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March 15, 2024 • 30 mins
Many businesses are currently struggling to calculate the tax owed on their crypto investments, giving way to questions about what is required of them in this upcoming tax season. Additionally, many wonder when and how they should start adopting new reporting practices in order to comply with looming changes to crypto tax requirements. On this episode, we are talking to the Senior Director of Government Solutions for TaxBit, Miles Fuller to learn more.
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Episode Transcript

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(00:10):
Welcome to Virginia Focus. I'm RebeccaHughes of the Virginia News Network. Many
businesses are currently struggling to calculate thetax ode on their crypto investments, giving
way to questions about what's required ofthem in this upcoming tax season. Additionally,
many wonder when and how they shouldstart adopting new reporting practices in order
to comply with the looming changes tocrypto tax requirements. On this episode,

(00:33):
we're talking to the Senior Director ofGovernment Solutions for Tax Bit, Miles Fuller,
to learn more. Welcome to theshow, mister Fuller. I know
this isn't your first time on theshow. Why don't you tell us kind
of what has changed since the lasttime we spoke. Okay, yeah,
I can run through kind of anupdate since we last spoke, which was
in the fall. I think wespoke right after the Treasury Department had issued

(00:55):
those proposed regulations to implement tax informationReport for digital assets, and a quick
recap on that, just you knowfor your listeners. Basically, when we
talk about tax information reporting, whatthat means is it's the same concept as
you getting a W two or ifyou were trading stocks, you would maybe

(01:15):
get this at the end of theyear from Charles Schwab or Merrill Lynch or
someone. You get this ten ninetynine document that says, hey, here's
all the stocks you bought during theyear. Here's and then here's the ones
you've sold. So for tax purposes, you've you know, either made this
much money on your stock sales orloss as much money. That type of
document you get from those brokers isknown as a tax information return. So
Congress passes law that says, hey, brokers that are operating in the digital

(01:38):
asset or the crypto space need todo the same thing. It was really
unclear before Congress passed that law,and so that law came in to effect
in twenty twenty one. We've beenwaiting for a while. In the fall,
Treasury Department issued regulations that would implementthat law, or proposed regulations,
and that's where we left it.Last time we spoke. We had these
proposed regulations that were setting up sortof what the specific rules requirements would be

(02:00):
that brokers have to follow for doingsome of those. It didn't cover everything
that Congress passed, but at leastthe first big step and since that time
in November what normally happens procedurally isthose proposed regulations come out, the Treasury
Department asked the public for comments orfeedback around them, and the Treasury Department
it's kind of a little bit humorous. And I just saw a little anecdote

(02:20):
about this the other day. TheTreasury Department got over one hundred and twenty
thousand comments about these proposed regulations fromthe public. Oh my gosh, which
is an absanely large amount, likethis absurd amount of comments. I think
I just saw something from some ofthe Treasury Department that said it was the
second most amount of comments that they'dever received with respect to any regulation that

(02:40):
was proposed. Ever, I'd bekind of curious what the one that had
the most was, but apparently itwas the second most. But they had
those comments all had to be inby November, and then just after that,
Treasure Department actually had a public hearingso people could all come into Washington,
d C. They could go tothe IRS building and there was a
hearing where people could give actually publicfeedback as well. And that all happen
in November, and so now reallywhere we're at is a little bit of

(03:02):
a holding pattern. Where Treasury departmentstrying to go through the process of digesting
all of the feedback that they receivedso they could take those proposed regulations and
transform them into it are known asfinal regulations, which would be the ones
that'll be implemented. We have littleadditional information yet as to like when they're
going to be finalized and how theymay look different from the proposed ones,

(03:22):
but we know that they're in thepipeline. Treasurey Department has said that they
are a high priority to get themout. That also makes sense strategically for
the Treasury Department because the proposed regulationssaid that the effective date when this stuff
is going to have to happen wouldbe basically next year, So the twenty

(03:42):
twenty five tax year is when thebrokers that would be subject to these ranks
are going to need to be collectinginformation during twenty twenty five, so they
could file these required information returns inearly twenty twenty six, kind of like
you get your W two or something. You get it like in January of
the tax year that just stand it, or did you anyuary following the tax
year that just ended, so thatis there you currently in the proposed rigs.

(04:03):
That is the schedule for when thingsare going to go into effect.
But in order to make that reallyfeasible, Treagy Department knows they need to
get these final regulations out so peopleknow what the rules are. So on
that front, there's that's kind ofwhere the status of things are. It's
a big rush and everyone's waiting tosee what happened. There was a lot
of feedback from brokers around the ragsthat the kind of one of the key
elements was that the rigs were alittle bit more broad or maybe it was

(04:27):
going to capture as written, wouldcapture a little more information than what some
of the brokers thought needed to becaptured, at least for tax administrative administrative
purposes. In the one specific areaI'll call out without getting too much in
the weeds, and what the feedbackwas was an area around what or known
in the digital asset or the cryptospace is stable coins. So stable coins
are generally digital assets that theoretically don'treally change in value very much. That's

(04:48):
why they're called stable because they're tiedto something like the US dollar, you
know, as a backing or somethingto it. And so there's a lot
of you know, those transactions.So if I had something one of these
stable coins and I got acquired oneand then later got rid of one,
because the value doesn't really change ideally, you know, I probably didn't really

(05:08):
make much gainer loss, if anyon it. So one of the things
the brokers came back with was likesaying, hey, you know, requiring
this reporting for stable coins seems alittle silly because no one's really gonna have
any gain or loss that the taxyou know, IRS needs to know about.
So that was probably one big andby carving it out or like excusing
that requirement, if the final ratesdo that, it would reduce a significant
amount of the filing volume. Soanother anecdote here is the IRS at a

(05:30):
conference in the fall made a publicstatement that they anticipate the number here of
the forms that are going to befiled with respect to this or be received
by the IRS alease could be inthe billions. So they're trying to deal
with and that's where brokers are like, yeah, we're trying to deal with
is a massive volume of transactions goingon, a massive volume of forms that
are going to be filed, Likehow do we best make that efficient?
And are we over reported. Sothat's like the question I think most of

(05:54):
the public has tasked the Treasury Departmentwith and the Treasury departments got to figure
out as they're finalizing the ranks.So that's like my hot take update on
the rags. But Rebecca, foryou, is there anything from that that
like piques your interest or you wantme to follow up on. Yes,
I want to go into the weedsand hear about the rest of the feedback
that they got and you know,some of the other details of because that
was a massive response. I meanI want to hear a lot more.

(06:19):
Yeah, there's different so if youget a little more technical some of the
other stuff that came up. SoI think that's like at a higher level
or a policy kind of level oflike hey, should we include these or
not. Another fascinating element that cameout of the Rags. That's a little
bit novel and it makes for mecoming from as a tax lawyer as my
background, it makes tax sense,like logical tax sense. But it is

(06:42):
a little bit weird in the sensethat it's it's it's novel for some of
these and it's so imagine a situationwhere you go in and say you use
a cryptocurrency like bitcoin to purchase somethingand just say that something, say we
go and purchase an automobile, Itdoesn't mean actually that's probably even a little
bit more far fetched. What didwe just go into the local department store

(07:02):
or whatever, Target and you justuse use bitcoin or something to purchase some
groceries and right now you would goin there, and the way it works
today if you're doing that with cashor not with cash, but even with
a credit card, you'd go intoTarget, you'd purchase your groceriy, say
it's one hundred dollars, and youyou know, you swipe your credit card
with you as an individual taxpayer,you never really are the wiser of what

(07:25):
happens on the back end. Buton the back end, the financial institution
that actually processes that credit card paymentfor like Target, actually files a form
know as a ten ninety nine Kform. It's a payment related form that
then tells Target, like, hey, we process this much you know,
dollars for you during the year ofsales. But that form also goes to
the IRS. So that's a taxform and that's how the IRS can kind

(07:46):
of check, you know, toknow that companies Target's obviously massive, but
if you think of more like amom and pop shop, they're able the
irs is able to have some insightif the credit card swipes or purchases or
debit card purchases are being properly reportedon taxes. So that's something that has
existed for a while in the taxworld. But that's forum is a forum
ten ninety nine K, and it'sgenerally filed by companies that are in the

(08:07):
business of doing payment processing. Sothink of like you know, Square is
probably the most common one in thismodern world we live in. You think
about you know or clover these onesyou now see it all the like,
smaller like mom and pop stores.Well, so in the crypto space,
really the treasury regulations are trying toimpose that requirement as well, where crypto
is used as a form of payment. So now if I pay with crypto,

(08:30):
the crypto that I'm used to paywith, that's gonna be picked up.
So they're going to have to doa reporting, even if it's not
a credit card, they're gonna haveto file this ten ninety nine K saying
that a payment was processed for thismerchant of say one hundred dollars worth of
crypto. So the payment card companiesare like, yeah, that's fine,
we already do that. And thereare actually right now, they're specialized payment
card companies in the crypto space thatspecialize in helping people actually accept bitcoin or

(08:52):
other crypto or digital assets as amerchant. So that's not really a problem.
But interesting facet comes out of that. In addition into now having to
do the ten ninety nine K,these payment processing companies have to do something
they've never had to do before,which is they have to generate this ten
ninety nine what's going to be calledthe ten ninety nine DA document that really
reports on me as the customer ratherthan reporting around the merchant as the sales

(09:16):
they made. But it's going tohave to report on me as a customer
and say like, hey, MilesFuller, as a customer, came in
and disposed of bitcoin, and wenow need to report that he disposed of
bitcoin at whatever, you know,for one hundred dollars and how many units
of bitcoin it was. And thepayment processors are kind of like, whohoa,
we've never had to do that before. We you know, we just
deal with cash, and so nowthat you know it's bitcoin, and we
have this whole thing that bitcoin cango up in value and down in value

(09:37):
in this broker type reporting kind oflike stocks. Now, these payment processors
are sort of considered brokers and thatthey're broker in my disposal as a customer
of a stock, and they haveto generate this ten ninety nine form that
normally I would get if I wasselling stocks or if I was selling something
coinbase, they would be doing itfor my selling where I've made like a
profit on some units. So that'sa little different flavor of a different nuance
that I think there was another elementof feedback that came from the payment processor

(10:01):
part of the industry that's picked upand they're saying like, whoa, this
is like a new requirement and wedon't really have these capabilities. We never
had to do this before, SoI don't know that it would change this
where I say, like, logically, it makes sense. As a tax
lawyer, I would say, hey, you know you're you are facilitating my
as a customer, I'm disposing ofan asset, uh, And so that
makes sense. But then there aresome wrinkles there and maybe some technical difficulties,
like how would when I'm in youknow, say I'm going to the

(10:24):
you know, back at Target againand I'm paying with some bitcoin and targets
using some payment processor to process thatpayment, and I pay with bitcoin in
order for them to issue in orderfor the payment processor to issue me the
form that's gonna you know, saythat I disposed of this bitcoin and I
you know, it was worth thismuch money when I supposed of it.
The payment processor has sort of legitimatedifficulties where they're like, well, I

(10:48):
don't know what the customer information isfor miles, like I need to do.
I need to get miles as likesocial Security number now so I can
issue them as form. There's someof these practical problems that come up that
no one's like had really ever hadto deal with before. And so I
think that's the feedback that the TragedyDepartment has received, and they're trying to
figure out what to do, andthere's certainly a way to do that,
but it may be, you know, it's going to be a little bit

(11:09):
of friction. So these are thepractical I always describe these as practical tax
problems as opposed to you think ofpolicy problems. People want the answers to
be one way or the other way. But sometimes as things go down the
path, people start to realize,like, oh, the practical way of
doing this is going to be alittle bit more difficult. Of course,
like we work at a software company, and there's an element of like,
hey, most of the stuff canbe done. It's just a little bit
different or nuanced and not as easyas you might have initially thought. So

(11:31):
that was kind of the other thestablecoin thing, and that was another practical
piece that came up that I thinkwas a big stuff. Now aside from
that, there probably was a differentflavor, though I think it is the
more fun or more interesting flavor ofthose comments. And you can always go
on to the Federal Register website andfind the regulations, and you could go
look at the comments if I believethey're still up there posting, because they're
all public. It is very interestingto read some of the comments, and

(11:52):
some of them are very much I'mgoing to stay on the policy end of
the spectrum. People concerned about privacyrights because people concerned about well, now
is the government getting all information aboutmy crypto and all this information and that's
Those are good questions, But Idon't know if there's good like good answers
for them, but those are otherpolicy questions that Treasury Apartment are trying to
deal with. So that's just sortof my I don't know on the rigs,

(12:13):
my factual resuscitation of what's you know, what happened or what feedback they
received. I'm not sure what they'redoing to resolve those, but it was
a very fascinating thing to see allof the comments come in, and there
was a little bit of a ploygoing into it where there was some stuff
on Twitter or whatever where people,you know, like sort of a think
of like really a grassroots movement ofindividuals to give comments back to the irs

(12:35):
something that probably doesn't normally I thinkthat the tax tax regulations are created and
no one really cares except for maybesome very large institutions and some tax practitioners
or tax lawyers. Here there wasreally, I think, like a grassroots
movement of individuals who were commenting onthe rags about like you think some of
these questions about like wait a minute, is this gonna be right, or
that it's gonna be really hard?Is how is this going to help me?

(12:56):
I do think the larger takeaway isat the end of the day.
For those who have crypto and doa lot of transactions with it, there
is in this moment, even today, in this tax here, and I'll
jump on that next, Like we'rein the current tax filing season for you
know, twenty twenty three tax here. There is still a difficulty with doing
your taxes in this space and doingthem accurately, you know, where you're
using software whatever, because you arenot as a consumer or an investor in

(13:20):
this stuff. You're really not gettingthis type of information from a lot of
the brokers or the businesses that areaccepting or enabling people to pay with crypto.
You're't getting any information out of it. You're getting you can go in
and like export some records, butbeing able to piece that together in a
meaningful way to put an accurate numberon a tax return is a little bit
difficult. And so that's where Ido think the end of the day,

(13:41):
like where the regulations are going arevery helpful because you can give people necessary
information. I guess is my takeaway. Okay, that's my thing on the
rigs. I can pivot and diveinto if you want. Rebecca on like
what's going on lately in tax seasonand some questions there. Well, let's
start with on a scale of sayone to five, five being the most
difficult thing in the world, onebeing the easiest thing in the world.

(14:03):
How difficult is it to do taxesif you have crypto? Curt, I
still think it might be like athree plus to a four. But I'm
gonna say it's very individual, likespecific, because I can tell you,
like if you are an individual whomaybe owns crypto, and and when I
talk about owning crypto or your involvementwith crypto is fairly limited. Like maybe

(14:24):
you just had an account on anexchange like a Gemini or a coinbase,
and you just threw some cash overthere, bought some crypto during the year,
sold some crypto, and you kindof just did it all in that
one place. Doing your taxes isactually probably more like a one or two.
You could do it nowadays. Thereis very sophisticated software that would let
you do it pretty easily. Wherethe level of complexity goes up is where

(14:45):
you start buying crypto, like inone place, maybe on a Gemini,
and then you want to move thosecrypto assets to a different place, maybe
to a different exchange, or maybeyou want to take them off of one
of those and put them in apersonally hosted wallet that's not run by one
of these centralized places. Then thingsstart to get complicated because if you move
them there and then say you movethem somewhere else into the decentralized finance world

(15:05):
where you have some on chain protocolthat's helping you do some trading, all
of a sudden you have a lotof movements and you maybe are investing in
a larger number of assets, andputting all the pieces together becomes the level
of complexity I think goes up exponentially. I describe it as like in your
head, if you imagine a puzzlewhen you're doing like a ten piece puzzle

(15:28):
like I used to do with mykids when they were little, Like,
yeah, doing a ten ten piecepuzzles pretty eay because there's only ten pieces
and you can kind of visualize holistically, like this is what the puzzle looks
like. When you go to doone hundred piece puzzle, it's not just
ten times harder, it's probably liketwenty times harder because now you have a
lot of smaller pieces. There's alot more ways they can go together.
The permutations are different, So theyimagine going from a hundred piece puzzle to

(15:48):
a thousand piece puzzle, like it'seven exponentially harder. So that's what I
think happens in the crypto space forinvestors. People that are doing a very
little bit limited amount of activity sortof in one location or with one so
can do their taxes fairly, eatfairly easily. When they start to expand
on, that is where the complexitylevel goes up quite a bit. Okay,
But I my question as to where, I mean, how many people

(16:11):
are on the complex side versus howmany people are on the simple side?
Would you guesstimate? I know youdon't know for sure, but what's your
guests? I would say, frommy experience, like anecdotally of what I've
seen, I feel like in thatless complex side. And so these are
people and maybe I would say fallin that one to three range of your
number range, that's probably like sixtypercent of the population, maybe a little

(16:33):
over like sixty five percent. Butthen that last thirty five percent are the
people that are obscenely complex. Likethe complexity starts to crank up really fast,
and we see a lot of those, And actually I think those are
a lot of people that have alot when it comes to taxes. Those
are a lot of people that havea lot more vested interest from a tax
standpoint, either because they owe alot of money because maybe whatever they were

(16:55):
doing they were very very good atsand successful and made a lot of profit
or something that's object to tax,or the inverse could be true. They
have a vested interest of getting thetaxes right for themselves because maybe they lost
a lot of money. You know, Crypto had been in a downturn for
the past year or two. It'sobviously taking back up like mad at the
moment. But you have people whohave tax losses and they want to be
able to claim those accurately and getthe benefit of them and be able to

(17:17):
document them in a way that theycan get the advantage from a tax policy
standpoint or tax standpoint of those losses. And so those are the people.
So I would say the people thelargest vested interest are the ones with the
most complex whereas the sixty five percentare probably people that yeah, they have
a little bit of investment, butit's not that much money either way,
and they can do it pretty straightforward, and they like probably aren't going to

(17:40):
get swept up at any massive enforcementnet of the IRS anytime soon because the
dollars are so small. Okay,okay, So then going back to what
you said about retailers basically becoming brokers. I guess my confusion there would be
if you were calling this a currency, which is the name of what it
is, cryptocurrency, then why arewe not treating it the same way as

(18:04):
our regular currency? Why would theyhave to have identifying information? Why do
they have to be considered brokers?Why don't they just accept the currency?
Like? Where is there more tothis that I don't understand? Yes,
well, I mean, yes,there is more. There's a deeper story
there, and it's actually one ofthe fundamental things that comes up a lot
in this space. Is it thisnineteen eighty four stuff? You know,

(18:26):
the book that way, going thatway. We're not moditoring, we're not
smiling, but no from a andthere's a very simple What's interesting is there's
a very simple legal answer to thequestion. But it's a legal answer.
So you're right, like we havetaken to call in this stuff cryptocurrency,
although more recently the IRS has movedaway and they kind of referred to as
digital assets. Cryptocurrency was sort ofa name that was spun up by the

(18:51):
creators in the space because they weretrying if you remember back historically in over
the last fifteen years in this space, sort of the first iteration of these
modern cryptocurrencies was coin came on thescene two thousand and nine, based on
a white paper that came out latein two thousand and eight, and it
really was intended to function like acurrency. So then there you go,
boom, we have crypto, youhave currency because we have this thing we've
created that's supposed to be like acurrency. Really, where we're at today

(19:14):
when we call it if you thinkabout it as digital assets here people even
say virtual assets because there's a wholebunch of them that they're not intended to
actually function like currencies. They're intendedto function in other ways. But from
a legal standpoint here in the UnitedStates, there is a particular federal statue.
It's Title thirty one of the USCode. I cannot remember the specific
code section off the top of myhead, but there's a federal statute that

(19:34):
says, in the United States legaltender meaning four purpose of the US what
is considered currency our legal tender isonly the coinage in the bank reserve notes
of that are put out by theUS mints or whatever. So that's basically
in reality, that's like our youknow, dollars and stuff that's in our
US dollars, in our wallets andstuff. That's the only currency. And
then obviously we have electronic versions ofthat, which is like when you use

(19:56):
credit cards and stuff. It's denominatedin that way. That's like the legal
barrier, but way that that lawtranslates for tax purposes is the IRS from
a tax standpoint says whoa whoa,Like, if it's not currency, like
in this little bucket of being whathas been statutorily identified as legal tender currency
in the US, then it's notcurrency. And if it's not currency,

(20:17):
what is it? And you fallinto this bigger bucket that says like it's
just property, which is what theIRS is. Original notice issued all the
way back in twenty fourteen said aboutreally all of the cryptocurrency stuff or digital
assets now which they at the timethey call virtual currency was really the term
of art they were using back then, not cryptocurrency. So they said,
because it's not considered legal tender inthe United States, it can't be considered

(20:38):
like cash and on the same playingfield as cash. You have to treat
it as property. And that's howyou get to where. Yeah, this
question you're bringing up about like well, why wouldn't you just pay for something?
Why do you need to know allthis stuff? And some of that
makes sense, right, Cash doesn'tchange in value. I mean, we
can have a great economic like monetaryeconomic discussion about foreign exchange rates and stuff.
But here where we live our dayto day jobs in the United States,

(21:00):
when I go into target, likemy dollar is a dollar, it's
always a dollar, whereas bitcoin isnot always a dollar. It could be
a dollar someth ye, it couldbe sixty thousand dollars and then like a
year ago it was fifteen thousand dollars, So you know, it varies,
and so you get that gain andloss, that economic impact or economic change
or volatility with pitcoin or any reallydigital asset. And that also makes sense

(21:22):
from a policy standpoint of like,well, we don't want to treat the
same as cash because it's all overthe place and it would seem kind of
weird or it would augment our economicprofiles of all of us as individuals if
we were just treating it the sameway. Okay, so two questions here.
Two part. I guess NFTs isthat considered a digital asset. And

(21:42):
when it comes to digital assets likethat, I think of things like art.
You know, if the artist ispopular, then my painting hanging in
my living room is going to bemore expensive. If the artist is not
popular right now, the value isgoing to go down. But I don't
pay taxes it all the time,and I if I'm going to use that

(22:03):
asset to pay for something, Ihave to liquidate it some other way.
Is that kind of where the rubis with all of this, except it's
digital and not something like a painting. Yeah, So if we move into
so what's interesting is the definition thatCongress gave when they passed this law that
was talking about these brokers. Theycreated this definition of what we of digital
assets, and they gave their definition. And then one of the debates for

(22:26):
a while was whether or not NFTsnon fungible tokens was actually going to be
included under that definition now in theproposed regulations. The Treasure Department answered that
with a yes that actually I'm gladyou bring this up because It's one area
where I forgot to mention that therewas feedback in the comments to the regulations
around like NFTs in addition to stablecoin stuff. N FFTs should not be

(22:47):
included because part of the definition Congressgave for digital assets included this reference to
the digital asset being a representation ofvalue, and people would kind of argue
the point you just made is like, well, like if I had like
digital artwork in the form of mget, is that really like a representation of
value? I'm not sure if that'sright. And so there was a question
there. I think Treasury Department includedit based on who knows, if they

(23:11):
were going back to do some soothsayingon the legislative history of what Congress talked
about when they passed the law orwhatever, but they ended up including it
to including it under the ranks todo it, which gets to your point
is like I would just go backand say, well, the NFT situation
in talking about in digital assets makessense from the standpoint of again we're just

(23:33):
talking about well, it's not currency, it's just property. In my artwork
that hangs on the wall in myhouse is property, and it's property that
might go up or down in value, but like any other property under the
tax code, you don't really haveto You aren't subjected to any tax associated
with those changes in value of propertythat you control until you get rid of
the property. And when you getrid of the property or tax terms,

(23:53):
we would call it dispose of property. You then look at the like what
did I get at the moment Idisposed it? Like what did I get
in return? And then you comparethat against like what did you spend or
you know, how much did itcost to acquire the property? So you
don't change it all. And that'swhere I think NFTs sort of fit because
it's just back to this idea.It's property that it. You know,
you have an NFT and you boughtit at one price, and later you

(24:15):
might have sold it another price.Now I'm probably not using the NFT to
pay for stuff at Target because it'sthis non ungeible thing. But you also
never know who knows where this ecosystem'sgoing. I feel like every time we
think something's probably not going to happen, then it happens exactly exactly where you
do it. So I'm having troublekeeping up. Yeah, so no,
so does that kind of answer,I think I cover because you kind of
had two part questions there, DidI kind of cover both of those parts

(24:37):
well enough for you? Yeah?That makes sense to me. I still,
I mean I think about again theart analogy, or even a car.
Once I sell my car, Ias far as I know, unless
something's changed, I don't have topay taxes on what I sold it for.
Though. Well, and think aboutit, so think about yeah,
and you're you're correct. So,but there seems that there's some rules for
stuff like that. So when youbuy your car, like it's a personal
thing when you think of like artworkand other stuff, we kind of view

(24:59):
that as a little bit of aninvestment. But also think about you know,
what's the famous last words your parentsprobably taught you, like buying a
car, Like you go buy anew car and the person thing you do,
you drive it off the car lotand it's immediately worth like ten percent
less than what you paid for it. Oh yeah, And so you could
have a car or you bought itat a certain price and then over year
and there you get it. Witha car, it's a depreciable asset,
meaning as it gets used up,the wear and tear, but it's a

(25:21):
personal asset. So the fact thatyour car is personal in nature generally means
that yeah, when you sell itor trade it in at some later date,
you know, you bought it forforty thousand, you trade it in
for five thousand, but you've usedit over the years. So and then
it comes in you're like, well, I have a loss, but it's
not really a capital loss because Iwas using it personally. I wasn't using
an investment. So there's some differenttax rules. I mean, it's the
bottom line that kick in to sortof handle that situation. When we're talking

(25:45):
about a car. Now, ifyou were a business and had a fleet
of cars or a business related car, there'd be a slightly different analysis because
you're using that car as part ofyour business rather than your personal vehicle.
And this is where you know peoplethat maybe have you know, self employed
type people may have their car alittle bit on their tax return and they
will get the benefit of the depreciationas the car gets used up over time.
That kind of stuff. But digitalassets as a piece of property or

(26:07):
even things like artwork or artwork inthe sense of an NFT, are not
really depreciable they're you know, they'renot being used up. You know,
like we were talking earlier about thehot rods. You know, obviously over
time you wear out certain things onthe car, and you have replacements.
That's what appreciation is all about.It's accounting for that wear out. You
know. Crypto stuff isn't getting moreout over time. You're just holding it
and it's going to go up andvalue or down value, kind of like
your stock certificates. So there's alittle bit of an analogy you can make

(26:30):
there, gotcha. Okay, Soit's kind of tiptoe in that line between
what we know of normally as faras currency and assets of value like paintings
versus stocks and things that you knowgo up and down value. I think
I'm I think I'm caught up now. Okay, cool, But yeah,
so where you and I mean,we're probably running a little short on time.

(26:52):
But the last thing I beleeve soas we're in this tax season,
one of the things that's been fascinatingthat I have been hearing about and I've
been waiting to see if the IRSis going to take any any action,
And what I mean by that isjust issue any sort of guidance that might
help people that are currently trying tofollow taxes. Is we may be touched
on this last time we talked,but you know, there was a number
of businesses in the crypto space thatentered bankruptcy, like Voyager, Celsius FTX

(27:12):
went into bankruptcy, and now youknow, there was some questions around like,
Okay, what happens tax lise withthat, Like I had some units,
you know, I had some cryptounits in account with these places.
Now I don't have those units anymore, and my units were worth X amount
of dollars and now I'm getting lessthan X amount of dollars back from these
places because they went through bankruptcy.So there are some questions cropping up now

(27:33):
about how people can report about thaton those taxes because these some of these
companies are exiting bankruptcy and making thesepayouts to make people, I don't want
to say a whole, but makingtheir customers less than a whole, because
none of no one's getting back dollarfor a dollar what was in there.
And there is a way under thetax code where you would maybe be able
to take a tax deduction associated withwhat you economically suffered as a loss.
So but it's not really clear likehow that fits because these arrangements, this

(27:57):
is where cryptos are really novel area. The way these businesses operate and stuff
are really outside the lines of whatother businesses do. So there's no clear
answer. So from a tax standpoint, you get a couple of different tax
analysis going on where people say,oh, I think you can deduct it
here, maybe you conduct it overhere, maybe you can't deduct it at
all. And I do think it'sa very individual level specific thing, but

(28:18):
I do think people are starting toget numbers where they say, like,
Okay, hey, I know Ihad stuff that was worth X. I
know that I got, you know, eighty percent of that back. So
this twenty percent that I didn't getback, I kind of know the number.
I got to go talk to mytax repair see if I can figure
ot where should put it on returnor how should I do that? And
where I would say is like I'dreally be hoping for the irs to maybe
at some point like issue some guidancethat maybe helps people with that or gives

(28:38):
them some instruction because it is alittle unclear. So that's like the interesting
tax filing thing I think this yearthat's coming up is like how to deal
with those situations? Okay, fascinating, absolutely fascinating. You are right,
we're up on our time, Sowhy don't you plug your website real quick
for me? Yeah, so youknow again, I'm here. I'm from
tax bit. If you haven't anyinteresting in the crypto space, we have

(29:00):
a lot of huge knowledge based articles. We help enterprise businesses deal with these
broker reporting rates that we were talkingabout. I mean, if you're someone
that feels like you might be subjectedto those as a business operator, come
to our website and check it out. We do that kind of stuff.
The website is taxpit dot com,so pretty straightforward and there's plenty of knowledge
based articles there. Even if you'rejust curious about crypto or investing in crypto

(29:21):
or some of these perky tax rules, feel free to go check it out.
Awesome. Thank you so much againfor all your time and all your
valuable valuable information. Yeah, awesome, No, always glad to talk to
with you, Rebecca. It's great. I hope you've enjoyed today's show.
Thanks for tuning into the show onyour favorite local radio station. You can
now listen to this show or pastshows through the iheartapp or on iHeart dot
Com. Just search for Virginia Focusunder podcasts. I'm Rebecca Hughes with a

(29:44):
Virginia news network, and I'll behere next week on Virginia Focus
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