebook to track it. Yeah. Yeah. And then the step above that is you just do, like, a local Excel file Yeah. Which is like that one. You're not going crazy. It can actually do math for you. You don't have to do the math yourself in a composition notebook. And one of the nice things about that is, like because we've had people that use some of the coin tracking software.

631
00:53:33.995 --> 00:53:39.295
Obviously, they're giving out their privacy, but then they also like, it's a black box where they don't know, like,

632
00:53:40.050 --> 00:53:42.390
if the calculation is correct. So they're just

633
00:53:42.690 --> 00:53:46.550
like, hey. I agree. Spits out a number. Yeah. A lot of times, it'll, like, miscalculated

634
00:53:46.930 --> 00:53:49.430
internal transfer as a taxable event, and,

635
00:53:49.810 --> 00:53:57.765
you still have to go in and manually adjust that. So if you're doing it in your own Excel file, like, you have to be like, you have to understand how it's working

636
00:53:58.065 --> 00:54:11.670
and get to the number yourself, which is why we'd like, we generally we do that with our clients to be like, here's the number, and here's how we got to this number. And then you can also obviously build on it as you're buying more and everything like that. So Excel,

637
00:54:12.370 --> 00:54:16.150
unfortunately, is a a good option for a lot of things. So,

638
00:54:16.690 --> 00:54:20.815
for better or worse. Matt, have you heard of RoTke for tracking your cost basis?

639
00:54:21.115 --> 00:54:25.694
No. What is it? It's r o Yeah. Just speak up a little bit. R o t k

640
00:54:25.994 --> 00:54:35.310
I. That's how you spell it. No. Never heard of it. We had one client mention it on a call. I don't know if it is, like, a 100% open source, but it it's definitely different than, like, CoinTracker.

641
00:54:35.930 --> 00:54:39.390
It does have room for, like, NFTs and staking and all that. But,

642
00:54:40.010 --> 00:54:52.644
that might be one option that people could look at. It might be a little better than maybe from a privacy perspective. I mean, I think you just, like, you just use an Excel. You do a local Excel sheet. Or, like, if you're on Mac, Numbers, or if you're on Linux, OpenOffice,

643
00:54:53.025 --> 00:54:54.164
but just like a

644
00:54:54.545 --> 00:54:56.164
not Google Docs Yeah.

645
00:54:56.625 --> 00:54:57.125
Spreadsheet.

646
00:54:57.505 --> 00:54:58.005
Yeah.

647
00:54:58.625 --> 00:54:59.684
And then you just

648
00:55:00.780 --> 00:55:01.280
date,

649
00:55:01.660 --> 00:55:09.200
sale, call spaces, price at sale. Yeah. Yeah. And then you just do the Greg Bay you do the math. Once, you know, that's,

650
00:55:09.820 --> 00:55:13.260
like, it's a combination of the mental burden of doing the math and,

651
00:55:14.395 --> 00:55:14.895
obviously

652
00:55:15.675 --> 00:55:20.235
high cost on savings, which is insane that there's a tax on savings in the first place. Yeah.

653
00:55:21.595 --> 00:55:23.135
That really grinds my gears.

654
00:55:25.275 --> 00:55:26.655
Okay. I still

655
00:55:29.609 --> 00:55:30.990
What's still confusing you?

656
00:55:38.410 --> 00:55:40.030
It makes sense to me

657
00:55:40.375 --> 00:55:42.395
as not an accountant or a lawyer

658
00:55:42.695 --> 00:55:45.435
that you would just establish HIFO or whatever.

659
00:55:47.255 --> 00:55:53.595
But I still can't believe that they're not, like, auditing people automatically if they're doing HIFO. Like, I Yeah. So

660
00:55:55.050 --> 00:56:06.270
I think kinda And it's like even if you're being completely honest, like, audits just fucking suck. Well You don't, like, I in ideal world, you just don't wanna be audited in the first place. So I think 2 things on that.

661
00:56:07.425 --> 00:56:11.205
You're not telling them what you're using when you're giving them your hall spaces.

662
00:56:12.545 --> 00:56:17.685
And so Right. So, like, they let's say they know hypothetically that you've been in Bitcoin since 2016 Yeah.

663
00:56:18.385 --> 00:56:24.520
And you're just using HIFO Yeah. And you're basically, like, paying them very little in taxes because you've still been stacking. Right.

664
00:56:25.140 --> 00:56:26.280
Probably getting audited.

665
00:56:28.180 --> 00:56:37.645
I wouldn't know if I would give them that much credit. Really? How much they know. Yeah. They're they're not this all knowing entity like they're okay. Yeah. I mean like.

666
00:56:39.465 --> 00:56:44.365
This is not tax advice. I mean the the reality is eventually if you're living your life on Bitcoin

667
00:56:45.320 --> 00:56:51.740
number goes up. Like, you're going to be diving into some of those earlier coins, and so it doesn't last forever. Right?

668
00:56:52.360 --> 00:56:53.260
If you stacked,

669
00:56:53.640 --> 00:56:57.180
you know, a whole coin this year and you have a cost basis of $100,000

670
00:56:57.800 --> 00:57:03.355
on it. Right? Like, that's a lot of money Right. Versus if you could have gotten a couple coins at $1,000

671
00:57:03.655 --> 00:57:10.955
each. Right? Like, and so, like, just number wise, like, you're gonna eventually get into older and older coins there if you're spending your Bitcoin,

672
00:57:11.650 --> 00:57:13.670
you know, to live your life. Right.

673
00:57:14.450 --> 00:57:19.270
And but I I think there are, like, red flags there, so you have to look out for. Like,

674
00:57:20.770 --> 00:57:27.875
tax loss, harvest fee is a great way to kind of, like, Bitcoin goes down. You sell it. You buy it right back. You have to so horrible for your privacy.

675
00:57:28.575 --> 00:57:34.914
Horrible for your privacy, but also a potential flag there where it's like, hey. I know you, like, you bought 5 Bitcoin,

676
00:57:35.855 --> 00:57:37.474
and then you told me you lost

677
00:57:37.990 --> 00:57:38.490
$50,000

678
00:57:39.110 --> 00:57:42.170
on it because but I know the price went up last year. Right?

679
00:57:42.790 --> 00:57:47.030
And it's like, well, the time that I bought it and sold it, I lost a bunch. Yeah.

680
00:57:47.430 --> 00:57:57.194
That could easily be something where it's like, we don't really know if that seems right to us. We know Bitcoin went up. You said you had a huge loss. Like, that would be something I'd be more worried about

681
00:57:57.974 --> 00:58:04.954
raising a flag for the IRS even if it's right, even if you did everything according to the book, if you're trying to stay away from an audit.

682
00:58:05.619 --> 00:58:09.080
Would you say that you might be more likely to be audited simply,

683
00:58:09.940 --> 00:58:12.599
with the yes or no question on the front rather than

684
00:58:13.140 --> 00:58:14.280
because see, the Bitcoin

685
00:58:14.660 --> 00:58:21.415
sale proceeds are lumped in the same form with, like, stock. So it's not that out of Whether yes or no. Do you own Bitcoin or do you not?

686
00:58:22.595 --> 00:58:24.775
Yeah. So Have you ever bought, sold,

687
00:58:25.235 --> 00:58:29.415
created Bitcoin, that one? Digital assets, that checkbox? The nuance there

688
00:58:29.890 --> 00:58:32.869
is that it's not it doesn't include bought.

689
00:58:33.650 --> 00:58:40.390
So if you just bought Bitcoin I think it does include bought. So there's a couple of there is a It's up to interpretation,

690
00:58:40.770 --> 00:58:42.150
isn't it? Well,

691
00:58:42.495 --> 00:58:54.435
I was just on a IRS CP the other day and learned another scenario that it's yes. So we can kind of run through these. So the question on this upcoming tax form so this will be on Wait. No. What was last year's?

692
00:58:55.790 --> 00:58:59.330
I think it's the same just minus the date. It looks the same. Okay. So continue.

693
00:58:59.630 --> 00:59:02.610
At any time during 2024, did you a, receive

694
00:59:03.150 --> 00:59:04.050
as a reward,

695
00:59:04.670 --> 00:59:07.010
award, or payment for property or services?

696
00:59:07.315 --> 00:59:11.815
Or b, sell, exchange, or otherwise dispose of a digital asset. Exchange.

697
00:59:12.355 --> 00:59:12.855
So

698
00:59:13.475 --> 00:59:14.295
that is

699
00:59:14.755 --> 00:59:17.895
like you swapped Ethereum for Bitcoin taxable event.

700
00:59:18.275 --> 00:59:28.810
If so Wait. It's not swap dollars for Bitcoin? No. So for anyone listening at home, if all you do is buy Bitcoin and hold it, you check no. That's it. Interesting. Now

701
00:59:29.250 --> 00:59:41.734
But then I think a lot of people checked yes if they just bought only. Yeah. Well, then, I mean, you can get into, like I don't love this rule, but, like, you can get into, like, trancher and fees. So I learned I was shocked to hear the IRS say this. But

702
00:59:42.355 --> 00:59:43.095
if you

703
00:59:43.955 --> 00:59:45.895
so let's run a scenario using Stripe.

704
00:59:46.220 --> 00:59:55.039
You're gonna send some Bitcoin that you just bought in Stripe to your cold storage. And you say, I can wait 24 hours. Right? And you take that delayed option, no transaction fee.

705
00:59:55.579 --> 01:00:05.055
The answer is no. If you send Bitcoin from an internal personal wallet to an internal personal wallet and it does incur a transaction fee, the answer is yes.

706
01:00:05.515 --> 01:00:11.375
Technically, you just posted some Bitcoin there of a transaction fee. 50¢ or whatever it was. So,

707
01:00:11.994 --> 01:00:17.630
I mean, that basically puts everyone in the just mark the box anyways. And the the thing I'd be worried about there is, like,

708
01:00:17.930 --> 01:00:39.585
you mark yes, and then you don't have anything where you actually report any significant transactions. I guess, in that case, you'd be reporting the 50¢ that you Right. Incur for the fee and then you're But it's a red flag if you're saying yes, but you're not actually paying them anymore. Exactly. Yeah. So I worry about that as well. Back thirds that can check, no. You didn't own any assets, any digital assets to begin with.

709
01:00:41.570 --> 01:00:48.310
You maybe bought Bitcoin last year. You just held it this year. You didn't move it or sell it or do anything. The answer's no. If you purchase

710
01:00:49.490 --> 01:00:56.385
and just hold it, the answer's no. And then if you transact it internally and there's no transaction fee, the answer's no.

711
01:00:56.705 --> 01:01:03.525
Everything else, the answer is yes. If you received an airdrop, if you received a fork, if you swapped your Ethereum for

712
01:01:04.045 --> 01:01:04.545
your

713
01:01:05.065 --> 01:01:05.565
Bitcoin,

714
01:01:07.105 --> 01:01:10.085
if you're paid for services or goods with Bitcoin,

715
01:01:10.770 --> 01:01:15.590
and then, like, staking mine. But none of you just bought? If you just buy and hold, the answer's no.

716
01:01:16.930 --> 01:01:24.455
And apparently, if you just buy, it don't move. And if you buy yeah. If you buy and you just sit on it, the answer's no. But

717
01:01:25.715 --> 01:01:29.015
that one, I I really didn't like seeing But so in 2026,

718
01:01:29.875 --> 01:01:53.500
when they're sending the form when the exchanges start sending the forms directly to the IRS, are they sending them a if you only bought, do they send them a form, or they only sell They only send the form to re report the proceeds from sales. So if you never sold, they're also not sending a form. Correct. And that's the same, like, if you don't sell any stocks, you're not gonna get a brokerage statement. Right. So Yeah. You just don't get a contract. Moved it off.

719
01:01:53.845 --> 01:01:56.425
There's no reporting there for that.

720
01:01:56.805 --> 01:01:59.145
Okay. Move it off with well, yeah.

721
01:01:59.605 --> 01:02:08.425
Never mind. Yeah. What This is I got confused. This is there's too much going on here. Okay, Freaks. Does anyone have any more questions? Because I feel like we covered everything.

722
01:02:09.910 --> 01:02:10.970
Yeah. Oh,

723
01:02:11.430 --> 01:02:14.810
Nick b is asking, what is the cost basis on mine Bitcoin?

724
01:02:17.190 --> 01:02:17.690
Essentially,

725
01:02:18.470 --> 01:02:18.970
fundamentally,

726
01:02:19.270 --> 01:02:21.050
the Bitcoin mined is

727
01:02:21.350 --> 01:02:22.650
revenue and taxable

728
01:02:22.950 --> 01:02:24.250
at the time it's earned.

729
01:02:24.744 --> 01:02:30.445
The price at that block height. Exactly. So, you know, you got 3 blocks yesterday, whatever it is

730
01:02:30.825 --> 01:02:32.285
or however your pool is,

731
01:02:32.984 --> 01:02:34.045
calculating that.

732
01:02:34.425 --> 01:02:37.085
We will generally get an export from the pool

733
01:02:37.385 --> 01:02:40.365
that says here's how much Bitcoin you mine on a given day.

734
01:02:40.720 --> 01:02:54.500
Either put it on the price at the time that you mine the block or the average over the course of the day and use that for revenue for mining. You're probably not gonna get in trouble if you just use the closing price of Bitcoin for the day. If you do it, you can. Yeah.

735
01:02:54.865 --> 01:03:00.485
The most important thing with anything with the IRS at the end of the day is just good faith and stay consistent.

736
01:03:01.105 --> 01:03:04.565
Yeah. Yeah. Don't play games with them. Just Right. Not worth it.

737
01:03:05.105 --> 01:03:08.725
Like, you're just you you you do your best to pay your full obligations,

738
01:03:10.029 --> 01:03:12.049
and we'll do our best to help lower that obligation.

739
01:03:13.710 --> 01:03:17.490
Okay. Awesome. Guys, this has been great. I mean, it's been kinda great.

740
01:03:18.109 --> 01:03:25.435
Yeah. Yeah. Before we wrap, I just want to say to all the freaks that continue to support the show, whether that's through ZapStream

741
01:03:25.735 --> 01:03:26.555
or Fountain,

742
01:03:28.295 --> 01:03:32.795
Fountain podcast app or other podcasting 2 point o apps, you guys make me

743
01:03:33.255 --> 01:03:36.795
continue and and keep tracking through. The show obviously doesn't have advertisements,

744
01:03:37.770 --> 01:03:39.310
so your support means a lot.

745
01:03:40.170 --> 01:03:42.830
The top boost from podcasting 2.0

746
01:03:43.610 --> 01:03:44.110
last

747
01:03:44.650 --> 01:03:45.150
episode,

748
01:03:46.330 --> 01:03:47.310
episode 146

749
01:03:47.770 --> 01:03:48.270
with

750
01:03:48.570 --> 01:03:50.350
Fran from Zapstore was 8

751
01:03:50.650 --> 01:03:51.310
with 7,777

752
01:03:52.490 --> 01:03:55.474
sets saying Zap Store sounds much needed.

753
01:03:55.775 --> 01:03:56.994
Nakamoto 6102

754
01:03:57.295 --> 01:04:01.875
with 7,000 Sats saying appreciate you. And doom satoshi with 3,333

755
01:04:02.815 --> 01:04:03.315
Sats

756
01:04:03.615 --> 01:04:07.714
saying bootstrapping web of trust with ship posting and Sats. Thank you for your time.

757
01:04:09.980 --> 01:04:13.119
Guys, this year, Fountains released their their,

758
01:04:13.660 --> 01:04:18.080
report for the top shows of the year. Ciel Dispatch got number 13.

759
01:04:18.940 --> 01:04:23.955
Recap got number 1, which is fucking badass. So all you freaks that support that show, thank you.

760
01:04:24.595 --> 01:04:30.935
Thank you a lot. It means it means it means the world. But dispatch getting 13, considering how bad I've been about

761
01:04:31.555 --> 01:04:33.495
consistent schedules on this show,

762
01:04:34.595 --> 01:04:37.895
I think says a lot. And it's all about you guys, so thank you guys.

763
01:04:38.950 --> 01:04:39.450
Seth,

764
01:04:39.910 --> 01:04:40.410
Joe,

765
01:04:41.590 --> 01:04:42.490
final thoughts.

766
01:04:44.630 --> 01:04:47.430
Go ahead. We'll start with Seth. Yeah. I was gonna say that,

767
01:04:49.430 --> 01:04:54.105
yeah. I mean, like, at at the end of the day, Matt has a good point. You could just default to

768
01:04:54.744 --> 01:04:57.805
FIFO for everything, and you don't have to report much.

769
01:04:58.345 --> 01:05:01.244
But if you want the most flexibility going forward,

770
01:05:01.945 --> 01:05:08.525
in the example of HIFO to pay as little tax as possible, going with specific ID is probably gonna be your best course of action.

771
01:05:08.840 --> 01:05:15.500
You have until the first time you transact with Bitcoin next year or if you don't, when you file your 2025

772
01:05:15.960 --> 01:05:20.940
tax return for that. But why do you even need specific ID if you just do HIFO?

773
01:05:23.405 --> 01:05:26.625
I mean, that's a good point. Yeah. Yeah. You're kinda just

774
01:05:27.085 --> 01:05:35.265
you have 2 choices. Specific ID or global. So you're just telling the IRS. I mean, you're doing HIFO on the back end, but you're telling them, hey, I'm doing specific ID and this is what I'm declaring.

775
01:05:35.840 --> 01:05:38.660
Right. So you just have to declare 1 of the 2. Doing HIFO,

776
01:05:39.200 --> 01:05:44.180
how you're describing it would be. But if you do HIFO global, isn't it the same as HIFO specific ID?

777
01:05:47.280 --> 01:06:04.115
The global is a little tricky to me. The the global is like you're picking based off of a certain data point. So you could pick date or you could pick cost basis. So, like, all of my 50 k Bitcoin purchases goes to this address. Yeah. The other nuance there is, like, it'd be HIFO by wallet.

778
01:06:06.240 --> 01:06:10.980
And so if you have 3 wallets, 3 different HIFO in each one versus specific ID

779
01:06:11.280 --> 01:06:17.380
where you're just pulling from that individual wallet, it's probably a nuance there where it's you're gonna end up in the same place.

780
01:06:18.335 --> 01:06:18.835
Okay.

781
01:06:21.295 --> 01:06:29.154
I think we're all just gonna be paying FIFO. It seems like it's we got one day left here. I hate it as much as you guys hate it. Yeah. Okay. Awesome.

782
01:06:29.615 --> 01:06:30.755
Final thoughts, Joe.

783
01:06:31.380 --> 01:06:33.160
No. I mean, thanks for having us on.

784
01:06:33.859 --> 01:06:36.119
It's the most exciting topic to talk about.

785
01:06:36.980 --> 01:06:40.520
Despite our profession, we don't necessarily love this stuff, but,

786
01:06:41.140 --> 01:06:43.880
hopefully, we're able to get some information out there for people.

787
01:06:45.665 --> 01:06:46.565
So, yeah,

788
01:06:47.025 --> 01:06:47.525
obviously,

789
01:06:48.545 --> 01:06:51.765
other questions come up, they're welcome to reach out to us.

790
01:06:52.545 --> 01:06:55.525
Not a ton of time left to dive into it for each individual,

791
01:06:57.105 --> 01:07:00.405
but we'll we'll continue to tackle this into 2025.

792
01:07:01.150 --> 01:07:03.410
I think those are a few people that sleep better tonight,

793
01:07:04.110 --> 01:07:16.610
knowing that it's not Yeah. It's not an emergency. It's not the end of the world. Because everything I was reading this morning, people are like Like, freaking the fuck out. I'm not sending a screenshot to the IRS. Yeah. It's like It's just fair, but, like No one has to send a screenshot to the IRS. Yeah.

794
01:07:17.205 --> 01:07:21.865
And worst comes to worst, you're just ending up paying FIFO. Yeah. It's not the end of the world.

795
01:07:22.245 --> 01:07:27.865
And just don't sell your Bitcoin. Just hold on to your Bitcoin. Sell it, you don't do it. That's more of a meme than reality.

796
01:07:28.885 --> 01:07:30.585
Okay, guys. Oh, one more thing.

797
01:07:32.490 --> 01:07:36.670
Do how how do if people need a new accountant, how do they reach out to you guys?

798
01:07:37.130 --> 01:07:44.190
Do you do you guys have slots open? Are you taking new users or new clients? We're filling up really quick. We, we're

799
01:07:44.545 --> 01:07:47.445
we are kinda full, but we're also looking to hire potentially.

800
01:07:48.625 --> 01:07:50.565
So your accountant reach out to us.

801
01:07:51.105 --> 01:07:52.805
Not in your perspective, Brian.

802
01:07:53.345 --> 01:08:01.870
A client, well, you need to get those additional accountant, and then we'll be able to take care of you. But now you're not be a client. You have to bring them an accountant Yeah. To work with them. BYO

803
01:08:02.410 --> 01:08:05.950
and bring your own accountant. No. You reach out to our website.

804
01:08:06.410 --> 01:08:12.270
We're looking to expand for 2025 and make sure that we can continue to to support the Bitcoin.

805
01:08:12.755 --> 01:08:15.095
You can email tax at satoshipatchioli.com,

806
01:08:16.355 --> 01:08:18.535
and one of the 2 of us will answer it.

807
01:08:20.195 --> 01:08:20.695
Tax@satoshipatchioli.com,

808
01:08:22.515 --> 01:08:23.735
or they could go to satoshipatchioli.com

809
01:08:24.595 --> 01:08:25.495
for more information.

810
01:08:25.860 --> 01:08:35.239
Exactly. These guys literally said right before we went on, they're like, we're not even advertising our product because we have we have too many clients. They they just did out of the goodness of their heart because they knew everyone was panicking.

811
01:08:36.739 --> 01:08:57.090
And And one of the help of Yeah. We had a whole bunch of clients that were like, you can't be with the all individually. Yeah. We'll we'll talk go talk to Matt. He'll have all the good questions. And then, hopefully, this applies to them. And if not, we'll follow-up with it individually. Honest I mean, I'm kinda pissed off that I had no idea HIFO existed until this conversation. We should have more tax conversations. Yeah. It's like dark. Like,

812
01:08:58.430 --> 01:09:03.650
fair enough. I mean, you guys have never done my individual returns. You just do Yeah. All my businesses,

813
01:09:04.670 --> 01:09:07.010
which I'm very grateful for. Thank you. Yes.

814
01:09:07.905 --> 01:09:13.525
It's awesome doing the return for our HR while you're listening to our HR. It's it's a vibe. Right? Yeah. It's pretty neat.

815
01:09:14.304 --> 01:09:16.145
Awesome. Freaks, I have,

816
01:09:16.784 --> 01:09:18.085
it's a it's a doubleheader

817
01:09:18.545 --> 01:09:19.045
dispatch

818
01:09:19.425 --> 01:09:19.925
week.

819
01:09:22.000 --> 01:09:25.700
I have Buck Perley, who's head of open source at Unchanged.

820
01:09:26.560 --> 01:09:29.620
We got a bunch of interesting things to talk about, including

821
01:09:30.080 --> 01:09:35.140
some kind of announcement that I don't know what the announcement is. So that's gonna be Wednesday at 1900

822
01:09:35.680 --> 01:09:36.135
UTC,

823
01:09:39.014 --> 01:09:39.675
which is

824
01:09:40.215 --> 01:09:54.899
2:2 PM EST if you don't if you haven't gotten with the standard of UTC yet. So, join us live for that or, you know, just listen to your favorite podcast app. Huge shout out to Seth and Joe. Thank you guys for joining us. Thank you for having us. And stay on 1st Access.