In this episode, we introduce a new initiative at the Denver Space, focusing on empowering women in Bitcoin. Our monthly meetups aim to educate and engage women on various topics, with this session dedicated to understanding Bitcoin taxes. We are joined by experts from Satoshi Pacioli Accounting, including Joe, Joey, and Seth, who share their insights on navigating the complexities of Bitcoin taxation.
Joey discusses his journey with Satoshi Pacioli and the unique challenges of bookkeeping in the Bitcoin space, highlighting the importance of proper record-keeping and understanding the intersection of Bitcoin with traditional financial systems. Seth and Joe further elaborate on the growth of their team and the services they offer to both individuals and businesses.
The conversation delves into critical aspects of Bitcoin taxation, including the importance of maintaining accurate cost basis records, the implications of missing historical transaction data, and strategies for managing Bitcoin transactions for tax purposes. The team also introduces a spreadsheet tool designed to help Bitcoin users track their transactions and calculate taxes efficiently.
We explore the nuances of different cost basis methods like LIFO, FIFO, and HIFO, and discuss upcoming changes in tax regulations for 2025. The episode also touches on the potential impact of AI on privacy and data security in the context of Bitcoin transactions.
https://satoshipacioli.com
🔥 LISTEN TO EPISODE HERE
(00:00:48) Introduction to the Denver Space and Women in Bitcoin
(00:01:30) Bitcoin Taxes and Satoshi Pacioli Accounting
(00:06:39) Key Considerations for Bitcoin Record Keeping
(00:09:18) Privacy Concerns in Bitcoin Transactions
(00:14:19) Understanding Cost Basis Methods
(00:21:41) Effective Record Keeping Strategies
(00:27:49) Open Source Tools for Bitcoin Accounting
(00:30:52) Tax Implications of Bitcoin Transactions
(00:35:33) Navigating Bitcoin Spending and Transfers
(00:46:42) IRS Audits and Extensions
(00:55:11) Taxable Events in Bitcoin
(01:04:02) Gifting and Inheritance of Bitcoin
(01:11:38) Final Thoughts and Upcoming Events
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[00:00:33]
Unknown:
Alright. Hey. Aloha, love tribe. Aloha, Denver space. Aloha, everybody in Canada who's tuning in. You know, getting feedback there. Do you hear that? No. Good. Okay. You guys, this is a totally new experience that we're gonna start delivering to you at the Denver Space, which is one of the only, you know, handful of citadels all over the world. And we're so excited. I decided I needed to stay home tonight because it's totally dumping up here, and I don't wanna drive in the ice. But we've been planning this every second Tuesday of the month. We're starting to do women in Bitcoin. And so we're doing an in person meetup. So all these wonderful women in Denver hi, ladies, if you're there. If you can see me, hello. I wish I could hug you.
We are working on, you know, different topics each month, and the ladies get to pick the topics. And so they say, hey. We wanna learn about this or this or that. And so we had a big request to do Bitcoin, taxes. And so, of course, who else should we have as the most, you know, distinguished guests than Joe, Joey, and Seth of Satoshi Pacioli Accounting. Welcome, you guys.
[00:01:50] Unknown:
Thank you.
[00:01:52] Unknown:
Thanks for having us. Yeah. Thanks. So glad you guys are here. So do you wanna tell everybody here a little bit about what, you know, what your company does and how you help Bitcoiners and how we you know, we're gonna obviously have a little, you know, mini little presentation, and then we'll open it up to some questions, you know, with everybody in the physical space in Denver and then online, everybody, because we're obviously live streaming this all over.
[00:02:15] Unknown:
You wanna kick things off, Joey, being there in person? Go, Joey.
[00:02:20] Unknown:
Yeah. So, I joined Satoshi Petroli back, last year in January. I've been doing full fledged bookkeeping since about 02/2009, and kind of, bookkeeping in general is very well versed in lots of different types of businesses. I kinda work, with small medium sized businesses and a lot of people that, you know, just wanna provide a product or service. And as they do that, they learn that they're in business and then that also requires proper record keeping and then also requires being able to submit your taxes, and work with wonderful CPAs like Joe and Seth.
So I feel blessed to be on this team and to be able to, also be in the Bitcoin space, because it's kind of a a wild, wild west where there's all these extra, kind of things that need to be done on the on the record keeping side that a lot of, accountants and bookkeepers in the fiat world don't wanna deal with because it's a bit extra work. So we feel pretty blessed to be able to, be value aligned with the Bitcoiners and see the same thing they do, with the asset, as well as the network that Bitcoin is and be able to kinda straddle the financial systems we have where it's Bitcoin and the current financial system and how do these two merge and kinda move their way into a new direction.
[00:03:38] Unknown:
Awesome. Thanks, Joey. Alright, Seth.
[00:03:42] Unknown:
Hey, everyone. Thank you for having us. So, yeah, my name is Seth Bayless. I, joined Satoshi Apache a little over a year ago now. Joined the team with Joe. Joe had been doing a few tax returns on his own, reluctantly, and, he brought he brought me on to help build that out. So, the tax team has grown. We just got another person to help us, with the spring filing, so full speed ahead there. But, prior to joining Joe here, I spent about three years in public accounting, doing tax compliance work. So, I know a lot about taxes, for better or worse. And, yeah, I'm happy to to serve Bitcoiners and their companies.
[00:04:24] Unknown:
Awesome. Thanks, Seth. Welcome. Alright, Joe. Joe Wood.
[00:04:28] Unknown:
Yeah. So Joe Wood. I started Satoshi about, three years ago now. Before that, I had about fourteen years of experience in fraud, public accounting, some private companies, some some large, some small, some nonprofits. But as I got more deeper and deeper down the Bitcoin rabbit hole, I wanted to spend more and more time focused on Bitcoin. And so I guess the the most logical way for me to do that was to start a company that was an accounting company that was focused on Bitcoin. So, yeah, about three years ago, I started the company really focused on, accountings, Bitcoin startups at first where it was, hey. We just got some funding maybe. We started up in the last year or so. We need some accounting support.
We're not ready to hire a full time controller yet, and so trying to fill that gap for them, right, as they they build out their team and their products. Along the way there, continuously got, like, the question of, like, hey. I need tax support. I need tax support. So started doing a little bit of that a couple years ago. Really saw the growth there. Really had the need to kinda bring someone on full time for that a year ago so that that was when we brought Seth on. And then along the same lines there, like, the on the bookkeeping account side grew as well, so bringing Joey on around that same time. And then since then, we've essentially doubled the team again. So we're we went from, you know, one one person to three people to six people now. So, we've got a lot of growth in the last year here.
[00:06:02] Unknown:
Amazing. And so are most of your clients individuals or businesses?
[00:06:07] Unknown:
About fifty fifty.
[00:06:08] Unknown:
Okay. Cool. Yeah. And so, you know, for whoever's in the audience right now, whether you're, you know, in person at the space or if you're, you know, watching this, live, you know, please feel free, you guys. There's the a q and a that you can put in, in Facebook or in YouTube. And so just put some stuff in the chat if you wanna ask some questions. And for those of you who are at the Denver space, ladies, you all know it should be up on the board, where you guys can do, like, a poll.denver.space, and then there's a code that you can put in. So I've already got some of your questions here that we're gonna queue up. But but before we start getting into those questions, guys, like, what do you think is, like you know, for those of us listening, whether we're an individual, whether we're, you know, a sole proprietor, a small business, you know, what are the number one, two, and three things, you know, that people should be paying attention to when they're tracking their Bitcoin, you know, in their personal life and in their business?
[00:07:03] Unknown:
You want me to take that one, Seth?
[00:07:07] Unknown:
Yeah. You can take it. I was gonna say that off the top of my head, I feel like the biggest piece we're seeing with people right now is missing cost basis when they're trying to, work on their transaction analysis as a whole. Yeah. So good record keeping. That's probably true across the board.
[00:07:25] Unknown:
Yeah. I feel like that's a good one. I'm curious for your thoughts, Joe. Yeah. A lot of times, the questions that we ask is, how many places have you bought from and how far back does it go? Right? And did you buy from an exchange that no longer exists? If you bought in the last couple years, if you bought mainly from one or two places, it's gonna be pretty easy to get that stuff. If you're going back five, six, seven years, if you bought from exchanges that no longer exist, so you don't have the exports anymore, it can be a lot harder to get to your cost basis on those.
[00:07:58] Unknown:
And so what because that is actually one that's the first question here. It says, if you lost some of your historical transactions from an exchange, missing cost basis, what should you do? So what what are the actions that you would recommend for folks who've got, you know, a jambalaya of of transactions? Yeah. Might have some cost basis and some are just like, well, I think I bought something, and I think it was in June, and I think it was in, you know, this year. You know? How do you help them, you know, just stay legit if if they're, obviously, if they're not just totally offline, you know? But if people are tracking this stuff, how do you help them, come up with those cost basis?
[00:08:39] Unknown:
Yeah. I mean, if you can get into a ballpark, that certainly helps. If, you know, if you know the the year, the month, at least we can check the price during that time period to get a ballpark there, and then maybe you can go back to something on chain where you you can see funds moving there. And so you can kinda get back to some of that that historical stuff. And then the other thing that we kinda get into with people a little bit is, like, if that matters more now in the short term, if you are holding Bitcoin for the long term, that becomes less and less important where it's like, you know, if Bitcoin goes to a million dollars, whether you bought it at 20,000 or 30,000 is not as big a deal. If you're gonna sell it next week, though, and you bought it at 80 or 90, like, that matters a lot more. Right? So, it does matter, like, kinda your time frame and your threshold there. But, yeah, to the extent that we can at least narrow it down into some band where we can pick a price range that gets us closer than just how we put zero on the cost base, which is gonna be at least advantageous.
[00:09:43] Unknown:
Totally. I've seen
[00:09:44] Unknown:
I'm sorry. Go ahead.
[00:09:46] Unknown:
I've I've helped with people, you know, maybe suggest if you could see the transfer leaving your bank to an exchange, then that can give you an estimate of maybe when you did purchase that Bitcoin. And then, you know, yeah, maybe you can see when it was received in an address in your wallet, and that's another good one. But the message I tell people pretty consistently is just to pick a consistent method and stay consistent with it. And at the end of the day, like, that's what the IRS is gonna be looking for. But, you know, if you're all over the place and you're doing this method and allowing this one later, that's when it might raise a little red flags.
[00:10:18] Unknown:
And so let's talk about a couple of the methods, because, obviously, we've got some changes coming up here in 2025 to 2026. And, you know, can you guys you guys did a webinar, I don't know, maybe a month ish ago, maybe I think it was maybe on December 30, maybe, when they had all these, like, you need to take a snapshot of this and that. Are you LIFO and HIFO FIFO, blah, blah, blah. Can you help everybody understand, you know, if they may not understand the difference between what type of cost, you know, the the the basis is are and, like, what those are?
And what is the obviously, each case is gonna be different based on, like, are people holding it, like you said, for twenty years, or is it stuff where people are gonna need to take it out? Is it for retirement? Is it not? Like, what's what are these what's a LIFO and what's a LIFO and a HIFO? Are those, like, little characters? What what is that?
[00:11:11] Unknown:
You wanna take that, Seth?
[00:11:13] Unknown:
Yeah. So, LIFO is last in first out. HIFO is highest in first out, and FIFO is first in first out. And I feel like the LIFO and FIFO were more traditional, like what I learned in school. HIFO seems to kind of be a newer term, especially when it relates to Bitcoin and other cryptocurrencies. But, yeah, relating to the new cost basis guidance, especially with the IRS, all Bitcoin purchases, pre 2025, you can pick and choose which basis you wanna use. So you can choose HIFO if you wanna minimize taxes. You could continue to lose to use, FIFO if you wanted to. But then going forward, starting 01/01/2026 and then in perpetuity, exchanges are gonna be required to use first in, first out. So assuming, you know, whenever you sell, it's most likely gonna result in a higher tax, there.
[00:12:17] Unknown:
And so so they're required in 2026? Or if you make the the declaration if you make a declaration ahead of time, is that, like, if I say I wanna use HIFO, like, do I get to say I'm using HIFO in 2026?
[00:12:33] Unknown:
Yes. For any sales, the big difference is, like, when you buy the Bitcoin. So if this is Bitcoin you bought in 2017, you can pick and choose that basis. But if you buy Bitcoin in 02/1927, that's going to have to be, first in first out on that Bitcoin. So it's kinda just a cutoff point between old Bitcoin when it was kinda wild west, and now we've got more rules and regulations,
[00:12:57] Unknown:
for purchases going forward. And what you're gonna start seeing there, right, is, like I'll just pick Stripe as an example. Let's say you're DCA on Stripe and you're buying every week, and then, you know, in February, you're selling some. Like, they're gonna go back to your buys as of the beginning of the year 2026 because that's kinda your starting point. Right? And they're gonna say, hey. You know, whatever you bought at the beginning of the year, that's your first in. That's gonna be your first out. That's gonna be your cost basis for this sale that you made in February. That's assuming I bought on strike. Right? I may send money to strike to sell it in 2026.
For that, they're gonna have they're require they're gonna re require you to give them your cost basis. And so that basically, that's still on you to pick. Do you still wanna use HIFO for Bitcoin that you acquired pre 2026? You can do that. You just have to be able to give that information, have it be accurate so that Stripe can go and then report on that. But that's something that I think you're gonna get messaging from exchanges over the next six months or so, and that they're not gonna spring that pea on people on January 1, hopefully. So, like, they're gonna probably phase into that.
[00:14:07] Unknown:
And is there, like you know, I know there are some, like, crypto tax softwares out there that people have used, and I I used some, you know, a couple years ago when I was I I first delved into, you know, what's Bitcoin? What's shitcoin? Oh, I'm gonna go be a trader. Look at me. No. I wasn't. And so that lasted a whole two months of my life, until I realized Bitcoin was a tool for freedom and peace. Then I went that whole direction of Bitcoin. But, you know, during that period of time, there was, like, you know, I mean, hundreds and hundreds and hundreds of transactions, you know. Or do you guys recommend any kind of, you know, because and I'm gonna pull this up in just a second, your spreadsheet.
And ladies, everybody who's listening, I'm gonna give you guys this link and I'll put it in our Telegram group and I'll put it up on social media if that's okay with you guys. But, Joe and Joey and Seth made this great spreadsheet about, you know, it's a tracking spreadsheet. Do you recommend for people to use software if they're doing a lot of purchases? You know, it's one thing if it's like, okay, I'm buying, you know, a hundred dollars of Bitcoin every Friday. That's kinda easy to track versus they're going in and out and doing all this crazy stuff. Like, what what do you recommend for folks?
[00:15:17] Unknown:
Yeah. I mean, we made our spreadsheet trying to really focus on the Bitcoin side of things and really for, like, the simplistic, hey. You're buying. You're selling. I think we probably have some work to to do on that to make it more robust so it can do more calculations in there so it can handle more lines. Mhmm. But in theory, it should work for a whole bunch of buys and a whole bunch of sells where you're getting into trading into different assets and, you know, exchanges in there, Ethereum, the Solana, back to Bitcoin, all that. It's really not built for that. And so that's where, like, going to a software like CoinTracker is probably gonna be necessary and connect to different exchanges and stuff.
We haven't built that out and probably is outside of our wheelhouse of what we'd wanna spend time on. Mhmm. And so, really, it is your complexity there. I there's a bunch of them out there. They they broadly work well if you can connect into exchanges, the APIs work, if you're not missing anything on your cost basis. We tried to build this spreadsheet here with the thought in mind of, hey. If you don't have all your data, it will still work. Right? It won't error out on you. It'll still calculate for you. And you can kinda see as this runs, essentially, as a macro in here, you can run-in Google Sheets or you can run-in Excel. You can try to see how it's working and, like, recalculate it right in the file versus the, like, coin tracker and those softwares are a bit of a black box where it's just I give it all my information. It prompts me back a number, and I hope that it's right. I give it to my account.
And so we we hope this is a little bit more transparent. You can play around with the numbers a little bit. And, obviously, if you run into questions, obviously, reach out to us, and either we can walk you through it or, yeah, see if there's a issue with the spreadsheet that we have to kind of troubleshoot.
[00:17:10] Unknown:
Yeah. And part of the comparison too is gonna be your level of privacy. Because when you're putting your information into these centralized, systems to be able to track your taxes, it's connecting to multiple exchanges and what happens with that data in the future. There's, you know, just the honeypots of the individual exchanges and then there's also the accumulated information inside of one of those, centralized systems to be able to give you the tax information. And then after that, it's like what happens if AI gets this information and gets to do all the stuff that we can't expect.
And so that's why we've built this because you can basically download the spreadsheet, do it locally. You don't even have to put your transaction data in there. It can actually calculate everything without that. So there's kind of just different levels of privacy you might be looking for. Some people some people may not need that, and then some people definitely wanna have that.
[00:18:00] Unknown:
Yeah. I think that's kinda that's the the intimidating thing for all of us. Right? I mean, it's like we don't wanna have the the AI start to get everything and then just know every little transaction that we had from all of these places. But it's like, do you you know, this is kind of a side question. Do you feel like, you know, unless we are just, like, super cypherpunks and really, like, just out of the system and living, you know, like Luke Skywalker in the cave, are we really gonna be able to avoid that, you know, level of scrutiny with these these computers that, you know, can obviously, I mean, we see what MidJourney can do in, like, fourteen seconds. It can make, like, a masterpiece, you know? So I feel like we're in a, we're up against the machines, you know? And then whoever's controlling the machines, you know, is gonna have the ability to kinda have a lot more access to things that we're you know, we would like them to be private. How how would you suggest for people to, you know, this isn't obviously a privacy panel, but how would you suggest for people, you know, to make sure if they're really interested in that to to protect themselves, you know, in in that way?
[00:19:19] Unknown:
Yeah. I mean, I think this is probably there's probably two different ways to look at that question. One is, like, when we're looking at this data specifically, we're like, ultimately, you have to put this data together to give it to the IRS anyways, and so you're obviously losing some privacy if you have to report that to the IRS. Mhmm. I think the other part of that question, though, kinda bakes into how private does Bitcoin evolve into over the coming years. How how much chain analysis can you do on the base level versus, you know, some of these privacy tools? How how much are they broadly used?
I think that all probably plays into, like, the kind of the the heart of that question. Ultimately, like, as an individual, you need to have this data and be able to get to it to report to the IRS. Anytime you're putting that data together to be able to report on it, there's some, like, level there where, you know, if it sits anywhere on the Internet, like, it's susceptible to, you know, other people being able to see it. So an unfortunate side effect. I mean, we were talking before we started here. Like, maybe that's a different, question at the end of the year where there's no IRS,
[00:20:36] Unknown:
but, like, we have a long way to go there. So Come on, Ron Paul. Come on, everybody. Let's get rid of these motherfuckers.
[00:20:44] Unknown:
Yeah. And I'd say additionally is kind of like, you know, what what things are under your control? And if there is an ability, which is why I was really happy about, this spreadsheet getting put together, is that there's one little aspect we can say, well, this is at least more in my control than me having it elsewhere. And, yes, you know, already KYC ed on the exchanges. Yes. You're filing my taxes, so here's information. But at least there's, like, a little bit here that I know that is in my control and is not sitting in all these other places of unknowns.
[00:21:11] Unknown:
Yeah. And so so, Joey, somebody asked what what is good record keeping? Like, so can you guys help me, like, look here, like, explain, like, what these these, tabs are and everything just so that folks who are gonna, you know, who wanna use this, like, what we've got, obviously, a date, a label, a value, balance fee, value, tax I or transaction ID. Like, what are the what are the most important things that people should be, you know, tracking so they can, you know, CYA?
[00:21:41] Unknown:
Yeah. So is it just a base layer for for general record keeping? I think we have a different perspective in the fiat world where we can just go to the bank and download the statement at any point almost. Mhmm. Now we've seen through the history of Bitcoin where exchanges have fallen out of existence, and now you have no data if you never grabbed it. I've been lucky that I've been a bookkeeper for so long that I've been trained to constantly pull my data off of websites because I've had to do that for all my clients Mhmm. This entire time. So I do it for myself also. But But I think it's a very good practice to just pull your data from any exchange, any wallet whenever you can, and choose maybe wallets that give you better export functions. I recently ran into a Bitcoin wallet that literally was a PDF only spreadsheet or sorry, PDF only export. So like a 50 pages of PDFs, individual transactions.
None of it was searchable and none of it you could actually, like, copy paste information out. So I had to, like, manually type everything out. So play with it when you first get your wallets or exchanges, see what they do for their exports, and maybe use the systems that work best for you. So they Do you have any that you recommend? Idea pulling them out. They're all kinda different. I mean, Sparrow is maybe probably the most best first one where you can pull that data out once you put in your information. The exchanges are pretty good. It's just more of, I think, getting in the frequency of deciding, like, quarterly or yearly. I'm gonna pull the spreadsheet out. If anything happens, you at least have your data and it's not lost at some point because I know many people have run into that issue where they just don't have the records. And then maybe the wallets aren't the same and you're trying to track all this history. You may not even know how to look at the blockchain, so you can get very lost. But I just wanna put that base layer of, like, record keeping to something that's very important that just you kinda kinda have to get used to, get the training wheels, and start to pull that information.
But Joe and Seth might be a little better at explaining the spreadsheet here. I know there's, like, a data tab and so forth.
[00:23:38] Unknown:
Yeah. I think, Yeah. I mean, I think you covered it really well, high level there. Yeah. I think, fundamentally, a couple things to remember. This like, you the Irish wants you to be able to do this by, like, wallet or exchange. So, like, you would wanna, like, do this if you, you know, say you bought on River. Like, this would be for River specifically. You have a different one for Stripe, for example. And so, like, keeping these separate is probably something that you wanna keep in mind. But, fundamentally, it's date of the transaction, the value, the balance. So the value there is, the Bitcoin value. Right? The balance is, the total balance.
And then you have essentially the the fees, which you'll have on essentially transactions outbound. Right? You won't have that coming in. And then value in USD as as well here. We have ability to kinda look that up on another page as well. But if you have that, you kinda dump that in there. And then, essentially, that that same sheet, you have essentially, if you wanna look at it as purchases and sales, it can also be Bitcoin received and Bitcoin sent. That would still that works the same from a tax perspective. And then there's a little button up there where if you go to Bitcoin on the top right there.
Yep. That's not far in your help. Not
[00:25:07] Unknown:
Hold on. Help me. Oh, here. Oh, wow. Method. There you go. Woah. What's that? I didn't see that there. Thing there. And then that's where you pick your method. So if you wanna pick,
[00:25:16] Unknown:
FIFO here, for example, you pick that, and then it would go and run. It's gonna it requests authorization to run the macro. And then it should run after you do that.
[00:25:29] Unknown:
Yes. It does. It takes the I need to, like, get my authorization.
[00:25:33] Unknown:
There you go. Yeah. It's not me to do it live for us. Allow blah blah blah. Okay.
[00:25:46] Unknown:
So oh. There it goes. Oh. Yeah. It begins to kinda populate.
[00:25:51] Unknown:
And so there's an area I can't see the tabs on here with the view, but there's one where it will show you, hey. Here's the Bitcoin that you have left. Right? Because you had, you know, 10 purchases, and then you made some sales. And so now you have, like, five of those left. And then it will also have a a part where it shows you all your sales. And so that that will break that into those additional tabs automatically
[00:26:13] Unknown:
Okay. Cool. Well, this is amazing. It's definitely I I don't even I I don't know. What what is this thing here where it says Bitcoin? I'm just curious as a nerd. Like, that's, like, some
[00:26:26] Unknown:
That's a good question. I have no idea. Anthony and our team built this. Just a side note, all built essentially, like, with AI tools as far as getting the coding on it and just testing it there. And so, like, no. I don't think technical coding background, but I was able to get the coding needed to put it into this sheet, and use that. So a very good use of kind of our current technology to use that to our advantage.
[00:26:55] Unknown:
So cool, man. And then are in okay. This is super cool. So okay. So somebody's asking me and and, ladies, thank you so much. I'm getting all your questions, so I'm gonna ask all of them. I promise. One of the questions says, is this spreadsheet open source? So does that mean,
[00:27:09] Unknown:
like, can somebody take the spreadsheet and then amend it a little? Do whatever you want with it. When you go in here to take it, you'll automatically make a copy. So you can see this is a copy here. Okay. And then I don't know exactly where to point you, but there'll be somewhere in here where you can actually read the code that's in there for that Bitcoin button. And so either if you wanted to take that, add on to it, manipulate it, run wild with it, it's all on there, either on the Google Sheet or the Excel. We only ask if you do make a change to it and it's a big improvement. Like, let us know so we can incorporate that into future versions. But,
[00:27:47] Unknown:
have at it and feel free to make changes to it. Awesome. I love that. And, like, what a cool thing. Right? Like, how many other industries are there? I mean, I don't know. Bitcoin's not an industry, but how many other communities are there out there that's just like, yeah. Take my shit and do something cool with it and switch it up. That's called free energy, of course. And so it really the the ethos of Bitcoin in in the way that everything is built is so cool because we're we all really do want to you know, we all need to make a living and eat and get some milk for our kids. You know? But we all also, like, get that, like, this is super important that we have this way of being with each other. And, like, oh, wow. You made it a little bit better. Cool. Awesome. Let's let's use that version instead. You know? And then Yeah. And then, of course, let's always give credit where credit is due, who made the first version or what you, you know, kind of remix stuff from. You know, as a DJ, that's what's you know, when I remix things, I'm like, yeah. That was a James Brown, you know, sample. You know? So so it's kind of fun.
Okay. Cool. Cool. I got I got stuff coming in from yay. Hey, Michael Leonard. Yay, brother. So I'm so glad he's on your team. So let's go let's go back over here to a couple more questions for you for you guys. I wanna bring it back, and we're gonna go stop sharing really quick. So I've got a few okay. What somebody says, are you hiring? We kinda went over this in the beginning, but are you hiring?
[00:29:19] Unknown:
Potentially. Yes. I'll always potentially. I think it's probably the right answer there. We posted a job on Bitcoin or Jobs probably a month or so ago, and I think we got, like, 50 applicants. And Wow. Like, it's pretty easy to do that if you, like, post that on a broad job site. But, like, just on Bitcoin or Jobs itself, I think we got, like, 500 views and, like, 10% of those people, like, applied, and, like, just really high quality applicants versus, like, if you just post that on the the broader Internet, you're gonna get, like, one or two good applicants out of a hundred. Right? And so all that to say, like, right now, we're we're certainly growing as a team.
We're trying to manage that internally, but always looking for other talented Bitcoiners out there that want to get into the space. And so just trying to balance right now, like, hey. What are the needs of our existing client base? What is the needs of our, upcoming client base? And who are the people out there that can really help us support those needs? So a long answer to say yes.
[00:30:23] Unknown:
We always wanted to kinda talk to other Bitcoiners and see who else is out there. Cool. I know. I always think it's just like submit your applications or submit your resume, submit a cover letter, submit your, you know, letter of intent and mission statements, because you just never know. Right? And so I think that's always super important. So so, yes, so the answer to that question is maybe for for the right person. Okay. We got open source hiring. Okay. So a couple questions. So some people have, if you're purchasing items with Bitcoin, do you need to report that to the IRS to calculate gains?
[00:31:04] Unknown:
Yes. The technical answer is always yes when you're using Bitcoin as a currency, as money. They the IRS treats it as a disposal of property. And so, yeah, right now, people often think, oh, is there a amount under, you know, $200 or whatever it is that the IRS doesn't care? The the reality is is it probably is not popping up on anybody's radar, but the technical answer is if you sell $200 of Bitcoin, it's it's taxable. If you spend $200 of Bitcoin, to, you know, purchase something, that's also a taxable event. And so the same same going back to the record keeping earlier, if you've done all that work ahead of time and you can just plug one more payment into that spreadsheet or whatever you have, it's not a big a deal.
But, yeah, if you wanna be spending Bitcoin, using Bitcoin every day, right now, it is a little bit tough.
[00:32:00] Unknown:
And so, again, so just for record keeping purposes, what is that just something like so let's say I'm I'm, you know, gave you guys $200 to do my taxes or whatever. I would just report that I spent $200, but of that Bitcoin and that Bitcoin, I bought it whatever at a hundred dollars. So I have to, you know, report that gain. Is that how Yeah. People do that?
[00:32:25] Unknown:
Yeah. And I guess trying to simplify that as much as possible when we go and say, like, different wallets have their own call spaces. Right? If you're gonna most likely, if you're using Bitcoin to spend, it's probably from a lightning wallet. Right? And so maybe you you purchased some Bitcoin specifically to put it on that lightning wall, and so you know, like, a good clean cost basis for that Bitcoin. And then you're gonna go spend that thousand dollars until you use it all up. And so, like, you have one cost basis for all that Bitcoin that you spent, and you can, you know, at the end of the year, just look and see everything that you spent on that wallet. And so it doesn't have to be something that you're spending a ton of time on, especially kinda going back to what Joey talked about earlier. There are some wallets that have, like, really good exports where I can just export all the transactions I did for the year, versus, like, some that are not gonna have those tools. So using something that, like, you know is gonna have good reporting, if you do wanna use Bitcoin and spend it on a daily basis, is probably something to be thinking about.
I mean, Strike is great for that, especially with their ability to, you know, send USD over the Lightning Network, although that's not exactly spending Bitcoin in the same way. But, like, I know Strike has really good reporting if you wanna use them for me. It's custodial, but still, like, a good, easy way to spend Bitcoin and not have to overly engineer your record keeping.
[00:33:53] Unknown:
And unless somebody else asked, what happens when you move Bitcoin from one address to another?
[00:34:01] Unknown:
Yeah. So, technically, that, you know, it's one personal address to another address that is not a taxable event. And we've seen from people in the past that, let's say, you're using CoinTracker. It might accidentally count a internal, you know, movement of Bitcoin from yourself to yourself as a taxable event. So it is important to go in and kinda double check those things and make sure that you're not paying more taxes than you should.
[00:34:27] Unknown:
Yeah.
[00:34:28] Unknown:
Oh, yeah. Yeah. You don't wanna do that.
[00:34:31] Unknown:
Yeah. And that's more akin to, like, a transfer. You're transferring between your bank account or you're checking in your savings. Check yeah. Exactly. Checking and savings. You're good. It's not a sale event or a spending event, which would be taxable.
[00:34:43] Unknown:
So, again, just so for whoever asked this this question, you know, just make sure you know that that's what you're doing, like these guys are saying. So don't don't accidentally get
[00:34:54] Unknown:
don't get taxed if you don't mind. Another another piece with that too, Val, is kinda the in between, because with Stripe, you can use the US dollar side of the app. And, basically, you as a user are spending US dollars, and you can actually send that to a Bitcoin address so that the person receives Bitcoin. So in terms of it's like this parallel financial system where it's not a taxable event because you're not actually spending Bitcoin as the user that's sending it, but the person that you're, that's trying you're trying to send to that's receiving it, they're receiving Bitcoin. And And that's what Joe was mentioning, that it's the US dollars that are using the the Bitcoin financial rails, the lightning financial rails. And now you're kind of, working within the rules essentially to not have a taxable event. You're also not touching your Bitcoin savings, and then you're also getting the person on the other side to receive Bitcoin, which I think is the best of all worlds right now that we can work within. And is Strike the only one that you know of that is doing that, Joey? That's all I'm aware of. Yeah. Do you guys know of any others? Yeah.
[00:35:50] Unknown:
I think it's just Strike for now. He's got to be on something I did. Mhmm. Yeah. I'd only leave $10 in the bank account for, like, a bottle of water at the Quinn Park or something like that, so I don't have to worry about keeping track of a $2 Cool. Taxable event.
[00:36:06] Unknown:
And then, just I'm gonna this is my question, actually, and I know this will be maybe a little side. But with Nostr, obviously, in Zaps, and that's a whole beautiful world that we have, you know, and we're watching, you know, creatives and podcasters and musicians and content creators and whoever. Like, here you go. Here's 20 sats. Here's a thousand sats. Here's whatever. What are you know? And I know a lot of people in Noster were a lot even more just like, yeah. Whatever. Fuck off. We'll figure this out later. You know? Because we're not it's like literally, it's like, oh my gosh.
Joey, I gave you 3¢. Let's report that to the the government. You know? Like, going forward, obviously, as Bitcoin gets larger, you know, do you feel like those kinds of things are are we gonna see people reporting their zaps? You know? Have you heard anybody even talking about this in your world yet?
[00:37:07] Unknown:
Yeah. I mean, it's probably coming. It's, yeah, it's a dollar amount thing right now where it's, like, a dollar here, $2 there. Yeah. But, yeah, I mean, if Nasr's catching on and everyone's using Nasr and there's significant value creation on there and people are sending significant amounts, I mean, people are already kinda sending significant amounts on there. Right? Yeah. I don't think I mean, it would be interesting, if we hear, like, in the media in five years of, like, the way people are trying to, like, get around, like, money laundering rules because they're setting millions of sats around the people. Right? Like, that'd probably be a good problem to have, like, a good headline that, like, not just that widely used. Yeah.
So, like, same rules broadly apply. It's just we're still very early in that space, so it's more akin to you going down to your local, you know, your local hangout, and you're, like, doing peer to peer stuff. And, you know, you're you're reimbursing somebody for something that they purchased for you or, you know, someone did you a favor. Right? Like, no one's reporting that type of stuff. Yeah. But if it becomes bigger, it becomes global, really, with, like, millions and millions of people, like, that will come, I think.
[00:38:25] Unknown:
Okay. That it's good to know just to keep an eye on that. Okay. Just these are this is a side tax question. Are expenses related to wealth management services and investment management services tax deductible?
[00:38:40] Unknown:
To the state that they're a business. Right, Seth?
[00:38:44] Unknown:
Yeah. I believe the only thing that you can deduct on the personal return would be, like, margin interest. Let me let me actually look that up for you guys. Okay. Cool.
[00:39:01] Unknown:
Okay. So One piece that I mentioned again on record keeping just because it kind of there's so many different ways to do it. I think one thing I didn't mention is is finding a a wallet that has the ability to have notes per transaction. So when you, before you make the transaction or when you do, usually there's a note spot and you can actually type a memo into that transaction itself. And so that gives you the information to say this is what I spent it on or this is what I received it on. We're so used to, having the fiat bank system do those memos for us whether they make sense or not. Most of the time, they don't make sense. We don't even know what it means, but we see the memo and it might ring a bell. But now we have that power within our wallets to actually be able to write memos for these things. Like Joe was saying, a lot of times you can have one that exports that too. So you get a much better financial picture if you do these small little things as you're making these transactions to make a memo for yourself for the future.
[00:39:51] Unknown:
Yeah. You gotta love a mem good memo, especially if you're sending, you know, stats. The okay. One more question here. And I don't know. We kinda talked about this a little bit earlier, so it this may not be totally applicable. The tax rules for 2025 have changed, but what is the strategy for minimizing taxes under the 2024 rules? How does the strategy change for 2025 going forward? Not sure if that's
[00:40:27] Unknown:
You wanna cover that, Seth?
[00:40:29] Unknown:
Yeah. And I was gonna say to answer the last question, pre TCJA, so the, the tax cuts that Trump enacted, you could, if you itemize, deduct, like, 2%. So that has gone away. But like Joe said, if it is related to a business expense, then that would be applicable. But just the standard And that could be coming back. Presumably, there's gonna be another similar type of tax,
[00:40:53] Unknown:
tax act this year, I assume. We'll see what's in that. Right?
[00:40:58] Unknown:
Yeah. Well, okay. We talked about this earlier, and and so this was one of my questions too. And this is this will dovetail. And, there's the the question we talked about in the beginning, which was, if you file an extension for your return, are you gonna get, you know, more likely to be red flagged for an audit? And, obviously, we know that there's a lot of things changing. And, again, if we can pray for the IRS to go away, that would be great. But is that something that people should worry about if they're like, oh, gosh. I don't have my my bookkeeping in order, and I wanna put an extension until October? What what would you say?
[00:41:38] Unknown:
There's no there's nothing that'll penalize you on having, extending your return. The one thing to note is if you do have a balance due, and you don't make an extension payment, you could be subject to a failure to pay penalty. And then any amount that is owed as of 04/15, that would start to accrue interest and penalties throughout the year. So, if you wanna just extend your return and hope the IRS goes away and you do have a balance due and they don't go away, it could be an expensive choice. So it's just, you know,
[00:42:15] Unknown:
stuff to consider, though. And expensive is is relative. Right? And so, like, some people, you know, if they get a $2,000 tax bill and they had to pay another thousand dollars in interest, they'll be like, oh, that's a like, that's a lot more money. Some people will be like, I would rather keep that $2,000 holding a Bitcoin for some period of time, versus, like, giving that money to the IRS earlier. Right? And so, like, we have clients all over the board there. I'm like, no. I don't wanna owe anything on April 15. I wanna make sure I'm all paid up to, hey. I'm gonna push this as long as possible. And we just try to give them the information so that they are at least knowledgeable when they're making those decisions.
[00:42:56] Unknown:
But so aside from kind of the the, you know, financial shell game of, you know, should I keep the money and that whole thing, is there anything in your experience that would red flag anybody if, let's say, they did that. Oh, I'm gonna keep the 2,000, and I'll give you guys the interest later and whatever. If if they do have a an a bill that's owed, is that gonna give them a potential audit flag that you are aware of?
[00:43:24] Unknown:
No. No. I don't think there would be any increased risk of audit there. You could get into fraud if you were to, like, file a fraudulent tax return that has a big refund, and then it turns out, you know, they amended later and, like, oh, here's that money back. Like, definitely wouldn't recommend doing that. But, no, I don't think I don't think having a balance due and not paying it is a red flag or anything. And then Okay. I I think like we've said at the beginning, just the fact that you, extend your return doesn't necessarily make you more at risk for an audit. Right? Yeah. And I think one of the things that because people will miss this sometimes.
[00:44:01] Unknown:
Make sure you file the extension. It takes, like, five minutes, probably less than five minutes. Like, even if you just wanna push it off and not worry about for six months, deal with the interest and everything, like, you still have to do that extension process by April 15. If you do it April 16, April seventeenth, you're gonna you're gonna get hit with a penalty that you wouldn't have otherwise. So, like, make sure you file the extension, and then make sure you file something by October 15 even if that's not finalized as well. Right? Like, as long as you get it in, like, we have clients that will go back and amend for prior year return because something was off. It's still better to do that than miss that extended deadline as well. So, like, hitting the deadlines is more important than paying the full balance you owe. That's can you where you can get into additional penalties that you just have no reason to pay. And this is a perfect segue into this question. Somebody says, what's the statute of limitation,
[00:45:00] Unknown:
if taxes were missed on, you know, whether it's your income, your capital gains, whatever, how many years till I don't have to worry about an audit?
[00:45:09] Unknown:
So the statute of limitations, is usually three years, and then it can go up to, I believe, it was six or seven years if you under report your income by 25% or more. So, you know, if there was intentional fraud, they can go back a lot longer. But if you received, a small amount of the Bitcoin Cash Fork and you dumped it and you didn't report it, you're probably gonna be okay, unless you're Roger Burr, I guess. But yeah. You you know? That 25% threshold. Yeah. Yeah. I I would I would need to know.
[00:45:46] Unknown:
Okay. So possibly three years. But if you were under reporting things by 25% or more seven years, they can do a look back on you kinda thing. Yeah. But reasonably
[00:45:57] Unknown:
yeah. I like their ability and their willingness to really dive into that. They have a lot of things that they're focused on that are probably unless you're, like, you know, high net worth, high earner that's paying very little on taxes, you're probably not on their radar in the the way that you would be. Like, I I know a lot of Bitcoiners are worried worried about getting targeted by the IRS. Anecdotal, I don't think we've seen a ton of that yet. Certainly, anything can happen, but it doesn't seem like, Bitcoin are getting targeted at a higher rate or anything because they see purchases from an exchange or you reported Bitcoin in one year, so now you're gonna get audited forever. That doesn't seem to be the case so far.
[00:46:42] Unknown:
Okay. Yeah. I think I I know I have several friends who, are miners and home miners, and they're like, oh my gosh. I've been earning Bitcoin for ten years or however long. And what do I do if I wanna start set? You know? So I think it's a big obviously, it's a rainbow of use cases and different people's scenarios of how, you know, they want to, you know, make sure that they're covering their butts and not getting in trouble, but also just, like, it's tough, you know, because we're obviously dealing with, you know, again, this the the the Bitcoin ethos is peer to peer. We don't wanna deal with, like, the IRS. We just wanna send Bitcoin to each other and live freely. Wouldn't that be great? One of the questions somebody said, do you do you believe the IRS is gonna get abolished?
[00:47:33] Unknown:
I wish it would.
[00:47:35] Unknown:
I look forward to getting another shout. Any any over under you on that that little bet?
[00:47:41] Unknown:
No. I wouldn't be betting on it necessarily. I mean, there's a lot of downstream things to deal with regarding, like, delayed, taxes paid on retirement accounts and things like that. So it's definitely not as easy as just flipping a switch, and we all move on with our lives. I know. La la la. But yeah. I mean, I'm I'm I'm absolutely here for it. Yeah. I mean,
[00:48:04] Unknown:
maybe a a smaller, like, goal there is, like, if you could some way get honestly, for me, if it's something where, like, you can spend a small amount of Bitcoin, some threshold there where it's not a taxable event. I even, like, would be willing to say, if you send to an exchange, you convert to fee, it's taxable. But if you spend it peer to peer, like, you're using it as money. That shouldn't be taxable. Like Yeah. I'll even go that far. Give them that much, like, wiggle room. Right? I think that would fundamentally change the way people kinda look at Bitcoin, use Bitcoin. Right? I'm like, hey. If I, you know, if I buy Bitcoin and I sell it, I gotta pay a 15% capital gains tax.
Or if I buy it and then I use it for things that I need that I was gonna buy anyways, I don't. I think that would be huge. And it would be, I think, a relatively relatively easy thing to do. Like, the government's still gonna get most of their money. So most people are still gonna just trade back to Fiat. Right? I think that's probably a lot more doable and politically, like, politically advantageous than, like, we're just gonna get rid of the whole IRS or we're gonna get rid of all capital gains tax. I think you're gonna get a lot of pushback on that. I would love to do it.
[00:49:21] Unknown:
We'll see. That's actually being talked about because we had a a member only event here at the space a few weeks ago, and, one of the lawyers was speaking about that, that that's one of the discussions of how do we have de minimis amounts of Bitcoin that shouldn't that's not taxable, because that'd be a game changer where we can do the small amounts of, transactions between each other and it's nothing that needs to be tracked because it's a waste of everybody's time. And it doesn't really make the government any taxes to begin with. It's not really worth anybody's time. So, I think it's in discussions now, but we're not there yet. But it would be a great win to have a de minimis amounts of nontaxable Bitcoin.
[00:49:52] Unknown:
It would be so great. Like, a big giant de minimis. A de maximis.
[00:49:58] Unknown:
Yes. Yeah. I've I've been saying they should go ahead and adjust it for inflation. Don't bother with 200. Let's make it let's make it a thousand.
[00:50:05] Unknown:
Let's make it 10,000. Like, not even that no. None of this $600 Venmo bullshit. Like, give me $10 at least. Like, for me, like, I hire people overseas to do some work for me sometimes, sometimes, whether they're video editors, whatever, and they're Bitcoin or so. I send them Bitcoin. How do you how do I account for that? You know? Because it's a Bitcoin to Bitcoin transaction, but it's with somebody overseas. I'm not issuing them ten ninety nines. You know? Like, what do I do?
[00:50:35] Unknown:
Yeah. I'm asking you. Oh, yeah. It's it's a point of transaction. US dollar point of transaction, but because they're international, there's no $10.99. So you're you're correct there. I mean, you guys surprised to say more about it, but that's in a nutshell.
[00:50:48] Unknown:
Yeah. Is there yeah. For I mean, if it's business, it's a business expense like anything else. Right? But, like, you value at the time that you sent it.
[00:50:55] Unknown:
That's it. Just value, like, the way that it would be Yep. US dollars sent. Okay. Okay. So someone else this is there's two more people here. Like, we've got a couple more questions. So and I wanna be respectful of your time because I know it's late. This is a similar question that we had at the very beginning of, like, what if you don't know your cost basis? Someone else also said here just recently, what's you know, the worst case scenario, your cost basis is zero. No. It's never gonna be zero, guys. Okay? It's gonna be guesstimate the shit out of that. And so let's figure out how that works. I don't know if you guys know that I used to work at Deloitte and Touche, and that was, like, what we used to do. We guesstimated the shit out of things. And so with our giant reams of paper with the holes in the sides and yeah. It was a I wasn't a very good accountant, guys. I was terrible.
I'm a much better DJ and podcaster. But so, because they didn't like when I said guesstimate the shit out of that. But so, okay. So for this question, again, we'll just kind of reiterate for the ladies in the room at the Denver Space, yay, and, everybody watching virtually, thank you guys for tuning in. If you don't know the exact amount spent, you know, how do you how do you, how do you guesstimate your price? You know? Same thing.
[00:52:14] Unknown:
Yeah. I mean, I guess, inherent in that question, if you if you're spending it in Sats, I I mean, I guess, you're gonna have a record of it, whether it's a lightning transaction. It, you know, went through your node or through the apps, right, custodially or if it's on chain, you're gonna have the on chain record. So you're always gonna be able to go back, and you can always check the Bitcoin price at that time and the amount of sat. So you're always gonna be able to recalculate that whether the wallet does it for you or not. I think that does that get to the heart of the question?
[00:52:51] Unknown:
I think so too. I mean, I think it's just, again, guys, it's just it's a tough one. Right? Because it's like you're gonna you're gonna have two scenarios. Right? If you're somebody who's been, you know, dabbling and investing, doing whatever you've been doing in Bitcoin up until today, you know, February 11, and your record keeping has sucked. Well, guess what? You get to kind of play and sort of go back and try to assemble some version of, well, I think about, you know, hundred bucks here, a thousand bucks here, whatever. And, you know, use the the spreadsheet that, you know, we're gonna send you guys or use a piece of paper, whatever you need to do. And then going forward, creating something that's a more solid way that you'd feel like rock solid, you know, in your transactions. And so you've kinda got ketchup, and then you've got okay. Now we're we're we're we're cooking with gas here. You know? And so,
[00:53:43] Unknown:
does does that make sense? Yeah. And this is no different than this is no different than before Bitcoin. It's kinda the same thing. It's like if you don't have a complete financial record, you have to do your your damn best to figure out what that picture looks like. And then more importantly, have a very consistent method on how you track that over that time period of not knowing. So if you have a close enough amount and then you have the date, well, then there's Yahoo, market to find the ending Bitcoin price and you have a price for that day that's historical where you can have Excel kinda build out those days.
So as long as you have a method and you're doing your damn best to try and make that as honest as possible, that's really what matters. And then like you said, Val, once you get to that point of now and present time, how do I fix this problem of the past and now prevent that for the future to do this new way of of record keeping or hire us as the awesome team to help you to do any part of that aspect.
[00:54:35] Unknown:
Totally. And and, obviously, you guys so who everybody who's at the Denver space, you all know, Joey, probably came and rallied you into the room so that you could be, you know, present there. So make sure you talk with Joey afterwards. I know he's upstairs. He's gonna come downstairs and talk with you. If you have specific questions for your, you know, past taxes, future stuff, I know he'll be there to to support you. A couple more questions really quick. So somebody just said, can you talk more broadly about what is a taxable event? Again, just just to clarify so people understand, like, what what does that look like? You know? Because I know we've got the oh, I'm sending some stats to my dude in El Salvador versus, you know, it it's a tough one. So I mean, it's not tough. It's just I want peer to peer.
[00:55:24] Unknown:
I think it's important too to differentiate those different kinds of tackle taxable events. So, like, your bread and butter, you just sell Bitcoin that you bought. That's a taxable event. It's gonna result in a capital gain or a capital loss. Let's say you're home mining, and you earn Sats. Technically, that is income, and so that would go, in a different section, and it would be taxed at a different rate, than the capital gains. And so, kinda your high level, you know, you you sell, you buy something. You know, by that nature, you're selling to buy it.
Yeah. If you earn, income from, you know, staking or any of that other stuff, air drops, all that. Any anytime that you're essentially given value for nothing, that would be taxed as income. It would show up on your, your schedule one on your personal return. Joe, are there any others I'm not thinking of?
[00:56:20] Unknown:
No. You covered it. I I think the IRS, like, on the capital gains tax side, like, the IRS is gonna look at anything that they would consider a disposal. So anytime that you you had Bitcoin and you no longer have Bitcoin anymore, that's, like, gonna be, like, a disposal from the IRS standpoint to fall under that capital gains tax. And then, yeah, I think just probably as we look at Bitcoin is money. Right? If you're receiving Bitcoin for any services you provide, products that you provide, just like if you were to provide US dollars, that's gonna be revenue to you, and that would fall under, you know, the same rules
[00:56:57] Unknown:
generally as well. So I think that covers everything, though. Yeah. And then on the record keeping side as well, it's like because if you know that these are the categories that are taxable, then also set up your wallet structures so that follows the same thing. Now you can have a single hardware wallet and put a couple different accounts in there. One account is maybe the, money that you use US dollars to buy from an exchange. Maybe another one if you're doing mining, that's where it's going to. And then if you're making income, in Bitcoin, then that's another wallet or another, account that it goes to. So it's very easy to be able to track what happened, and then it all flows into, the tax side.
[00:57:35] Unknown:
And kind of in tandem with that, there's the question on the first page of your tax return that kinda asks, did you have any digital assets? And so general guidance, the answer is probably gonna be yes if you did interact with any digital assets. However, the notes here for when you can select no, you just outright don't own any digital assets. If you only buy and do not sell any Bitcoin during the year, the answer is no. And then if you, transferred to a wallet, you know, internally with yourself and you don't sell, then that would also be no. But anything else, receiving a digital asset as payment for good or service,
[00:58:12] Unknown:
the hard forks, air drops, anything like that, your classic sell, those are gonna result in a taxable event. So we get it like a hard fork where BlockRock has their own chain and we get it like an extra coin and we dump all those. That will be a taxable event. Right?
[00:58:26] Unknown:
Yes. Yeah. Right. Well, Lisa, we're being forced to huddle, it sounds like. So
[00:58:31] Unknown:
Totally, dude. Yeah. I love what Michael is is echoing what you guys are saying. This I like this idea too about segmentation. I hadn't thought about that. I'm not a miner yet. I wanna be a home miner because guess what? We're gonna have the heat punk summit in that the Denver space in a couple of weeks, which is gonna be amazing. And but so this is something a question somebody said too. You know, why is mining income but selling is capital gains? And I think you guys just answered that. Right? So there is a difference between something that you're generating as income and you're start I mean, you're still gonna have cost because there's inputs to create the those Bitcoin. So you're not just having a zero cost basis. You're gonna have whatever the cost of the inputs of electricity is for that particular Bitcoin, I would imagine. Right? Well,
[00:59:21] Unknown:
maybe just to clarify that, like, really try to simplify a little bit of, like let's just say you got a hundred dollars of Bitcoin that you mined. You got a hundred dollars of revenue there. It might have cost you $50 in energy. You'd have a $50 gain there that you'd be taxable. But when we talk about cost basis for that, your cost basis for that Bitcoin would be a hundred dollars. And then the price fluctuation after that, you'd have a capital gain or loss on. Right? So Okay. You might hold that Bitcoin. It might go up to a hundred and 20, and you sell it. You have a capital gain on top of that. So I don't know. Have a $20 capital gain because Yeah. If you sold it at that elevated value. So you're talking you have a few different pieces there. You have the revenue. You have the cost of goods sold, and then you have the profit, and then you have a capital gain or loss based on the fluctuation of Bitcoin after you mined it. So, like, it just as as this is a good, you know, easy example. So if you had, let's say, whatever. You you mined a hundred dollars worth of Bitcoin. You have $50 worth of energy inputs, you're gonna get taxed as ordinary income at
[01:00:25] Unknown:
$50 Yep. Which is your thing. And then if you go later and sell it for a hundred and 20, now you're gonna have a $20 cap gain. You know? Some people consider that double tax, which is why they It seems like rip off. You know? Yeah. I mean, by the way. Triple dipping in there. Oh. That's not very nice. I don't like the IRS. Let me see if there's any more questions from the ladies in the audience. Hey, ladies. Do you guys have any more questions? Somebody said, what about gifts? Same thing. It's gonna I would imagine it's treated as a, you know, a gift. Like, if somebody gifts me $10,000 of Bitcoin.
[01:01:05] Unknown:
Yeah. Same same rules apply to any gift. You wanna give background on that at all, Seth?
[01:01:11] Unknown:
Yeah. So for, if you do gift somebody Bitcoin, you would check yes on that question. The gifting is a little interesting because you can gift, like, up to a certain amount per year per taxpayer. It it changes every year, but it's about, like, $16,000. And that's before you get into that lifetime exclusion number, which is, like, $12,000,000, I think, for Maryvale joint. And that number might change. I saw some proposals. They might be lowering that. But with the gifting, you would just wanna make sure that you also rescind that cost basis to the recipient because they're gonna essentially take that cost basis from you. So you can kinda get into, like, estate planning with that.
Maybe while you're alive, you wanna give some Bitcoin to your children or anyone else like that. You know, they're gonna keep that cost basis that you had with the asset. However, if you were to pass that asset onto them, you know, when you passed away, they would receive a step up in basis to the fair market value at the time of your death. So it's a, you know, a couple of different ways to gift Bitcoin to people. But, yeah, yet another reason to kinda keep track of your cost basis,
[01:02:27] Unknown:
because it might be a little messy if you start gifting it to people and then they don't know what their basis is there as well. Right. If we think inherited this is our mess before Bitcoin, like, I can't even imagine what this might be in the future if if the person that's gifting that in the future didn't do their own record keeping. It could get really messy, tons of wallets, and all this rest. Well, but, like so let's say a gift like, let's say I received a gift, right, of whatever, you know, point one Bitcoin. Right? So we're gonna say it's worth $10,000 today ish.
[01:02:54] Unknown:
Is it is it, like, is that my basis then of whatever I received it at, like, whatever today's price is? Does that make sense?
[01:03:06] Unknown:
It would be whatever their original purchase price was, assuming they bought the asset. It's their original,
[01:03:12] Unknown:
not my today. I received it, and it's worth this much. So that's a different okay.
[01:03:18] Unknown:
Yeah. So if you're inheriting their cost basis. Yeah. And your scenario that you just played out is how it would be if you inherited that due to their death.
[01:03:27] Unknown:
Okay. So only at death is is when people get the cost basis of whatever it is today. But if somebody's gifting you something and they got the Bitcoin for a dollar, you know, you're gonna in you're gonna incur what their cost basis is, and so you have to know what that is. Okay. So these are obviously great questions, guys, and these are questions that, obviously, you know, Seth and Joe and Joey can answer, you know, and be your your super Satoshi Pacioli, Pacioli, accounting firm. Fifth Amendment right. The last question everybody is this is, like, five people have asked. Just what are the top couple tips that you might give people who are preparing their 2024 taxes so that they make sure that they do it, you know, well?
[01:04:18] Unknown:
You wanna take that, Seth? I think you had a whole list of things.
[01:04:22] Unknown:
Yeah. So I would say, definitely looking at your prior year tax return is a good basis. I something I did this past year was I kinda had, like, a notepad with my receipts and other items, and I would think, okay. You know, I cleaned up my cost basis and Coinbase at the beginning of the year, so I might get a ten ninety nine from them. And, like, I would write down, might get a ten ninety nine from this, should get a w two from this. So I kind of did that throughout the year. So when I was working on my return, like, a week ago, I was very easily able to go look and find those items. Yeah. I think, just good planning. I I think something that I've thought, over my time of practicing taxes, I feel like people do make it a a boogeyman, and it's not as bad as it it seems. You know, the the tax returns look complicated, but they are fairly straightforward. You can just read the instructions, and they they tell you what to do and how to do it. I just I think people get a little spooked with it.
But, yeah, just just good record keeping there again, with the tax planning. But, yeah, I did a note to share with people, because a lot of questions we'll get is I have a w two. What can I do to lower my taxable burden? And there's not a whole lot you can do there if you just have a w two and you haven't, tweaked your w four withholdings. The appropriate amount should be withheld, so you should be about breakeven at the end of the year. That's kind of the goal. But kind of some of the top ways that you can, save on taxes for the year, you can look at doing, like, a backdoor Roth IRA. So that's, like, kind of a little work around. Maybe you're over the income limit, to contribute to a normal Roth IRA.
You're able to kinda do some engineering, and you can contribute more than you would normally be allowed. We won't really see it a whole lot this year, hopefully, but tax loss harvesting, On the flip side of that, let's say you, wanna take the year off and you're not working and you wanna live off your Bitcoin. If you keep the amount of Bitcoin that you sell under a certain threshold, you could potentially pay 0% capital gains on that Bitcoin for the year. So you could have a very low taxable burden, for that year.
Contributing like a four zero one k and HSA is a good way to lower, your taxable burden.
[01:06:40] Unknown:
And, just a note on that. The for the IRA specifically, you can still make contributions for 2024. Yeah. You can't make it for your like, a four zero one k for your employer still, but you have until April 15, right, to make a contribution to our IRA still. So there's time on that one.
[01:07:00] Unknown:
Yeah. So every year, you have until April 5. So, like, in this example, you have until April fifteenth of twenty twenty five to make up to the $7,000, contribution limit for a Roth or traditional IRA for tax year 2024. So, yeah, you have a little bit of extra time there. One tip on the list that I wouldn't necessarily recommend, is tax exempt funds or treasury bills. I would probably, be sticking to Bitcoin, but, you know, it's not financial advice. And then, you know, you can invest in real estate if you want to. It has its pros and cons. You can always start a business, but you don't necessarily want to, you know, let the tail whack the dog in that scenario. Like, if the goal is to pay as little tax as as possible, maybe it's not best to just lose a bunch of money so you don't pay taxes. Maybe it was better just to keep the money and and pay that little bit of tax.
And then kind of the last thing is optimizing your charitable contributions. And so, you know, Unchained's got a great product, with the donor advised fund. So that's a great way for you to receive an immediate tax benefit for donations. And the beauty of theirs, is that those funds are held in Bitcoin, and they'll continue to grow in value. And then one day in the future, you can pick and choose a charity of your choice that you wanna donate that to. And, presumably, it'll hopefully be, more money that you're able to contribute to them.
[01:08:21] Unknown:
Yeah. That's good. I didn't know Unchained did donor advised funds. That's really cool.
[01:08:26] Unknown:
They just started. I I think one, I guess, note of caution, I would probably try to stress to people on the donation side. Like, it's always good to donate to people, but, it's harder and hard. Like, if you're not already itemizing your deductions, it's pretty hard to to get an advantage through the the donation. And so, like, if I'm taking the standard deduction and married and you're getting 27,000 and you have nothing else to itemize, you're gonna have to give $30,000 of a donation before it helps you. Not to say don't give $30,000 if you can afford to. Right?
But it just it's always unfortunate when, like, you see someone make a nice donation, and then they're not getting any tax benefit of it. And so that's where, like, the idea for the donor advised fund comes in of, like, hey. I can't afford to give, 20,000 every year, but maybe I give it all in one year and I get a big effect. And so I give that to the donor advised fund, and I put $50,000 in there. And then I give it out to charities over time. Right? But I do it in a year where it's really beneficial to me. Maybe I it's a year I was already gonna itemize.
[01:09:36] Unknown:
So try to be strategic about that giving as much as possible so you actually get the tax advantage there. Yeah. That's perfect advice. And one more thing really quick, just Unchained, obviously. Rocky is one of our, Denver space members. We love him, and I love Unchained. But, with the the the Roth IRA, you know, the the what's interesting with Unchained is you get to hold two you know, you're in a multisig, and you get to hold two of the three keys if you choose to. And so a lot of the other IRA products that are out there, you're not custodying your own Bitcoin. And so, god forbid, shit hits the fan and you need to jump ship, you still have access to your own Bitcoin if you choose to do a Roth IRA with Unchained. So I I think Unchained is incredible.
So I highly recommend, you know, just if you're, you know, eligible for doing Roth IRAs, if you make, you know, a certain amount of money, or not too much, you know, because you can't do it if you make too much. What is the threshold, Seth, for a Roth? Like
[01:10:36] Unknown:
I wanna say it phases at, like, a hundred $40,000. Yeah.
[01:10:41] Unknown:
Let me So it's for us normies. It's not for the billionaires.
[01:10:45] Unknown:
Yeah. But like I said, you know, there's certain ways to work around that where you could potentially do the backdoor Roth, and you could still get money in. You could still do that as of right now. I have also heard chatter that they might be trying to crack down on that too. So Yeah. Yeah.
[01:10:59] Unknown:
And then for the HSA too, guys, like, if you all you know, if if you're not with CrowdHealth, who, you know, is a Bitcoiner company that's doing crowd kinda health funding, you can have a a health savings account, and you can put it in You can't buy Bitcoin directly, but if you're doing Fidelity, for example, you can get MicroStrategy or you can get an ETF so you can at least have, you know, your paper Bitcoin kinda thing exposed with, those products and services that they have. So there's there's a couple different ways that you can, you know, do do some different, creative gymnastics. And so I know that you guys are here to help the ladies and the gentlemen, who've tuned in. And I am just so grateful. Thanks. I know it's late, and I know everybody there, whoever's at the space, I hope you guys got your answer your questions answered. And, I really, really want you guys to make sure that, like, if if you are doing accounting, like, make sure you guys follow these guys and reach out to Seth and Joe and Joey. They are the best in the business as far as I am concerned.
And, yeah, any final words? We've and, you know, I really wanna also just, of course, promote the space in Denver. Denver, again, you know, is one of the, you know, the little pushpins on the map that is, you know, becoming one of the Citadel locations. We're having lots of different events there. We're gonna be doing a Bitcoin for Holistic Health summit, in April. We're obviously doing the women's events. We're doing tons of stuff with, you know, learning Bitcoin. We've got Eric Yakes. We've got everybody who's just making these great, great events possible. And everybody's a volunteer. Nobody's getting paid. We're just doing this because we love Bitcoin and because we love the mission, and we wanna bring people together. And so, you know, it takes a village. And so we really want you to make sure you're following the space. Please think about becoming a member or donating, and every little bit counts as we all know.
You know, and I just I'm so grateful. You know? And Joey's one of the board members. He's been, you know, working diligently, you know, forever with the rest of the board making this happen. I'm so excited and honored to get to work with you guys and put these events on and hopefully educate people and get new people excited and interested in Bitcoin in our own way. So, yeah, that's that. And any final thoughts or words, gentlemen?
[01:13:21] Unknown:
Yeah. This has been been a labor of love. I love being here at the space. As you mentioned, Tyler's got his event coming up on February, I'm pretty sure, for the Heat Punk, mining event. We have a lot of people coming here from out of town, so I think it's gonna be one of our biggest events thus far. Yeah. And Joe and Seth are from the park. So, like, we basically have, the space in the park represented here on both sides is pretty sweet. I did wanna mention all the things that we were just talking about that, Seth and Joe were bringing up about all these ways to get these different, attacks hacks, I guess you could say. It's actually on our Nostr. So we basically have that exclusively on our Nostr account. So if you go to Satoshi Piccioli, on Nostr, you might be able to find it through Twitter as well. But, Seth's been doing a great job about listing all these different posts that have all these different tax hacks. Basically, everything that we've been talking about right here is is built out. So you can read that yourself and kinda find the one that applies to you.
[01:14:17] Unknown:
And, yeah, I think point. Yeah. We, we only give that information out on Nasr. Not just only because of Nasr, but, like, there's plenty of that stuff on Twitter already. Right? But, obviously, none of that content on Nasr, so we try to get out there. But, yeah, yeah, I don't have anything else. I appreciate you having us on. Always happy to chat. Obviously, if anybody has additional questions, reach out to us, but appreciate you, making some time for us here.
[01:14:42] Unknown:
Yeah. Absolutely. Thank you for having us. And, yeah, I guess kinda my my last, final thought is the the time to really think about how can I plan for taxes for the next year and start saving money is towards the end of, you know, this year? So definitely reach out to us September, October, November. The earlier, the better. We can take a look at what you did last year. What are your goals for this next year? And we can try to help you. You know, at the end of the day, our goal is to for you to pay as little as taxes as possible. So, that's a great way to do it, and it was tax planning. Love it.
[01:15:16] Unknown:
Alright, everybody. Thank you guys so much. Happy Tuesday. Woo hoo. It's techie Tuesday and women in Bitcoin Tuesday. And I'm so grateful. This is such a cool thing. And, like, can you imagine if Satoshi didn't do what Satoshi did? Like, we wouldn't get to be hanging out here with each other, and I wouldn't have gotten to meet you all. So thank you, Satoshi. We love you, and God bless all of you. And everybody who's down there in Denver, go hit Joey up. And so he's gonna come down there in a second and, be there if you guys have any questions. And, yeah. We're super duper stoked.
Yay. We got someone saying thank you. Yay. We love you, Glenn. So, anyways, peace, love, and warm aloha. What I'm gonna do is this is all gonna, of course, be up on YouTube for everybody to check out. I'm gonna put all the, the links. I'll put is it okay if I put the link to the spreadsheet in the show notes?
[01:16:08] Unknown:
Yeah. That'd be great. Okay. Cool. And,
[01:16:12] Unknown:
and then, again, I'll you know, if you guys have any questions, reach out to these guys. And I'm not sure what our Women in Bitcoin I think we might be doing domestic violence in March. That's gonna be our next Women in Bitcoin and teaching women how to get out of abusive situations. And then in, April, we're gonna have, Becca Amelie from AnchorWatch and, Morgan Richard, who's a CFA. And we're gonna talk about, you know, planning for the future and inheritance and insurance for your Bitcoin. So we're gonna have lots of cool stuff lined up for the, the second Tuesdays of every month. And I think we are gonna try to do these digitally and, you know, this kinda hybrid thing. So we wanna get, you know, as many people involved as possible, and we really appreciate your support. And make sure, once again, go follow these guys at satoshipatioli.com.
Manja. Alright, guys. Peace, love, and warm aloha. I'll talk to you soon. And, Joey, I'll be around if you've got you know, if any of the ladies need to get a hold of me here. But, you know, we'll end the stream, and we'll go from there. But thanks again, you guys. I really appreciate your time.
[01:17:23] Unknown:
Alright. Aloha. Yeah. Thank you. Take care.
Alright. Hey. Aloha, love tribe. Aloha, Denver space. Aloha, everybody in Canada who's tuning in. You know, getting feedback there. Do you hear that? No. Good. Okay. You guys, this is a totally new experience that we're gonna start delivering to you at the Denver Space, which is one of the only, you know, handful of citadels all over the world. And we're so excited. I decided I needed to stay home tonight because it's totally dumping up here, and I don't wanna drive in the ice. But we've been planning this every second Tuesday of the month. We're starting to do women in Bitcoin. And so we're doing an in person meetup. So all these wonderful women in Denver hi, ladies, if you're there. If you can see me, hello. I wish I could hug you.
We are working on, you know, different topics each month, and the ladies get to pick the topics. And so they say, hey. We wanna learn about this or this or that. And so we had a big request to do Bitcoin, taxes. And so, of course, who else should we have as the most, you know, distinguished guests than Joe, Joey, and Seth of Satoshi Pacioli Accounting. Welcome, you guys.
[00:01:50] Unknown:
Thank you.
[00:01:52] Unknown:
Thanks for having us. Yeah. Thanks. So glad you guys are here. So do you wanna tell everybody here a little bit about what, you know, what your company does and how you help Bitcoiners and how we you know, we're gonna obviously have a little, you know, mini little presentation, and then we'll open it up to some questions, you know, with everybody in the physical space in Denver and then online, everybody, because we're obviously live streaming this all over.
[00:02:15] Unknown:
You wanna kick things off, Joey, being there in person? Go, Joey.
[00:02:20] Unknown:
Yeah. So, I joined Satoshi Petroli back, last year in January. I've been doing full fledged bookkeeping since about 02/2009, and kind of, bookkeeping in general is very well versed in lots of different types of businesses. I kinda work, with small medium sized businesses and a lot of people that, you know, just wanna provide a product or service. And as they do that, they learn that they're in business and then that also requires proper record keeping and then also requires being able to submit your taxes, and work with wonderful CPAs like Joe and Seth.
So I feel blessed to be on this team and to be able to, also be in the Bitcoin space, because it's kind of a a wild, wild west where there's all these extra, kind of things that need to be done on the on the record keeping side that a lot of, accountants and bookkeepers in the fiat world don't wanna deal with because it's a bit extra work. So we feel pretty blessed to be able to, be value aligned with the Bitcoiners and see the same thing they do, with the asset, as well as the network that Bitcoin is and be able to kinda straddle the financial systems we have where it's Bitcoin and the current financial system and how do these two merge and kinda move their way into a new direction.
[00:03:38] Unknown:
Awesome. Thanks, Joey. Alright, Seth.
[00:03:42] Unknown:
Hey, everyone. Thank you for having us. So, yeah, my name is Seth Bayless. I, joined Satoshi Apache a little over a year ago now. Joined the team with Joe. Joe had been doing a few tax returns on his own, reluctantly, and, he brought he brought me on to help build that out. So, the tax team has grown. We just got another person to help us, with the spring filing, so full speed ahead there. But, prior to joining Joe here, I spent about three years in public accounting, doing tax compliance work. So, I know a lot about taxes, for better or worse. And, yeah, I'm happy to to serve Bitcoiners and their companies.
[00:04:24] Unknown:
Awesome. Thanks, Seth. Welcome. Alright, Joe. Joe Wood.
[00:04:28] Unknown:
Yeah. So Joe Wood. I started Satoshi about, three years ago now. Before that, I had about fourteen years of experience in fraud, public accounting, some private companies, some some large, some small, some nonprofits. But as I got more deeper and deeper down the Bitcoin rabbit hole, I wanted to spend more and more time focused on Bitcoin. And so I guess the the most logical way for me to do that was to start a company that was an accounting company that was focused on Bitcoin. So, yeah, about three years ago, I started the company really focused on, accountings, Bitcoin startups at first where it was, hey. We just got some funding maybe. We started up in the last year or so. We need some accounting support.
We're not ready to hire a full time controller yet, and so trying to fill that gap for them, right, as they they build out their team and their products. Along the way there, continuously got, like, the question of, like, hey. I need tax support. I need tax support. So started doing a little bit of that a couple years ago. Really saw the growth there. Really had the need to kinda bring someone on full time for that a year ago so that that was when we brought Seth on. And then along the same lines there, like, the on the bookkeeping account side grew as well, so bringing Joey on around that same time. And then since then, we've essentially doubled the team again. So we're we went from, you know, one one person to three people to six people now. So, we've got a lot of growth in the last year here.
[00:06:02] Unknown:
Amazing. And so are most of your clients individuals or businesses?
[00:06:07] Unknown:
About fifty fifty.
[00:06:08] Unknown:
Okay. Cool. Yeah. And so, you know, for whoever's in the audience right now, whether you're, you know, in person at the space or if you're, you know, watching this, live, you know, please feel free, you guys. There's the a q and a that you can put in, in Facebook or in YouTube. And so just put some stuff in the chat if you wanna ask some questions. And for those of you who are at the Denver space, ladies, you all know it should be up on the board, where you guys can do, like, a poll.denver.space, and then there's a code that you can put in. So I've already got some of your questions here that we're gonna queue up. But but before we start getting into those questions, guys, like, what do you think is, like you know, for those of us listening, whether we're an individual, whether we're, you know, a sole proprietor, a small business, you know, what are the number one, two, and three things, you know, that people should be paying attention to when they're tracking their Bitcoin, you know, in their personal life and in their business?
[00:07:03] Unknown:
You want me to take that one, Seth?
[00:07:07] Unknown:
Yeah. You can take it. I was gonna say that off the top of my head, I feel like the biggest piece we're seeing with people right now is missing cost basis when they're trying to, work on their transaction analysis as a whole. Yeah. So good record keeping. That's probably true across the board.
[00:07:25] Unknown:
Yeah. I feel like that's a good one. I'm curious for your thoughts, Joe. Yeah. A lot of times, the questions that we ask is, how many places have you bought from and how far back does it go? Right? And did you buy from an exchange that no longer exists? If you bought in the last couple years, if you bought mainly from one or two places, it's gonna be pretty easy to get that stuff. If you're going back five, six, seven years, if you bought from exchanges that no longer exist, so you don't have the exports anymore, it can be a lot harder to get to your cost basis on those.
[00:07:58] Unknown:
And so what because that is actually one that's the first question here. It says, if you lost some of your historical transactions from an exchange, missing cost basis, what should you do? So what what are the actions that you would recommend for folks who've got, you know, a jambalaya of of transactions? Yeah. Might have some cost basis and some are just like, well, I think I bought something, and I think it was in June, and I think it was in, you know, this year. You know? How do you help them, you know, just stay legit if if they're, obviously, if they're not just totally offline, you know? But if people are tracking this stuff, how do you help them, come up with those cost basis?
[00:08:39] Unknown:
Yeah. I mean, if you can get into a ballpark, that certainly helps. If, you know, if you know the the year, the month, at least we can check the price during that time period to get a ballpark there, and then maybe you can go back to something on chain where you you can see funds moving there. And so you can kinda get back to some of that that historical stuff. And then the other thing that we kinda get into with people a little bit is, like, if that matters more now in the short term, if you are holding Bitcoin for the long term, that becomes less and less important where it's like, you know, if Bitcoin goes to a million dollars, whether you bought it at 20,000 or 30,000 is not as big a deal. If you're gonna sell it next week, though, and you bought it at 80 or 90, like, that matters a lot more. Right? So, it does matter, like, kinda your time frame and your threshold there. But, yeah, to the extent that we can at least narrow it down into some band where we can pick a price range that gets us closer than just how we put zero on the cost base, which is gonna be at least advantageous.
[00:09:43] Unknown:
Totally. I've seen
[00:09:44] Unknown:
I'm sorry. Go ahead.
[00:09:46] Unknown:
I've I've helped with people, you know, maybe suggest if you could see the transfer leaving your bank to an exchange, then that can give you an estimate of maybe when you did purchase that Bitcoin. And then, you know, yeah, maybe you can see when it was received in an address in your wallet, and that's another good one. But the message I tell people pretty consistently is just to pick a consistent method and stay consistent with it. And at the end of the day, like, that's what the IRS is gonna be looking for. But, you know, if you're all over the place and you're doing this method and allowing this one later, that's when it might raise a little red flags.
[00:10:18] Unknown:
And so let's talk about a couple of the methods, because, obviously, we've got some changes coming up here in 2025 to 2026. And, you know, can you guys you guys did a webinar, I don't know, maybe a month ish ago, maybe I think it was maybe on December 30, maybe, when they had all these, like, you need to take a snapshot of this and that. Are you LIFO and HIFO FIFO, blah, blah, blah. Can you help everybody understand, you know, if they may not understand the difference between what type of cost, you know, the the the basis is are and, like, what those are?
And what is the obviously, each case is gonna be different based on, like, are people holding it, like you said, for twenty years, or is it stuff where people are gonna need to take it out? Is it for retirement? Is it not? Like, what's what are these what's a LIFO and what's a LIFO and a HIFO? Are those, like, little characters? What what is that?
[00:11:11] Unknown:
You wanna take that, Seth?
[00:11:13] Unknown:
Yeah. So, LIFO is last in first out. HIFO is highest in first out, and FIFO is first in first out. And I feel like the LIFO and FIFO were more traditional, like what I learned in school. HIFO seems to kind of be a newer term, especially when it relates to Bitcoin and other cryptocurrencies. But, yeah, relating to the new cost basis guidance, especially with the IRS, all Bitcoin purchases, pre 2025, you can pick and choose which basis you wanna use. So you can choose HIFO if you wanna minimize taxes. You could continue to lose to use, FIFO if you wanted to. But then going forward, starting 01/01/2026 and then in perpetuity, exchanges are gonna be required to use first in, first out. So assuming, you know, whenever you sell, it's most likely gonna result in a higher tax, there.
[00:12:17] Unknown:
And so so they're required in 2026? Or if you make the the declaration if you make a declaration ahead of time, is that, like, if I say I wanna use HIFO, like, do I get to say I'm using HIFO in 2026?
[00:12:33] Unknown:
Yes. For any sales, the big difference is, like, when you buy the Bitcoin. So if this is Bitcoin you bought in 2017, you can pick and choose that basis. But if you buy Bitcoin in 02/1927, that's going to have to be, first in first out on that Bitcoin. So it's kinda just a cutoff point between old Bitcoin when it was kinda wild west, and now we've got more rules and regulations,
[00:12:57] Unknown:
for purchases going forward. And what you're gonna start seeing there, right, is, like I'll just pick Stripe as an example. Let's say you're DCA on Stripe and you're buying every week, and then, you know, in February, you're selling some. Like, they're gonna go back to your buys as of the beginning of the year 2026 because that's kinda your starting point. Right? And they're gonna say, hey. You know, whatever you bought at the beginning of the year, that's your first in. That's gonna be your first out. That's gonna be your cost basis for this sale that you made in February. That's assuming I bought on strike. Right? I may send money to strike to sell it in 2026.
For that, they're gonna have they're require they're gonna re require you to give them your cost basis. And so that basically, that's still on you to pick. Do you still wanna use HIFO for Bitcoin that you acquired pre 2026? You can do that. You just have to be able to give that information, have it be accurate so that Stripe can go and then report on that. But that's something that I think you're gonna get messaging from exchanges over the next six months or so, and that they're not gonna spring that pea on people on January 1, hopefully. So, like, they're gonna probably phase into that.
[00:14:07] Unknown:
And is there, like you know, I know there are some, like, crypto tax softwares out there that people have used, and I I used some, you know, a couple years ago when I was I I first delved into, you know, what's Bitcoin? What's shitcoin? Oh, I'm gonna go be a trader. Look at me. No. I wasn't. And so that lasted a whole two months of my life, until I realized Bitcoin was a tool for freedom and peace. Then I went that whole direction of Bitcoin. But, you know, during that period of time, there was, like, you know, I mean, hundreds and hundreds and hundreds of transactions, you know. Or do you guys recommend any kind of, you know, because and I'm gonna pull this up in just a second, your spreadsheet.
And ladies, everybody who's listening, I'm gonna give you guys this link and I'll put it in our Telegram group and I'll put it up on social media if that's okay with you guys. But, Joe and Joey and Seth made this great spreadsheet about, you know, it's a tracking spreadsheet. Do you recommend for people to use software if they're doing a lot of purchases? You know, it's one thing if it's like, okay, I'm buying, you know, a hundred dollars of Bitcoin every Friday. That's kinda easy to track versus they're going in and out and doing all this crazy stuff. Like, what what do you recommend for folks?
[00:15:17] Unknown:
Yeah. I mean, we made our spreadsheet trying to really focus on the Bitcoin side of things and really for, like, the simplistic, hey. You're buying. You're selling. I think we probably have some work to to do on that to make it more robust so it can do more calculations in there so it can handle more lines. Mhmm. But in theory, it should work for a whole bunch of buys and a whole bunch of sells where you're getting into trading into different assets and, you know, exchanges in there, Ethereum, the Solana, back to Bitcoin, all that. It's really not built for that. And so that's where, like, going to a software like CoinTracker is probably gonna be necessary and connect to different exchanges and stuff.
We haven't built that out and probably is outside of our wheelhouse of what we'd wanna spend time on. Mhmm. And so, really, it is your complexity there. I there's a bunch of them out there. They they broadly work well if you can connect into exchanges, the APIs work, if you're not missing anything on your cost basis. We tried to build this spreadsheet here with the thought in mind of, hey. If you don't have all your data, it will still work. Right? It won't error out on you. It'll still calculate for you. And you can kinda see as this runs, essentially, as a macro in here, you can run-in Google Sheets or you can run-in Excel. You can try to see how it's working and, like, recalculate it right in the file versus the, like, coin tracker and those softwares are a bit of a black box where it's just I give it all my information. It prompts me back a number, and I hope that it's right. I give it to my account.
And so we we hope this is a little bit more transparent. You can play around with the numbers a little bit. And, obviously, if you run into questions, obviously, reach out to us, and either we can walk you through it or, yeah, see if there's a issue with the spreadsheet that we have to kind of troubleshoot.
[00:17:10] Unknown:
Yeah. And part of the comparison too is gonna be your level of privacy. Because when you're putting your information into these centralized, systems to be able to track your taxes, it's connecting to multiple exchanges and what happens with that data in the future. There's, you know, just the honeypots of the individual exchanges and then there's also the accumulated information inside of one of those, centralized systems to be able to give you the tax information. And then after that, it's like what happens if AI gets this information and gets to do all the stuff that we can't expect.
And so that's why we've built this because you can basically download the spreadsheet, do it locally. You don't even have to put your transaction data in there. It can actually calculate everything without that. So there's kind of just different levels of privacy you might be looking for. Some people some people may not need that, and then some people definitely wanna have that.
[00:18:00] Unknown:
Yeah. I think that's kinda that's the the intimidating thing for all of us. Right? I mean, it's like we don't wanna have the the AI start to get everything and then just know every little transaction that we had from all of these places. But it's like, do you you know, this is kind of a side question. Do you feel like, you know, unless we are just, like, super cypherpunks and really, like, just out of the system and living, you know, like Luke Skywalker in the cave, are we really gonna be able to avoid that, you know, level of scrutiny with these these computers that, you know, can obviously, I mean, we see what MidJourney can do in, like, fourteen seconds. It can make, like, a masterpiece, you know? So I feel like we're in a, we're up against the machines, you know? And then whoever's controlling the machines, you know, is gonna have the ability to kinda have a lot more access to things that we're you know, we would like them to be private. How how would you suggest for people to, you know, this isn't obviously a privacy panel, but how would you suggest for people, you know, to make sure if they're really interested in that to to protect themselves, you know, in in that way?
[00:19:19] Unknown:
Yeah. I mean, I think this is probably there's probably two different ways to look at that question. One is, like, when we're looking at this data specifically, we're like, ultimately, you have to put this data together to give it to the IRS anyways, and so you're obviously losing some privacy if you have to report that to the IRS. Mhmm. I think the other part of that question, though, kinda bakes into how private does Bitcoin evolve into over the coming years. How how much chain analysis can you do on the base level versus, you know, some of these privacy tools? How how much are they broadly used?
I think that all probably plays into, like, the kind of the the heart of that question. Ultimately, like, as an individual, you need to have this data and be able to get to it to report to the IRS. Anytime you're putting that data together to be able to report on it, there's some, like, level there where, you know, if it sits anywhere on the Internet, like, it's susceptible to, you know, other people being able to see it. So an unfortunate side effect. I mean, we were talking before we started here. Like, maybe that's a different, question at the end of the year where there's no IRS,
[00:20:36] Unknown:
but, like, we have a long way to go there. So Come on, Ron Paul. Come on, everybody. Let's get rid of these motherfuckers.
[00:20:44] Unknown:
Yeah. And I'd say additionally is kind of like, you know, what what things are under your control? And if there is an ability, which is why I was really happy about, this spreadsheet getting put together, is that there's one little aspect we can say, well, this is at least more in my control than me having it elsewhere. And, yes, you know, already KYC ed on the exchanges. Yes. You're filing my taxes, so here's information. But at least there's, like, a little bit here that I know that is in my control and is not sitting in all these other places of unknowns.
[00:21:11] Unknown:
Yeah. And so so, Joey, somebody asked what what is good record keeping? Like, so can you guys help me, like, look here, like, explain, like, what these these, tabs are and everything just so that folks who are gonna, you know, who wanna use this, like, what we've got, obviously, a date, a label, a value, balance fee, value, tax I or transaction ID. Like, what are the what are the most important things that people should be, you know, tracking so they can, you know, CYA?
[00:21:41] Unknown:
Yeah. So is it just a base layer for for general record keeping? I think we have a different perspective in the fiat world where we can just go to the bank and download the statement at any point almost. Mhmm. Now we've seen through the history of Bitcoin where exchanges have fallen out of existence, and now you have no data if you never grabbed it. I've been lucky that I've been a bookkeeper for so long that I've been trained to constantly pull my data off of websites because I've had to do that for all my clients Mhmm. This entire time. So I do it for myself also. But But I think it's a very good practice to just pull your data from any exchange, any wallet whenever you can, and choose maybe wallets that give you better export functions. I recently ran into a Bitcoin wallet that literally was a PDF only spreadsheet or sorry, PDF only export. So like a 50 pages of PDFs, individual transactions.
None of it was searchable and none of it you could actually, like, copy paste information out. So I had to, like, manually type everything out. So play with it when you first get your wallets or exchanges, see what they do for their exports, and maybe use the systems that work best for you. So they Do you have any that you recommend? Idea pulling them out. They're all kinda different. I mean, Sparrow is maybe probably the most best first one where you can pull that data out once you put in your information. The exchanges are pretty good. It's just more of, I think, getting in the frequency of deciding, like, quarterly or yearly. I'm gonna pull the spreadsheet out. If anything happens, you at least have your data and it's not lost at some point because I know many people have run into that issue where they just don't have the records. And then maybe the wallets aren't the same and you're trying to track all this history. You may not even know how to look at the blockchain, so you can get very lost. But I just wanna put that base layer of, like, record keeping to something that's very important that just you kinda kinda have to get used to, get the training wheels, and start to pull that information.
But Joe and Seth might be a little better at explaining the spreadsheet here. I know there's, like, a data tab and so forth.
[00:23:38] Unknown:
Yeah. I think, Yeah. I mean, I think you covered it really well, high level there. Yeah. I think, fundamentally, a couple things to remember. This like, you the Irish wants you to be able to do this by, like, wallet or exchange. So, like, you would wanna, like, do this if you, you know, say you bought on River. Like, this would be for River specifically. You have a different one for Stripe, for example. And so, like, keeping these separate is probably something that you wanna keep in mind. But, fundamentally, it's date of the transaction, the value, the balance. So the value there is, the Bitcoin value. Right? The balance is, the total balance.
And then you have essentially the the fees, which you'll have on essentially transactions outbound. Right? You won't have that coming in. And then value in USD as as well here. We have ability to kinda look that up on another page as well. But if you have that, you kinda dump that in there. And then, essentially, that that same sheet, you have essentially, if you wanna look at it as purchases and sales, it can also be Bitcoin received and Bitcoin sent. That would still that works the same from a tax perspective. And then there's a little button up there where if you go to Bitcoin on the top right there.
Yep. That's not far in your help. Not
[00:25:07] Unknown:
Hold on. Help me. Oh, here. Oh, wow. Method. There you go. Woah. What's that? I didn't see that there. Thing there. And then that's where you pick your method. So if you wanna pick,
[00:25:16] Unknown:
FIFO here, for example, you pick that, and then it would go and run. It's gonna it requests authorization to run the macro. And then it should run after you do that.
[00:25:29] Unknown:
Yes. It does. It takes the I need to, like, get my authorization.
[00:25:33] Unknown:
There you go. Yeah. It's not me to do it live for us. Allow blah blah blah. Okay.
[00:25:46] Unknown:
So oh. There it goes. Oh. Yeah. It begins to kinda populate.
[00:25:51] Unknown:
And so there's an area I can't see the tabs on here with the view, but there's one where it will show you, hey. Here's the Bitcoin that you have left. Right? Because you had, you know, 10 purchases, and then you made some sales. And so now you have, like, five of those left. And then it will also have a a part where it shows you all your sales. And so that that will break that into those additional tabs automatically
[00:26:13] Unknown:
Okay. Cool. Well, this is amazing. It's definitely I I don't even I I don't know. What what is this thing here where it says Bitcoin? I'm just curious as a nerd. Like, that's, like, some
[00:26:26] Unknown:
That's a good question. I have no idea. Anthony and our team built this. Just a side note, all built essentially, like, with AI tools as far as getting the coding on it and just testing it there. And so, like, no. I don't think technical coding background, but I was able to get the coding needed to put it into this sheet, and use that. So a very good use of kind of our current technology to use that to our advantage.
[00:26:55] Unknown:
So cool, man. And then are in okay. This is super cool. So okay. So somebody's asking me and and, ladies, thank you so much. I'm getting all your questions, so I'm gonna ask all of them. I promise. One of the questions says, is this spreadsheet open source? So does that mean,
[00:27:09] Unknown:
like, can somebody take the spreadsheet and then amend it a little? Do whatever you want with it. When you go in here to take it, you'll automatically make a copy. So you can see this is a copy here. Okay. And then I don't know exactly where to point you, but there'll be somewhere in here where you can actually read the code that's in there for that Bitcoin button. And so either if you wanted to take that, add on to it, manipulate it, run wild with it, it's all on there, either on the Google Sheet or the Excel. We only ask if you do make a change to it and it's a big improvement. Like, let us know so we can incorporate that into future versions. But,
[00:27:47] Unknown:
have at it and feel free to make changes to it. Awesome. I love that. And, like, what a cool thing. Right? Like, how many other industries are there? I mean, I don't know. Bitcoin's not an industry, but how many other communities are there out there that's just like, yeah. Take my shit and do something cool with it and switch it up. That's called free energy, of course. And so it really the the ethos of Bitcoin in in the way that everything is built is so cool because we're we all really do want to you know, we all need to make a living and eat and get some milk for our kids. You know? But we all also, like, get that, like, this is super important that we have this way of being with each other. And, like, oh, wow. You made it a little bit better. Cool. Awesome. Let's let's use that version instead. You know? And then Yeah. And then, of course, let's always give credit where credit is due, who made the first version or what you, you know, kind of remix stuff from. You know, as a DJ, that's what's you know, when I remix things, I'm like, yeah. That was a James Brown, you know, sample. You know? So so it's kind of fun.
Okay. Cool. Cool. I got I got stuff coming in from yay. Hey, Michael Leonard. Yay, brother. So I'm so glad he's on your team. So let's go let's go back over here to a couple more questions for you for you guys. I wanna bring it back, and we're gonna go stop sharing really quick. So I've got a few okay. What somebody says, are you hiring? We kinda went over this in the beginning, but are you hiring?
[00:29:19] Unknown:
Potentially. Yes. I'll always potentially. I think it's probably the right answer there. We posted a job on Bitcoin or Jobs probably a month or so ago, and I think we got, like, 50 applicants. And Wow. Like, it's pretty easy to do that if you, like, post that on a broad job site. But, like, just on Bitcoin or Jobs itself, I think we got, like, 500 views and, like, 10% of those people, like, applied, and, like, just really high quality applicants versus, like, if you just post that on the the broader Internet, you're gonna get, like, one or two good applicants out of a hundred. Right? And so all that to say, like, right now, we're we're certainly growing as a team.
We're trying to manage that internally, but always looking for other talented Bitcoiners out there that want to get into the space. And so just trying to balance right now, like, hey. What are the needs of our existing client base? What is the needs of our, upcoming client base? And who are the people out there that can really help us support those needs? So a long answer to say yes.
[00:30:23] Unknown:
We always wanted to kinda talk to other Bitcoiners and see who else is out there. Cool. I know. I always think it's just like submit your applications or submit your resume, submit a cover letter, submit your, you know, letter of intent and mission statements, because you just never know. Right? And so I think that's always super important. So so, yes, so the answer to that question is maybe for for the right person. Okay. We got open source hiring. Okay. So a couple questions. So some people have, if you're purchasing items with Bitcoin, do you need to report that to the IRS to calculate gains?
[00:31:04] Unknown:
Yes. The technical answer is always yes when you're using Bitcoin as a currency, as money. They the IRS treats it as a disposal of property. And so, yeah, right now, people often think, oh, is there a amount under, you know, $200 or whatever it is that the IRS doesn't care? The the reality is is it probably is not popping up on anybody's radar, but the technical answer is if you sell $200 of Bitcoin, it's it's taxable. If you spend $200 of Bitcoin, to, you know, purchase something, that's also a taxable event. And so the same same going back to the record keeping earlier, if you've done all that work ahead of time and you can just plug one more payment into that spreadsheet or whatever you have, it's not a big a deal.
But, yeah, if you wanna be spending Bitcoin, using Bitcoin every day, right now, it is a little bit tough.
[00:32:00] Unknown:
And so, again, so just for record keeping purposes, what is that just something like so let's say I'm I'm, you know, gave you guys $200 to do my taxes or whatever. I would just report that I spent $200, but of that Bitcoin and that Bitcoin, I bought it whatever at a hundred dollars. So I have to, you know, report that gain. Is that how Yeah. People do that?
[00:32:25] Unknown:
Yeah. And I guess trying to simplify that as much as possible when we go and say, like, different wallets have their own call spaces. Right? If you're gonna most likely, if you're using Bitcoin to spend, it's probably from a lightning wallet. Right? And so maybe you you purchased some Bitcoin specifically to put it on that lightning wall, and so you know, like, a good clean cost basis for that Bitcoin. And then you're gonna go spend that thousand dollars until you use it all up. And so, like, you have one cost basis for all that Bitcoin that you spent, and you can, you know, at the end of the year, just look and see everything that you spent on that wallet. And so it doesn't have to be something that you're spending a ton of time on, especially kinda going back to what Joey talked about earlier. There are some wallets that have, like, really good exports where I can just export all the transactions I did for the year, versus, like, some that are not gonna have those tools. So using something that, like, you know is gonna have good reporting, if you do wanna use Bitcoin and spend it on a daily basis, is probably something to be thinking about.
I mean, Strike is great for that, especially with their ability to, you know, send USD over the Lightning Network, although that's not exactly spending Bitcoin in the same way. But, like, I know Strike has really good reporting if you wanna use them for me. It's custodial, but still, like, a good, easy way to spend Bitcoin and not have to overly engineer your record keeping.
[00:33:53] Unknown:
And unless somebody else asked, what happens when you move Bitcoin from one address to another?
[00:34:01] Unknown:
Yeah. So, technically, that, you know, it's one personal address to another address that is not a taxable event. And we've seen from people in the past that, let's say, you're using CoinTracker. It might accidentally count a internal, you know, movement of Bitcoin from yourself to yourself as a taxable event. So it is important to go in and kinda double check those things and make sure that you're not paying more taxes than you should.
[00:34:27] Unknown:
Yeah.
[00:34:28] Unknown:
Oh, yeah. Yeah. You don't wanna do that.
[00:34:31] Unknown:
Yeah. And that's more akin to, like, a transfer. You're transferring between your bank account or you're checking in your savings. Check yeah. Exactly. Checking and savings. You're good. It's not a sale event or a spending event, which would be taxable.
[00:34:43] Unknown:
So, again, just so for whoever asked this this question, you know, just make sure you know that that's what you're doing, like these guys are saying. So don't don't accidentally get
[00:34:54] Unknown:
don't get taxed if you don't mind. Another another piece with that too, Val, is kinda the in between, because with Stripe, you can use the US dollar side of the app. And, basically, you as a user are spending US dollars, and you can actually send that to a Bitcoin address so that the person receives Bitcoin. So in terms of it's like this parallel financial system where it's not a taxable event because you're not actually spending Bitcoin as the user that's sending it, but the person that you're, that's trying you're trying to send to that's receiving it, they're receiving Bitcoin. And And that's what Joe was mentioning, that it's the US dollars that are using the the Bitcoin financial rails, the lightning financial rails. And now you're kind of, working within the rules essentially to not have a taxable event. You're also not touching your Bitcoin savings, and then you're also getting the person on the other side to receive Bitcoin, which I think is the best of all worlds right now that we can work within. And is Strike the only one that you know of that is doing that, Joey? That's all I'm aware of. Yeah. Do you guys know of any others? Yeah.
[00:35:50] Unknown:
I think it's just Strike for now. He's got to be on something I did. Mhmm. Yeah. I'd only leave $10 in the bank account for, like, a bottle of water at the Quinn Park or something like that, so I don't have to worry about keeping track of a $2 Cool. Taxable event.
[00:36:06] Unknown:
And then, just I'm gonna this is my question, actually, and I know this will be maybe a little side. But with Nostr, obviously, in Zaps, and that's a whole beautiful world that we have, you know, and we're watching, you know, creatives and podcasters and musicians and content creators and whoever. Like, here you go. Here's 20 sats. Here's a thousand sats. Here's whatever. What are you know? And I know a lot of people in Noster were a lot even more just like, yeah. Whatever. Fuck off. We'll figure this out later. You know? Because we're not it's like literally, it's like, oh my gosh.
Joey, I gave you 3¢. Let's report that to the the government. You know? Like, going forward, obviously, as Bitcoin gets larger, you know, do you feel like those kinds of things are are we gonna see people reporting their zaps? You know? Have you heard anybody even talking about this in your world yet?
[00:37:07] Unknown:
Yeah. I mean, it's probably coming. It's, yeah, it's a dollar amount thing right now where it's, like, a dollar here, $2 there. Yeah. But, yeah, I mean, if Nasr's catching on and everyone's using Nasr and there's significant value creation on there and people are sending significant amounts, I mean, people are already kinda sending significant amounts on there. Right? Yeah. I don't think I mean, it would be interesting, if we hear, like, in the media in five years of, like, the way people are trying to, like, get around, like, money laundering rules because they're setting millions of sats around the people. Right? Like, that'd probably be a good problem to have, like, a good headline that, like, not just that widely used. Yeah.
So, like, same rules broadly apply. It's just we're still very early in that space, so it's more akin to you going down to your local, you know, your local hangout, and you're, like, doing peer to peer stuff. And, you know, you're you're reimbursing somebody for something that they purchased for you or, you know, someone did you a favor. Right? Like, no one's reporting that type of stuff. Yeah. But if it becomes bigger, it becomes global, really, with, like, millions and millions of people, like, that will come, I think.
[00:38:25] Unknown:
Okay. That it's good to know just to keep an eye on that. Okay. Just these are this is a side tax question. Are expenses related to wealth management services and investment management services tax deductible?
[00:38:40] Unknown:
To the state that they're a business. Right, Seth?
[00:38:44] Unknown:
Yeah. I believe the only thing that you can deduct on the personal return would be, like, margin interest. Let me let me actually look that up for you guys. Okay. Cool.
[00:39:01] Unknown:
Okay. So One piece that I mentioned again on record keeping just because it kind of there's so many different ways to do it. I think one thing I didn't mention is is finding a a wallet that has the ability to have notes per transaction. So when you, before you make the transaction or when you do, usually there's a note spot and you can actually type a memo into that transaction itself. And so that gives you the information to say this is what I spent it on or this is what I received it on. We're so used to, having the fiat bank system do those memos for us whether they make sense or not. Most of the time, they don't make sense. We don't even know what it means, but we see the memo and it might ring a bell. But now we have that power within our wallets to actually be able to write memos for these things. Like Joe was saying, a lot of times you can have one that exports that too. So you get a much better financial picture if you do these small little things as you're making these transactions to make a memo for yourself for the future.
[00:39:51] Unknown:
Yeah. You gotta love a mem good memo, especially if you're sending, you know, stats. The okay. One more question here. And I don't know. We kinda talked about this a little bit earlier, so it this may not be totally applicable. The tax rules for 2025 have changed, but what is the strategy for minimizing taxes under the 2024 rules? How does the strategy change for 2025 going forward? Not sure if that's
[00:40:27] Unknown:
You wanna cover that, Seth?
[00:40:29] Unknown:
Yeah. And I was gonna say to answer the last question, pre TCJA, so the, the tax cuts that Trump enacted, you could, if you itemize, deduct, like, 2%. So that has gone away. But like Joe said, if it is related to a business expense, then that would be applicable. But just the standard And that could be coming back. Presumably, there's gonna be another similar type of tax,
[00:40:53] Unknown:
tax act this year, I assume. We'll see what's in that. Right?
[00:40:58] Unknown:
Yeah. Well, okay. We talked about this earlier, and and so this was one of my questions too. And this is this will dovetail. And, there's the the question we talked about in the beginning, which was, if you file an extension for your return, are you gonna get, you know, more likely to be red flagged for an audit? And, obviously, we know that there's a lot of things changing. And, again, if we can pray for the IRS to go away, that would be great. But is that something that people should worry about if they're like, oh, gosh. I don't have my my bookkeeping in order, and I wanna put an extension until October? What what would you say?
[00:41:38] Unknown:
There's no there's nothing that'll penalize you on having, extending your return. The one thing to note is if you do have a balance due, and you don't make an extension payment, you could be subject to a failure to pay penalty. And then any amount that is owed as of 04/15, that would start to accrue interest and penalties throughout the year. So, if you wanna just extend your return and hope the IRS goes away and you do have a balance due and they don't go away, it could be an expensive choice. So it's just, you know,
[00:42:15] Unknown:
stuff to consider, though. And expensive is is relative. Right? And so, like, some people, you know, if they get a $2,000 tax bill and they had to pay another thousand dollars in interest, they'll be like, oh, that's a like, that's a lot more money. Some people will be like, I would rather keep that $2,000 holding a Bitcoin for some period of time, versus, like, giving that money to the IRS earlier. Right? And so, like, we have clients all over the board there. I'm like, no. I don't wanna owe anything on April 15. I wanna make sure I'm all paid up to, hey. I'm gonna push this as long as possible. And we just try to give them the information so that they are at least knowledgeable when they're making those decisions.
[00:42:56] Unknown:
But so aside from kind of the the, you know, financial shell game of, you know, should I keep the money and that whole thing, is there anything in your experience that would red flag anybody if, let's say, they did that. Oh, I'm gonna keep the 2,000, and I'll give you guys the interest later and whatever. If if they do have a an a bill that's owed, is that gonna give them a potential audit flag that you are aware of?
[00:43:24] Unknown:
No. No. I don't think there would be any increased risk of audit there. You could get into fraud if you were to, like, file a fraudulent tax return that has a big refund, and then it turns out, you know, they amended later and, like, oh, here's that money back. Like, definitely wouldn't recommend doing that. But, no, I don't think I don't think having a balance due and not paying it is a red flag or anything. And then Okay. I I think like we've said at the beginning, just the fact that you, extend your return doesn't necessarily make you more at risk for an audit. Right? Yeah. And I think one of the things that because people will miss this sometimes.
[00:44:01] Unknown:
Make sure you file the extension. It takes, like, five minutes, probably less than five minutes. Like, even if you just wanna push it off and not worry about for six months, deal with the interest and everything, like, you still have to do that extension process by April 15. If you do it April 16, April seventeenth, you're gonna you're gonna get hit with a penalty that you wouldn't have otherwise. So, like, make sure you file the extension, and then make sure you file something by October 15 even if that's not finalized as well. Right? Like, as long as you get it in, like, we have clients that will go back and amend for prior year return because something was off. It's still better to do that than miss that extended deadline as well. So, like, hitting the deadlines is more important than paying the full balance you owe. That's can you where you can get into additional penalties that you just have no reason to pay. And this is a perfect segue into this question. Somebody says, what's the statute of limitation,
[00:45:00] Unknown:
if taxes were missed on, you know, whether it's your income, your capital gains, whatever, how many years till I don't have to worry about an audit?
[00:45:09] Unknown:
So the statute of limitations, is usually three years, and then it can go up to, I believe, it was six or seven years if you under report your income by 25% or more. So, you know, if there was intentional fraud, they can go back a lot longer. But if you received, a small amount of the Bitcoin Cash Fork and you dumped it and you didn't report it, you're probably gonna be okay, unless you're Roger Burr, I guess. But yeah. You you know? That 25% threshold. Yeah. Yeah. I I would I would need to know.
[00:45:46] Unknown:
Okay. So possibly three years. But if you were under reporting things by 25% or more seven years, they can do a look back on you kinda thing. Yeah. But reasonably
[00:45:57] Unknown:
yeah. I like their ability and their willingness to really dive into that. They have a lot of things that they're focused on that are probably unless you're, like, you know, high net worth, high earner that's paying very little on taxes, you're probably not on their radar in the the way that you would be. Like, I I know a lot of Bitcoiners are worried worried about getting targeted by the IRS. Anecdotal, I don't think we've seen a ton of that yet. Certainly, anything can happen, but it doesn't seem like, Bitcoin are getting targeted at a higher rate or anything because they see purchases from an exchange or you reported Bitcoin in one year, so now you're gonna get audited forever. That doesn't seem to be the case so far.
[00:46:42] Unknown:
Okay. Yeah. I think I I know I have several friends who, are miners and home miners, and they're like, oh my gosh. I've been earning Bitcoin for ten years or however long. And what do I do if I wanna start set? You know? So I think it's a big obviously, it's a rainbow of use cases and different people's scenarios of how, you know, they want to, you know, make sure that they're covering their butts and not getting in trouble, but also just, like, it's tough, you know, because we're obviously dealing with, you know, again, this the the the Bitcoin ethos is peer to peer. We don't wanna deal with, like, the IRS. We just wanna send Bitcoin to each other and live freely. Wouldn't that be great? One of the questions somebody said, do you do you believe the IRS is gonna get abolished?
[00:47:33] Unknown:
I wish it would.
[00:47:35] Unknown:
I look forward to getting another shout. Any any over under you on that that little bet?
[00:47:41] Unknown:
No. I wouldn't be betting on it necessarily. I mean, there's a lot of downstream things to deal with regarding, like, delayed, taxes paid on retirement accounts and things like that. So it's definitely not as easy as just flipping a switch, and we all move on with our lives. I know. La la la. But yeah. I mean, I'm I'm I'm absolutely here for it. Yeah. I mean,
[00:48:04] Unknown:
maybe a a smaller, like, goal there is, like, if you could some way get honestly, for me, if it's something where, like, you can spend a small amount of Bitcoin, some threshold there where it's not a taxable event. I even, like, would be willing to say, if you send to an exchange, you convert to fee, it's taxable. But if you spend it peer to peer, like, you're using it as money. That shouldn't be taxable. Like Yeah. I'll even go that far. Give them that much, like, wiggle room. Right? I think that would fundamentally change the way people kinda look at Bitcoin, use Bitcoin. Right? I'm like, hey. If I, you know, if I buy Bitcoin and I sell it, I gotta pay a 15% capital gains tax.
Or if I buy it and then I use it for things that I need that I was gonna buy anyways, I don't. I think that would be huge. And it would be, I think, a relatively relatively easy thing to do. Like, the government's still gonna get most of their money. So most people are still gonna just trade back to Fiat. Right? I think that's probably a lot more doable and politically, like, politically advantageous than, like, we're just gonna get rid of the whole IRS or we're gonna get rid of all capital gains tax. I think you're gonna get a lot of pushback on that. I would love to do it.
[00:49:21] Unknown:
We'll see. That's actually being talked about because we had a a member only event here at the space a few weeks ago, and, one of the lawyers was speaking about that, that that's one of the discussions of how do we have de minimis amounts of Bitcoin that shouldn't that's not taxable, because that'd be a game changer where we can do the small amounts of, transactions between each other and it's nothing that needs to be tracked because it's a waste of everybody's time. And it doesn't really make the government any taxes to begin with. It's not really worth anybody's time. So, I think it's in discussions now, but we're not there yet. But it would be a great win to have a de minimis amounts of nontaxable Bitcoin.
[00:49:52] Unknown:
It would be so great. Like, a big giant de minimis. A de maximis.
[00:49:58] Unknown:
Yes. Yeah. I've I've been saying they should go ahead and adjust it for inflation. Don't bother with 200. Let's make it let's make it a thousand.
[00:50:05] Unknown:
Let's make it 10,000. Like, not even that no. None of this $600 Venmo bullshit. Like, give me $10 at least. Like, for me, like, I hire people overseas to do some work for me sometimes, sometimes, whether they're video editors, whatever, and they're Bitcoin or so. I send them Bitcoin. How do you how do I account for that? You know? Because it's a Bitcoin to Bitcoin transaction, but it's with somebody overseas. I'm not issuing them ten ninety nines. You know? Like, what do I do?
[00:50:35] Unknown:
Yeah. I'm asking you. Oh, yeah. It's it's a point of transaction. US dollar point of transaction, but because they're international, there's no $10.99. So you're you're correct there. I mean, you guys surprised to say more about it, but that's in a nutshell.
[00:50:48] Unknown:
Yeah. Is there yeah. For I mean, if it's business, it's a business expense like anything else. Right? But, like, you value at the time that you sent it.
[00:50:55] Unknown:
That's it. Just value, like, the way that it would be Yep. US dollars sent. Okay. Okay. So someone else this is there's two more people here. Like, we've got a couple more questions. So and I wanna be respectful of your time because I know it's late. This is a similar question that we had at the very beginning of, like, what if you don't know your cost basis? Someone else also said here just recently, what's you know, the worst case scenario, your cost basis is zero. No. It's never gonna be zero, guys. Okay? It's gonna be guesstimate the shit out of that. And so let's figure out how that works. I don't know if you guys know that I used to work at Deloitte and Touche, and that was, like, what we used to do. We guesstimated the shit out of things. And so with our giant reams of paper with the holes in the sides and yeah. It was a I wasn't a very good accountant, guys. I was terrible.
I'm a much better DJ and podcaster. But so, because they didn't like when I said guesstimate the shit out of that. But so, okay. So for this question, again, we'll just kind of reiterate for the ladies in the room at the Denver Space, yay, and, everybody watching virtually, thank you guys for tuning in. If you don't know the exact amount spent, you know, how do you how do you, how do you guesstimate your price? You know? Same thing.
[00:52:14] Unknown:
Yeah. I mean, I guess, inherent in that question, if you if you're spending it in Sats, I I mean, I guess, you're gonna have a record of it, whether it's a lightning transaction. It, you know, went through your node or through the apps, right, custodially or if it's on chain, you're gonna have the on chain record. So you're always gonna be able to go back, and you can always check the Bitcoin price at that time and the amount of sat. So you're always gonna be able to recalculate that whether the wallet does it for you or not. I think that does that get to the heart of the question?
[00:52:51] Unknown:
I think so too. I mean, I think it's just, again, guys, it's just it's a tough one. Right? Because it's like you're gonna you're gonna have two scenarios. Right? If you're somebody who's been, you know, dabbling and investing, doing whatever you've been doing in Bitcoin up until today, you know, February 11, and your record keeping has sucked. Well, guess what? You get to kind of play and sort of go back and try to assemble some version of, well, I think about, you know, hundred bucks here, a thousand bucks here, whatever. And, you know, use the the spreadsheet that, you know, we're gonna send you guys or use a piece of paper, whatever you need to do. And then going forward, creating something that's a more solid way that you'd feel like rock solid, you know, in your transactions. And so you've kinda got ketchup, and then you've got okay. Now we're we're we're we're cooking with gas here. You know? And so,
[00:53:43] Unknown:
does does that make sense? Yeah. And this is no different than this is no different than before Bitcoin. It's kinda the same thing. It's like if you don't have a complete financial record, you have to do your your damn best to figure out what that picture looks like. And then more importantly, have a very consistent method on how you track that over that time period of not knowing. So if you have a close enough amount and then you have the date, well, then there's Yahoo, market to find the ending Bitcoin price and you have a price for that day that's historical where you can have Excel kinda build out those days.
So as long as you have a method and you're doing your damn best to try and make that as honest as possible, that's really what matters. And then like you said, Val, once you get to that point of now and present time, how do I fix this problem of the past and now prevent that for the future to do this new way of of record keeping or hire us as the awesome team to help you to do any part of that aspect.
[00:54:35] Unknown:
Totally. And and, obviously, you guys so who everybody who's at the Denver space, you all know, Joey, probably came and rallied you into the room so that you could be, you know, present there. So make sure you talk with Joey afterwards. I know he's upstairs. He's gonna come downstairs and talk with you. If you have specific questions for your, you know, past taxes, future stuff, I know he'll be there to to support you. A couple more questions really quick. So somebody just said, can you talk more broadly about what is a taxable event? Again, just just to clarify so people understand, like, what what does that look like? You know? Because I know we've got the oh, I'm sending some stats to my dude in El Salvador versus, you know, it it's a tough one. So I mean, it's not tough. It's just I want peer to peer.
[00:55:24] Unknown:
I think it's important too to differentiate those different kinds of tackle taxable events. So, like, your bread and butter, you just sell Bitcoin that you bought. That's a taxable event. It's gonna result in a capital gain or a capital loss. Let's say you're home mining, and you earn Sats. Technically, that is income, and so that would go, in a different section, and it would be taxed at a different rate, than the capital gains. And so, kinda your high level, you know, you you sell, you buy something. You know, by that nature, you're selling to buy it.
Yeah. If you earn, income from, you know, staking or any of that other stuff, air drops, all that. Any anytime that you're essentially given value for nothing, that would be taxed as income. It would show up on your, your schedule one on your personal return. Joe, are there any others I'm not thinking of?
[00:56:20] Unknown:
No. You covered it. I I think the IRS, like, on the capital gains tax side, like, the IRS is gonna look at anything that they would consider a disposal. So anytime that you you had Bitcoin and you no longer have Bitcoin anymore, that's, like, gonna be, like, a disposal from the IRS standpoint to fall under that capital gains tax. And then, yeah, I think just probably as we look at Bitcoin is money. Right? If you're receiving Bitcoin for any services you provide, products that you provide, just like if you were to provide US dollars, that's gonna be revenue to you, and that would fall under, you know, the same rules
[00:56:57] Unknown:
generally as well. So I think that covers everything, though. Yeah. And then on the record keeping side as well, it's like because if you know that these are the categories that are taxable, then also set up your wallet structures so that follows the same thing. Now you can have a single hardware wallet and put a couple different accounts in there. One account is maybe the, money that you use US dollars to buy from an exchange. Maybe another one if you're doing mining, that's where it's going to. And then if you're making income, in Bitcoin, then that's another wallet or another, account that it goes to. So it's very easy to be able to track what happened, and then it all flows into, the tax side.
[00:57:35] Unknown:
And kind of in tandem with that, there's the question on the first page of your tax return that kinda asks, did you have any digital assets? And so general guidance, the answer is probably gonna be yes if you did interact with any digital assets. However, the notes here for when you can select no, you just outright don't own any digital assets. If you only buy and do not sell any Bitcoin during the year, the answer is no. And then if you, transferred to a wallet, you know, internally with yourself and you don't sell, then that would also be no. But anything else, receiving a digital asset as payment for good or service,
[00:58:12] Unknown:
the hard forks, air drops, anything like that, your classic sell, those are gonna result in a taxable event. So we get it like a hard fork where BlockRock has their own chain and we get it like an extra coin and we dump all those. That will be a taxable event. Right?
[00:58:26] Unknown:
Yes. Yeah. Right. Well, Lisa, we're being forced to huddle, it sounds like. So
[00:58:31] Unknown:
Totally, dude. Yeah. I love what Michael is is echoing what you guys are saying. This I like this idea too about segmentation. I hadn't thought about that. I'm not a miner yet. I wanna be a home miner because guess what? We're gonna have the heat punk summit in that the Denver space in a couple of weeks, which is gonna be amazing. And but so this is something a question somebody said too. You know, why is mining income but selling is capital gains? And I think you guys just answered that. Right? So there is a difference between something that you're generating as income and you're start I mean, you're still gonna have cost because there's inputs to create the those Bitcoin. So you're not just having a zero cost basis. You're gonna have whatever the cost of the inputs of electricity is for that particular Bitcoin, I would imagine. Right? Well,
[00:59:21] Unknown:
maybe just to clarify that, like, really try to simplify a little bit of, like let's just say you got a hundred dollars of Bitcoin that you mined. You got a hundred dollars of revenue there. It might have cost you $50 in energy. You'd have a $50 gain there that you'd be taxable. But when we talk about cost basis for that, your cost basis for that Bitcoin would be a hundred dollars. And then the price fluctuation after that, you'd have a capital gain or loss on. Right? So Okay. You might hold that Bitcoin. It might go up to a hundred and 20, and you sell it. You have a capital gain on top of that. So I don't know. Have a $20 capital gain because Yeah. If you sold it at that elevated value. So you're talking you have a few different pieces there. You have the revenue. You have the cost of goods sold, and then you have the profit, and then you have a capital gain or loss based on the fluctuation of Bitcoin after you mined it. So, like, it just as as this is a good, you know, easy example. So if you had, let's say, whatever. You you mined a hundred dollars worth of Bitcoin. You have $50 worth of energy inputs, you're gonna get taxed as ordinary income at
[01:00:25] Unknown:
$50 Yep. Which is your thing. And then if you go later and sell it for a hundred and 20, now you're gonna have a $20 cap gain. You know? Some people consider that double tax, which is why they It seems like rip off. You know? Yeah. I mean, by the way. Triple dipping in there. Oh. That's not very nice. I don't like the IRS. Let me see if there's any more questions from the ladies in the audience. Hey, ladies. Do you guys have any more questions? Somebody said, what about gifts? Same thing. It's gonna I would imagine it's treated as a, you know, a gift. Like, if somebody gifts me $10,000 of Bitcoin.
[01:01:05] Unknown:
Yeah. Same same rules apply to any gift. You wanna give background on that at all, Seth?
[01:01:11] Unknown:
Yeah. So for, if you do gift somebody Bitcoin, you would check yes on that question. The gifting is a little interesting because you can gift, like, up to a certain amount per year per taxpayer. It it changes every year, but it's about, like, $16,000. And that's before you get into that lifetime exclusion number, which is, like, $12,000,000, I think, for Maryvale joint. And that number might change. I saw some proposals. They might be lowering that. But with the gifting, you would just wanna make sure that you also rescind that cost basis to the recipient because they're gonna essentially take that cost basis from you. So you can kinda get into, like, estate planning with that.
Maybe while you're alive, you wanna give some Bitcoin to your children or anyone else like that. You know, they're gonna keep that cost basis that you had with the asset. However, if you were to pass that asset onto them, you know, when you passed away, they would receive a step up in basis to the fair market value at the time of your death. So it's a, you know, a couple of different ways to gift Bitcoin to people. But, yeah, yet another reason to kinda keep track of your cost basis,
[01:02:27] Unknown:
because it might be a little messy if you start gifting it to people and then they don't know what their basis is there as well. Right. If we think inherited this is our mess before Bitcoin, like, I can't even imagine what this might be in the future if if the person that's gifting that in the future didn't do their own record keeping. It could get really messy, tons of wallets, and all this rest. Well, but, like so let's say a gift like, let's say I received a gift, right, of whatever, you know, point one Bitcoin. Right? So we're gonna say it's worth $10,000 today ish.
[01:02:54] Unknown:
Is it is it, like, is that my basis then of whatever I received it at, like, whatever today's price is? Does that make sense?
[01:03:06] Unknown:
It would be whatever their original purchase price was, assuming they bought the asset. It's their original,
[01:03:12] Unknown:
not my today. I received it, and it's worth this much. So that's a different okay.
[01:03:18] Unknown:
Yeah. So if you're inheriting their cost basis. Yeah. And your scenario that you just played out is how it would be if you inherited that due to their death.
[01:03:27] Unknown:
Okay. So only at death is is when people get the cost basis of whatever it is today. But if somebody's gifting you something and they got the Bitcoin for a dollar, you know, you're gonna in you're gonna incur what their cost basis is, and so you have to know what that is. Okay. So these are obviously great questions, guys, and these are questions that, obviously, you know, Seth and Joe and Joey can answer, you know, and be your your super Satoshi Pacioli, Pacioli, accounting firm. Fifth Amendment right. The last question everybody is this is, like, five people have asked. Just what are the top couple tips that you might give people who are preparing their 2024 taxes so that they make sure that they do it, you know, well?
[01:04:18] Unknown:
You wanna take that, Seth? I think you had a whole list of things.
[01:04:22] Unknown:
Yeah. So I would say, definitely looking at your prior year tax return is a good basis. I something I did this past year was I kinda had, like, a notepad with my receipts and other items, and I would think, okay. You know, I cleaned up my cost basis and Coinbase at the beginning of the year, so I might get a ten ninety nine from them. And, like, I would write down, might get a ten ninety nine from this, should get a w two from this. So I kind of did that throughout the year. So when I was working on my return, like, a week ago, I was very easily able to go look and find those items. Yeah. I think, just good planning. I I think something that I've thought, over my time of practicing taxes, I feel like people do make it a a boogeyman, and it's not as bad as it it seems. You know, the the tax returns look complicated, but they are fairly straightforward. You can just read the instructions, and they they tell you what to do and how to do it. I just I think people get a little spooked with it.
But, yeah, just just good record keeping there again, with the tax planning. But, yeah, I did a note to share with people, because a lot of questions we'll get is I have a w two. What can I do to lower my taxable burden? And there's not a whole lot you can do there if you just have a w two and you haven't, tweaked your w four withholdings. The appropriate amount should be withheld, so you should be about breakeven at the end of the year. That's kind of the goal. But kind of some of the top ways that you can, save on taxes for the year, you can look at doing, like, a backdoor Roth IRA. So that's, like, kind of a little work around. Maybe you're over the income limit, to contribute to a normal Roth IRA.
You're able to kinda do some engineering, and you can contribute more than you would normally be allowed. We won't really see it a whole lot this year, hopefully, but tax loss harvesting, On the flip side of that, let's say you, wanna take the year off and you're not working and you wanna live off your Bitcoin. If you keep the amount of Bitcoin that you sell under a certain threshold, you could potentially pay 0% capital gains on that Bitcoin for the year. So you could have a very low taxable burden, for that year.
Contributing like a four zero one k and HSA is a good way to lower, your taxable burden.
[01:06:40] Unknown:
And, just a note on that. The for the IRA specifically, you can still make contributions for 2024. Yeah. You can't make it for your like, a four zero one k for your employer still, but you have until April 15, right, to make a contribution to our IRA still. So there's time on that one.
[01:07:00] Unknown:
Yeah. So every year, you have until April 5. So, like, in this example, you have until April fifteenth of twenty twenty five to make up to the $7,000, contribution limit for a Roth or traditional IRA for tax year 2024. So, yeah, you have a little bit of extra time there. One tip on the list that I wouldn't necessarily recommend, is tax exempt funds or treasury bills. I would probably, be sticking to Bitcoin, but, you know, it's not financial advice. And then, you know, you can invest in real estate if you want to. It has its pros and cons. You can always start a business, but you don't necessarily want to, you know, let the tail whack the dog in that scenario. Like, if the goal is to pay as little tax as as possible, maybe it's not best to just lose a bunch of money so you don't pay taxes. Maybe it was better just to keep the money and and pay that little bit of tax.
And then kind of the last thing is optimizing your charitable contributions. And so, you know, Unchained's got a great product, with the donor advised fund. So that's a great way for you to receive an immediate tax benefit for donations. And the beauty of theirs, is that those funds are held in Bitcoin, and they'll continue to grow in value. And then one day in the future, you can pick and choose a charity of your choice that you wanna donate that to. And, presumably, it'll hopefully be, more money that you're able to contribute to them.
[01:08:21] Unknown:
Yeah. That's good. I didn't know Unchained did donor advised funds. That's really cool.
[01:08:26] Unknown:
They just started. I I think one, I guess, note of caution, I would probably try to stress to people on the donation side. Like, it's always good to donate to people, but, it's harder and hard. Like, if you're not already itemizing your deductions, it's pretty hard to to get an advantage through the the donation. And so, like, if I'm taking the standard deduction and married and you're getting 27,000 and you have nothing else to itemize, you're gonna have to give $30,000 of a donation before it helps you. Not to say don't give $30,000 if you can afford to. Right?
But it just it's always unfortunate when, like, you see someone make a nice donation, and then they're not getting any tax benefit of it. And so that's where, like, the idea for the donor advised fund comes in of, like, hey. I can't afford to give, 20,000 every year, but maybe I give it all in one year and I get a big effect. And so I give that to the donor advised fund, and I put $50,000 in there. And then I give it out to charities over time. Right? But I do it in a year where it's really beneficial to me. Maybe I it's a year I was already gonna itemize.
[01:09:36] Unknown:
So try to be strategic about that giving as much as possible so you actually get the tax advantage there. Yeah. That's perfect advice. And one more thing really quick, just Unchained, obviously. Rocky is one of our, Denver space members. We love him, and I love Unchained. But, with the the the Roth IRA, you know, the the what's interesting with Unchained is you get to hold two you know, you're in a multisig, and you get to hold two of the three keys if you choose to. And so a lot of the other IRA products that are out there, you're not custodying your own Bitcoin. And so, god forbid, shit hits the fan and you need to jump ship, you still have access to your own Bitcoin if you choose to do a Roth IRA with Unchained. So I I think Unchained is incredible.
So I highly recommend, you know, just if you're, you know, eligible for doing Roth IRAs, if you make, you know, a certain amount of money, or not too much, you know, because you can't do it if you make too much. What is the threshold, Seth, for a Roth? Like
[01:10:36] Unknown:
I wanna say it phases at, like, a hundred $40,000. Yeah.
[01:10:41] Unknown:
Let me So it's for us normies. It's not for the billionaires.
[01:10:45] Unknown:
Yeah. But like I said, you know, there's certain ways to work around that where you could potentially do the backdoor Roth, and you could still get money in. You could still do that as of right now. I have also heard chatter that they might be trying to crack down on that too. So Yeah. Yeah.
[01:10:59] Unknown:
And then for the HSA too, guys, like, if you all you know, if if you're not with CrowdHealth, who, you know, is a Bitcoiner company that's doing crowd kinda health funding, you can have a a health savings account, and you can put it in You can't buy Bitcoin directly, but if you're doing Fidelity, for example, you can get MicroStrategy or you can get an ETF so you can at least have, you know, your paper Bitcoin kinda thing exposed with, those products and services that they have. So there's there's a couple different ways that you can, you know, do do some different, creative gymnastics. And so I know that you guys are here to help the ladies and the gentlemen, who've tuned in. And I am just so grateful. Thanks. I know it's late, and I know everybody there, whoever's at the space, I hope you guys got your answer your questions answered. And, I really, really want you guys to make sure that, like, if if you are doing accounting, like, make sure you guys follow these guys and reach out to Seth and Joe and Joey. They are the best in the business as far as I am concerned.
And, yeah, any final words? We've and, you know, I really wanna also just, of course, promote the space in Denver. Denver, again, you know, is one of the, you know, the little pushpins on the map that is, you know, becoming one of the Citadel locations. We're having lots of different events there. We're gonna be doing a Bitcoin for Holistic Health summit, in April. We're obviously doing the women's events. We're doing tons of stuff with, you know, learning Bitcoin. We've got Eric Yakes. We've got everybody who's just making these great, great events possible. And everybody's a volunteer. Nobody's getting paid. We're just doing this because we love Bitcoin and because we love the mission, and we wanna bring people together. And so, you know, it takes a village. And so we really want you to make sure you're following the space. Please think about becoming a member or donating, and every little bit counts as we all know.
You know, and I just I'm so grateful. You know? And Joey's one of the board members. He's been, you know, working diligently, you know, forever with the rest of the board making this happen. I'm so excited and honored to get to work with you guys and put these events on and hopefully educate people and get new people excited and interested in Bitcoin in our own way. So, yeah, that's that. And any final thoughts or words, gentlemen?
[01:13:21] Unknown:
Yeah. This has been been a labor of love. I love being here at the space. As you mentioned, Tyler's got his event coming up on February, I'm pretty sure, for the Heat Punk, mining event. We have a lot of people coming here from out of town, so I think it's gonna be one of our biggest events thus far. Yeah. And Joe and Seth are from the park. So, like, we basically have, the space in the park represented here on both sides is pretty sweet. I did wanna mention all the things that we were just talking about that, Seth and Joe were bringing up about all these ways to get these different, attacks hacks, I guess you could say. It's actually on our Nostr. So we basically have that exclusively on our Nostr account. So if you go to Satoshi Piccioli, on Nostr, you might be able to find it through Twitter as well. But, Seth's been doing a great job about listing all these different posts that have all these different tax hacks. Basically, everything that we've been talking about right here is is built out. So you can read that yourself and kinda find the one that applies to you.
[01:14:17] Unknown:
And, yeah, I think point. Yeah. We, we only give that information out on Nasr. Not just only because of Nasr, but, like, there's plenty of that stuff on Twitter already. Right? But, obviously, none of that content on Nasr, so we try to get out there. But, yeah, yeah, I don't have anything else. I appreciate you having us on. Always happy to chat. Obviously, if anybody has additional questions, reach out to us, but appreciate you, making some time for us here.
[01:14:42] Unknown:
Yeah. Absolutely. Thank you for having us. And, yeah, I guess kinda my my last, final thought is the the time to really think about how can I plan for taxes for the next year and start saving money is towards the end of, you know, this year? So definitely reach out to us September, October, November. The earlier, the better. We can take a look at what you did last year. What are your goals for this next year? And we can try to help you. You know, at the end of the day, our goal is to for you to pay as little as taxes as possible. So, that's a great way to do it, and it was tax planning. Love it.
[01:15:16] Unknown:
Alright, everybody. Thank you guys so much. Happy Tuesday. Woo hoo. It's techie Tuesday and women in Bitcoin Tuesday. And I'm so grateful. This is such a cool thing. And, like, can you imagine if Satoshi didn't do what Satoshi did? Like, we wouldn't get to be hanging out here with each other, and I wouldn't have gotten to meet you all. So thank you, Satoshi. We love you, and God bless all of you. And everybody who's down there in Denver, go hit Joey up. And so he's gonna come down there in a second and, be there if you guys have any questions. And, yeah. We're super duper stoked.
Yay. We got someone saying thank you. Yay. We love you, Glenn. So, anyways, peace, love, and warm aloha. What I'm gonna do is this is all gonna, of course, be up on YouTube for everybody to check out. I'm gonna put all the, the links. I'll put is it okay if I put the link to the spreadsheet in the show notes?
[01:16:08] Unknown:
Yeah. That'd be great. Okay. Cool. And,
[01:16:12] Unknown:
and then, again, I'll you know, if you guys have any questions, reach out to these guys. And I'm not sure what our Women in Bitcoin I think we might be doing domestic violence in March. That's gonna be our next Women in Bitcoin and teaching women how to get out of abusive situations. And then in, April, we're gonna have, Becca Amelie from AnchorWatch and, Morgan Richard, who's a CFA. And we're gonna talk about, you know, planning for the future and inheritance and insurance for your Bitcoin. So we're gonna have lots of cool stuff lined up for the, the second Tuesdays of every month. And I think we are gonna try to do these digitally and, you know, this kinda hybrid thing. So we wanna get, you know, as many people involved as possible, and we really appreciate your support. And make sure, once again, go follow these guys at satoshipatioli.com.
Manja. Alright, guys. Peace, love, and warm aloha. I'll talk to you soon. And, Joey, I'll be around if you've got you know, if any of the ladies need to get a hold of me here. But, you know, we'll end the stream, and we'll go from there. But thanks again, you guys. I really appreciate your time.
[01:17:23] Unknown:
Alright. Aloha. Yeah. Thank you. Take care.
Introduction to the Denver Space and Women in Bitcoin
Bitcoin Taxes and Satoshi Pacioli Accounting
Key Considerations for Bitcoin Record Keeping
Privacy Concerns in Bitcoin Transactions
Understanding Cost Basis Methods
Effective Record Keeping Strategies
Open Source Tools for Bitcoin Accounting
Tax Implications of Bitcoin Transactions
Navigating Bitcoin Spending and Transfers
IRS Audits and Extensions
Taxable Events in Bitcoin
Gifting and Inheritance of Bitcoin
Final Thoughts and Upcoming Events
