Awards & Recognition
The Tax Law Offices of David W. Klasing
Austin, known for its eclectic and vibrant culture, stands as a beacon of innovation and economic diversity in the heart of Texas. Its dynamic mix of tech startups, established businesses, and a creative populace makes the city’s financial environment as diverse as its music scene. In this thriving urban landscape, the burgeoning sector of virtual currencies is increasingly capturing attention and interest.
The U.S. Treasury identifies Bitcoin as a decentralized virtual currency. It was created in 2009 by an individual (or group) using the alias “Satoshi Nakamoto.” It exists independently of any virtual world and can be transferred without a central bank, clearinghouse, or other third-party administrator, successfully reducing transaction fees and other charges. By removing any central authority, Bitcoin allows each person to directly and freely choose with whom to associate, interact, or exchange.
Transactions between sender and receiver are verified by network nodes using a public ledger. The system enters the verification process through a process called “mining.” “Miners” solve increasingly complex mathematical equations to authenticate transfers and are compensated for their services with newly-created bitcoins.
At the Tax Law Offices of David W. Klasing, many of our tax professionals are both licensed tax attorneys and certified public accountants. We provide the best of both worlds by helping you keep records and properly file federal tax returns related to virtual currency, as well as defending you against any civil or criminal tax issues that arise. If you have multiple years of substantial non-reported taxable cryptocurrency transactions, it is in your best interest to reach out to the federal government rather than wait around for them to reach out to you. We will help you knock on the government’s door before they knock on yours, ensuring that you avoid high-risk eggshell & reverse eggshell audits and exponentially severe IRS-CI criminal tax investigations.
Note: As long as a taxpayer that has willfully committed tax crimes (potentially including unreported cryptocurrency income coupled with affirmative evasion of U.S. income tax) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax investigation/prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply.
It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process. Only an Attorney has the Attorney-Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.
Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.
As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, KovelCPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth. See our Testimonials to see what our clients have to say about us!
Over the years, we’ve been the beacon for numerous clients, guiding them through the intricacies of record-keeping and reporting procedures required to file a federal tax return, including earnings from virtual currency. Regrettably, many people who hold virtual currencies either unintentionally or deliberately ignore their federal tax and reporting requirements and consequently can face severe civil and criminal tax penalties. Beyond advisory capacities, we’ve staunchly defended our clients against IRS underreporting allegations and brought their cases to successful civil conclusions. If the complexities of virtual currency and its federal tax ramifications are on your radar, our dual-licensed Austin Virtual Currency Tax Attorneys and CPAs are at your service. We are happy to provide a reduced rate for initial consultation, which you can arrange by calling our offices at (512)-768-7271 or by clicking here to schedule online.
Bitcoin’s March 2024 Surge: Understanding Market Forces and Tax Impact
In March 2024, the Bitcoin landscape saw a remarkable surge, soaring to an all-time high of over $73,000. This significant increase is attributed to several key catalysts, including the approval of spot Bitcoin ETFs and the much-anticipated Bitcoin halving event. The SEC’s green light for spot Bitcoin ETFs in early January spurred a heightened demand for these financial products, with daily trading volumes reaching nearly $2 billion shortly after their introduction. This surge in interest has been further amplified by the influx of approximately $2.3 billion into spot Bitcoin ETFs in a single week, showcasing a growing acceptance and mainstream interest in Bitcoin as a viable investment option.
The upcoming Bitcoin halving, a scheduled event that reduces the reward for mining new blocks by half, is expected to further propel Bitcoin’s value by tightening the supply. Historically, such halving events have led to significant price rallies due to the reduced rate of new Bitcoins entering circulation, thereby heightening demand against a limited supply backdrop.
Moreover, the anticipation of interest rate cuts following the Federal Reserve’s meetings, coupled with the speculative atmosphere surrounding the U.S. presidential elections, has inclined investors towards riskier assets like Bitcoin. Such economic and political uncertainties often drive the appeal of decentralized assets, offering a hedge against traditional market volatilities.
In light of these developments, the tax implications for Bitcoin investors and users have become more pronounced. With Bitcoin classified as property by the IRS, the realization of capital gains or losses from Bitcoin transactions must be meticulously reported on federal tax returns. This includes not only the sale or use of Bitcoin but also exchanges between different cryptocurrencies, each transaction potentially resulting in taxable events. The distinction between short-term and long-term capital gains, based on the holding period of Bitcoin, further complicates tax calculations and reporting, necessitating thorough record-keeping of transaction values and dates.
At the Tax Law Offices of David W. Klasing, our dual-licensed Austin Virtual Currency Tax Attorneys and CPAs offer the unique perspective of being both licensed attorneys and certified public accountants. Our CPA training can help us to reconstruct past records and set up a system for you to record the detailed information required on your tax return regarding the buying and selling of virtual currencies, including the aforementioned need to keep track of the fair market value of the cryptocurrency on the date you purchased it. We can use these records to help calculate your capital gains and losses for the year from the buying, selling, and trading of cryptocurrency and to assist you in filling out your returns in a complete and timely manner. Our legal background will give us the skills needed to be sure nothing we do exposes you to civil fines or criminal tax liability.
While taking these steps may help to reduce potential fines or even shield you from prosecution, it is essential that you discuss your situation with an experienced Bitcoin tax lawyer before you contact the IRS; otherwise, you risk exacerbating your situation or even inadvertently incriminating yourself. If you have any questions about reporting Bitcoin or other virtual currency transactions to the IRS, do not hesitate to contact the Tax Law Office of David W. Klasing here online or by calling (512)-768-7271 to schedule a reduced-rate initial consultation with a knowledgeable tax attorney, CPA, EA, or attorney-CPA from our respected team.
What if I Received a Letter from the IRS About My Unreported Cryptocurrency Transactions?
Starting January 1, 2024, the IRS requires individuals receiving $10,000 or more in cryptocurrency to report the transaction details, including sender information and transaction nature, to the IRS within 15 days, under penalty of felony charges. This update stems from an anti-money-laundering law originally enacted in 1984, with the Infrastructure Bill signed by President Biden, extending these provisions to digital assets under Section 6050I of the Internal Revenue Code (IRC). This section has historically mandated the reporting of large cash transactions exceeding $10,000 related to trade or business activities through Form 8300, now expanded to encompass digital currencies.
The IRS continues to focus on cryptocurrency for compliance, emphasizing the importance of reporting all taxable cryptocurrency transactions on federal income tax returns. The array of transactions triggering reporting requirements remains broad, encompassing activities from receiving cryptocurrencies as payment to selling or disposing of digital assets. However, not all cryptocurrency transactions result in federal tax liability, with certain types, like transfers between wallets one owns and receiving bona fide gifts of cryptocurrency, among others, being notable exceptions.
Receiving a letter from the IRS concerning unreported cryptocurrency transactions can be a significant cause for concern. If not appropriately handled, this can quickly result in a high-risk eggshell audit or a federal criminal tax investigation. Many cryptocurrency traders are shocked to learn that their exchanges of one type of crypto for another were taxable in the year of the exchange. Many trades are shocked to learn that the IRS may have obtained their information from a John Doe summons of Coinbase or another cryptocurrency brokerage. We have extensive experience dealing with all facets of crypto, including airdrops. Keeping your cryptocurrency offshore creates tremendous exposure too. Lastly, we are well-versed in assisting investors who held crypto with brokerages that have either ceased operations or were shut down, and we understand the intricacies of such situations.
How Can Austin Residents Access David W. Klasing’s Services?
David’s proven proficiency is now available in Austin at our appointment-only satellite office, providing both legal and federal tax services in one place—at a single hourly billing rate. We have just introduced a flexible scheduling option where our clients can reserve a four-hour slot at any of our satellite locations. David W. Klasing will travel to any of our satellite offices to meet with you personally. This option must be preceded by a one-hour phone or go-to-meeting consultation to warrant incurring the travel expenses and opportunity costs of traveling. We have designed this service to benefit our clients, with no additional travel expenses added to your bill. Call us at (512)-768-7271 or complete our online contact form today.
In addition to our fully staffed 19,700 square foot penthouse office in Irvine, the Tax Law Offices of David W. Klasing has unstaffed (conference room only) California-based satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad, and Sacramento. We also have satellite offices in Las Vegas, Nevada; Salt Lake City, Utah; Phoenix, Arizona, Albuquerque, New Mexico,Austin Texas, Washington DC, Miami Florida and New York New York that solely handle Federal & California Tax issues.
See our Bitcoin and Cryptocurrency Q and A Library
More Questions and Answers About Bitcoin
- What to Do When the IRS Wants My Bitcoin Trade History
- Bitcoin Tax Record Keeping
- Can I Appeal a Bitcoin Tax Determination by the IRS?
- Why does BitCoin and other types of Virtual Currency draw so much attention from the Taxing Authorities and the Federal Government?
- Where is the most current IRS guidance on Virtual Currency found?
- Should You Report Bitcoin on Your Taxes?
- What Is Bitcoin?
- How does the IRS treat Bitcoin?
- Can I Face Tax Penalties for Mistakes Made with Bitcoin?
- How Does a Business Determine Its Taxes When Paid in Bitcoin?
- Who Pays the Taxes in a Bitcoin “Mining Pool?”
- Are Bitcoin Miners Required to Pay Self-Employment Tax?
- Can Bitcoin Trading Create an Obligation to Pay Capital Gains Taxes?
- What Is Bitcoin Digital Currency and Why Does it Matter for Tax Purposes?
- What Happens if the IRS Thinks I’m Using Bitcoin to Commit Tax Evasion?
Here is a link to our YouTube channel: click here!
