IRS AUDITS CRYPTOCURRENCY, CONSERVATION EASEMENTS AND MICRO-CAPTIVES

Cryptocurrency Tax Audit: The IRS tax laws involving cryptocurrency continue to evolve. In general, the U.S. tax laws involving the taxation of cryptocurrency can be very complicated. This is primarily due to the fact that the Internal Revenue Service treats cryptocurrency as property, even though it is generally thought of as currency. Moreover, cryptocurrency tax enforcement is on the rise as well. Even the updated Draft 1040 for 2020 includes a question about cryptocurrency on the first page of the form. Whether or not you received an IRS Letter 6173, 6174 or 6174-A, you may be at a risk for an IRS cryptocurrency tax audit. This is further amplified if you maintain cryptocurrency at Coinbase, due to the court approval (after several rounds) of the IRS Summon for more than 14,000 account holders. CONSERVATION EASEMENT BUYERS BEWARE The Internal Revenue Service has yet again publicly reiterated its commitment to challenge syndicated conservation easement transactions—transactions that it has, in recent years, labeled as “listed” transactions, tax-speak for “buyer beware.” In a recent press release, the IRS warned yet again that it believes that these easement deductions are “abusive transactions” and hinted that taxpayers can expect to face “new arguments” from its arsenal of legal theories. To add insult to injury, the IRS further cautioned that its newly-established “Office of Fraud Enforcement and the National Fraud Counsel are coordinating . . . to canvas cases for additional fraud considerations,” including civil fraud penalties and referrals to criminal investigation. The stakes, in other words, remain high for participants in syndicated conservation easement transactions. CAPTIVE INSURANCE AUDITS The IRS has been warning about these micro-captives for several years and placed them on its annual “Dirty Dozen” list of tax scams. The IRS has consistently disallowed the tax benefits claimed by taxpayers in these micro-captive structures. Lance Wallach receives hundreds of calls annually to help people fight the IRS and get their money back from the promoters of these scams. Google Lance Wallach and your advisor, who do you trust? 516-236-8440 Wallachinc@gmail.com