Cryto-Rich Avoiding Capital Gains
Cryptocurrency has led to an influx of favorable gains for many investors – the trouble is, such gains are subject to the capital gains tax. The tax can be a staggering amount, especially for those who are unprepared. Interestingly enough though, a financial advisor and certified financial planner by the name of Tim Picciott has been reported to be helping the “crypto rich” bypass the tax penalty and all in a legal manner.
To provide more insight into his practice and its support of helping investors avoid the capital gains tax, Picciott participated in an interview with News.Bitcoin.com. Here are the main points Picciott stressed:
The Start of Picciott’s Interest In Bitcoin
Graduating in 2008 as a tough time for everyone, but as someone who worked in the financial system, it led to a distrust. His interest in Bitcoin began around that time as well, which coincided with his support of the libertarian movement. Although he did not purchase Bitcoin when it was around $53.
In terms of the current system, Picciott stated “I see the current system is essentially high tech slavery. I don’t like being a slave, and I don’t like my kids being a slave. I see cryptocurrencies as a way to bypass all of these middlemen and bypass a lot of these parasites to really free humanity.
Today’s Practice: Avoiding Capital Gains Tax
Picciott stated that at the start he was aware of how to help businesses avoid the tax when it came to stocks and bonds or the appreciation of a business, but crypto was more uncertain.
To gain knowledge that would allow him to help his clients, he attended the Nexus Earth Conference in Colorado. There, people asked him about self-directed IRAs, which allow individuals to put whatever they like into the account as long as its not deemed a collectible. Today, Picciott is working with a few guys in Massachusetts who have been aiding financial clients purchasing crypto with the same issue.
Picciott applies a few methods to helping people. For example, he helps those who are already crypto-rich and who want to work within the system to avoid the tax, and then there are those who have existing IRAs and 401Ks who are interested in becoming crypto rich.
A method to avoiding the tax includes putting “in $100K into crypto as the peak and your investment is down to $30K, well you can convert your IRA at that point into a Roth, only pay tax on the $30K to convert it, and all of the appreciation would then be forever tax-free. There’s not one cookie cutter strategy for everyone as each case is different.”
The methods Picciott applies are different than using a trust, which other crypto-IRA firms tend to do. In terms of the self-directed IRA, Picciott stated that he recommends holding the crypto so the assets are in the IRA. In that case, the IRA firms will then charge 10-15 percent, when he charges 1-2 percent.
Picciott further noted that those who have a lot of cryptocurrencies on exchanges such as Coinbsae, but who choose to not pay taxes may be at risk for government action. The individuals that are most susceptible are those who are “on the grid” and bought the currencies on Coinbase or any other major exchange and have a lot of assets.
In his own words, “When they caught AL Capone for all of his criminal activity, it was because he the IRS came to him, and was like ‘How do you have these five speedboats and mansions but you claimed you haven’t made anything?’ So if all of a sudden, they see you driving around in a ‘Lambo’ the IRS is going to wonder how you got the money. If you can’t substantiate that purchase, you might get into some trouble.”