About Shehan Chandrasekera Shehan Chandrasekera is the Head of Tax Strategy at CoinTracker, a Forbes Crypto Tax Analyst, and a CPE instructor who has won multiple awards: 2020 & 2019 CPA Practice Advisor 40 under 40 accounting professionals, Outstanding Young CPA of the year, Rising Star of Texas & Among 21 accountants mentioned on Accounting Today who will be helping shape (and reshape) accounting in 2020 and beyond by Accounting Today.
Shehan is a renowned speaker who has done speaking engagements with many organizations, including Google, Coinbase, Square, Consensus, Coindesk, Lyft, AICPA, the American Bar Association, and a plethora of state CPA Societies
Shehan Chandrasekera gave a wide-ranging exclusive interview which you can see below, and we are happy for you to use it for publication provided there is a credit to www.cryptonews.com.
Highlights Of The Interview How are cryptocurrencies treated by the IRS? What are taxable transactions? There are 5 What transactions are not taxable? What are the biggest challenges when complying with crypto taxes? What tax form should you file to report your crypto taxes accurately? Full Transcript Of The Interview Matt Zahab
Ladies and gentlemen, welcome back to the Cryptonews Podcast.We are buzzing as always and, today’s guest is coming in hot from beautiful Houston, Texas we’d love to see it today we have Shehan Chandrasekera the Head of Tax Strategy at CoinTracker.He is one of few.He’s one of the handful of CPAs in the country who is recognized as a subject matter expert on Cryptocurrency Taxation.He’s currently the Head of Tax Strategy at CoinTracker, a Forbes Crypto Tax Analyst and CPE instructor who has won multiple awards, including the 2020 and 2019 CPA practice advisor 40 under 40 accounting professionals, outstanding young CPA of the year.Rising star of Texas and among 21 accountants mentioned on accounting today, who will be helping shape and reshape accounting in 2020 and beyond by counting today.He’s done a shit ton of speaking engagements with many organizations, including Google ever heard of them? Coinbase, Square, Consensus, CoinDesk, Lyft American Bar Association and a plethora of other state CPA Societies, Shehan pumped to have you on welcome to the show my friend.
Shehan Chandrasekera
Yeah, thanks for having me, Matt.
Matt Zahab
It’s been a while we’ve been trying to get you on for a hot minute, we finally got you on and it’s perfect time to by the time this episode airs mid to late Feb tax season baby, it’s upon us.Tell me what and why did you were a rising star and just a regular side of the whole tax world.
And you decided to jump to Crypto, why jump ship?
Shehan Chandrasekera
So I got into Crypto around 2017 2018 time period, I thought it was interesting for me to kind of come into this space from the technical angle that I knew, which was the taxation side of things.Back in the day, like you know this was like five, six years ago, there wasn’t much guidance around Taxes .A lot of people had questions, and some of these software companies were being built at that time.So I thought it was a good time for me to kind of combine my curiosity around technology and the technical abilities that I had, which was taxation and, this was a you know a perfect place for me to be.
Matt Zahab
So it was just a no brainer.At the end of the day.
Shehan Chandrasekera
Yeah.I mean, you had to play the long game in Crypto.I mean, I feel so like you know the Crypto is like very early.It’s barely in a 10 years old.
So there’s a lot more to do in this space.
Matt Zahab
And on the Crypto accountant side of things, there are literally a handful of you guys and, we need to replicate and duplicate all of you by the millions.It’s like do you not find it a little weird how there’s still so few accountants who actually know what they’re doing on the Crypto taxation side of things?
Shehan Chandrasekera
Yeah, I think the accounting industry in general kind of going through this bad period, a lot of people are churning out of the industry to go to private sector because of again, fundamental issues in the industry, which has nothing to do with Crypto.So we have people leaving the industry.And then the existing folks mainly focus on focusing like you know, this traditional type of industries, like you know, real estate construction and those type of things.
And then at the same time generally speaking, codons are not the first one to kind of go into like a new territory and kind of figure things out.And then Crypto is one of those like you know, new up and coming thing.And so because of those, like reasons that people are leaving the existing you know, folks don’t necessarily want to you know, test these new things.As a result, like the number of economists who know about Crypto and who’s embedded in this space are relatively low right now.
Matt Zahab
Are you not in just like crazy demand right now? Like I feel like you especially this time of year, like I feel like you’re just you have a million requests every single minute.
Shehan Chandrasekera
So I mean before I joined CoinTracker, as the head of tech strategy, I was practicing as a CPA, meaning like I was just helping people prepare taxes consulting people.
Now I don’t get the chance to do that.Because again, I’m more involved in kind of building software.But I cannot even imagine like if you know, a thing or two about Crypto and, you happen to be a CPA, the demand for you should be like super high again, which is you know, simple supply and demand, right? Because the Crypto space is getting more complex every day.The regulators are not necessarily issuing an indirect guidance that average person can read and kind of follow the instructions.
So yeah, they kind of default go into these CPAs are I mean, honestly, there’s probably maybe less than you know, I don’t know, maybe 50 or maybe hundreds of like you know, either CPA firms or economists who I personally know that are like you’re really good at Crypto or type of work.But there are 150 million returns that’s being filed with the IRS every year.So there’s a huge discrepancy between the number of people whose filing and their currency or family with Crypto.
Matt Zahab
Well said.Quick little point for the listeners here.
Obviously Shehan is an expert on the US taxation side of things.So for the sake of this pod, we are going to obviously focus in on the US side.And with that being said you just brought up the IRS.The IRS is the governing body that manages and treats everything tax related.How does the IRS treat Cryptocurrencies? To my understanding, they are viewed as property, but walk me through this whole process and why have they chosen to treat Cryptocurrencies the same as properties?
Shehan Chandrasekera
Yeah, so IRS first issued guidance related to Cryptocurrency in 2014.In that guidance, IRS said that Crypto is treated as property, although we call it a currency, they’re not creating as a currency for tax purposes.So in 2014, they issued that guidance.And then the next set of guidance came out in 2019, in the form of frequently asked questions, which you can still see on the IRS website.
Again, they didn’t change the treatment or anything like that.So since 2014, any transaction that you do in Crypto, like you kind of have to apply the generic property treatment in simple terms, like when you buy a Crypto you know, that establishes what’s called the cost basis, meaning how much you paid for it.
And if you were to sell it at a price above that cost basis that results in a profit or gain which you had to pay taxes on.And obviously, if you sell it at a price below that cost basis that results in a loss, which you can write-off in in certain cases.So that’s at a high level how this property tax treatment works.But it’s just a generic treatment for all these Cryptocurrencies which have like an indifferent characteristic.I mean, you could have NFTs you could have Stablecoins, you could have algorithmic Stablecoins and different things.But in the eyes of the IRS at least as of today, all those digital assets are treated as property.
Matt Zahab
It’s just so complex because again, you have your Crypto and then as a whole right you have your very simple using a centralized exchange buying and selling then you have you know, some staking, which can be done on that centralized exchange.
Then you have NFTs and then you have Airdrops, you have all these different kinds, I believe there are five tax transactions, you have cashing out, you have Crypto to Crypto trades, you have spending, you have earning, which is staking, mining, etc.And you have Airdrops and Hard Forks, I’d love if we could just go over sort of the five taxable transactions and, perhaps just some best practices in regards to taking note of when each one of those things happen.
So you can have your ducks in a row when the counting season comes around.
Shehan Chandrasekera
Yeah, I think a lot of I guess people have questions around when do they have to pay taxes if we’re doing stuff with Crypto so I like to kind of go through these five transactions, I call them events.So if you go to any of these events, you could either have a taxable income, or in some cases a write-off which you can use already, so your taxable income and increase a refund.So these are the five situations are number one cashing out.So cashing out is clearly taxable.Say for example, you bought a Bitcoin over 10,000, sold it for 50,000.You gotta pay capital gains taxes on $40,000 worth of gains.
It’s the most cleanest and I guess, most clearest event.The second one is when you exchange one coin to another, so say you’re going from Ethereum to Bitcoin, or Bitcoin to something else that we call a Crypto to Crypto trade, that can also trigger a taxable event which you had to pay taxes on, then that’s the event like a lot of people are still somewhat confused about because people think, Oh, I never received any cash in hand.So why do I have to pay any taxes? So here’s like a good example of that application of the property tax treatment.So for example, at the time you’re spending that Bitcoin to get a Ethereum that Bitcoin has appreciated, you gotta pay capital gains taxes on that appreciation.So Crypto to Crypto trades are taxable, that’s the second event.Third is when you spend a Cryptocurrency or even an NFT to buy a good or service.It could be for example, you’re going to Starbucks and spending a fraction of a Bitcoin to buy a cup of coffee.That triggers a taxable event.
Because there’s a difference between how much you paid for that fraction of a Bitcoin and the market value at the time you’re spending it to get the cup of coffee.
Matt Zahab
And what if it’s less?
Shehan Chandrasekera
If it is less, that’s considered a capital loss, which you can use to offset your capital gains.And so all the examples that I mentioned like obviously, you can have capital gains and also capital losses as well.
The fourth one is when you earn Cryptocurrency, that income is subject to your regular income taxes.So there’s multiple ways we do in Cryptocurrencies, it could be through you know, rewards, mining income, staking income, or you could work for an employer who pays you in Cryptocurrency, so that triggers a taxable event at the time he received those coins into your wallet.
And the fifth bucket is very Crypto specific, like there’s a two events Airdrops in Hard Forks.So as a result of our Airdrops or Hard Fork you could receive these free coins that you probably even asked for.
But according to the IRS, if you receive these new coins with certain amount of value that triggers a taxable event, which you had to pay taxes on, so remember there’s five situations, if you went through any of those price situations, you could either have a capital gain or a capital loss.And that would also trigger you to file these additional forms that do taxes to be compliant with the IRS guidelines.
Matt Zahab
Crazy man, why aren’t there more clear and concise guidelines for this? Like, it just seems like there’s so many, like even the example you talked about buying a coffee from Starbucks with a fraction of a Bitcoin? Like, who’s to say that Bitcoin, that it’s a different Bitcoin that you purchased? You only mean like, let’s say you bought Bitcoin in four different areas and, or four different time frames rather and, time frame number one, you bought it at 5k, and time frame number four, you bought it at 60k and, you said Oh well, I’m using the Bitcoin that I bought at 60k, that is now worth 22k.
And I’m using that to buy my coffee.So that’s a capital loss you know what I mean.Like, who’s gonna track that?
Shehan Chandrasekera
Yeah, so the calculation of the gains and losses and tracking the basis and tracking exactly which coin that you’re spending, all those things are virtually impossible for any person to do.
Unless you have like, yourself a CoinTracker, I mean, we at CoinTracker within just a matter of a button like in your example, like you can say highest in first out.So when you when you do the highest in first out, you’re essentially disposing of the coins with the highest cost basis first, that results in the least amount of capital gains for example.But if you want to do that type of what’s called specific identification, you had to keep like detail records of each slot you know, when you bought them how much you paid for it, and etc.Again, it’s very hard to do if you have multiple coins spread across multiple wallets and exchanges and purchase at different time points.So you need some type of software.
With the help of software, you can specifically assign those beneficial cost bases to have to trigger the capital gain or loss sales or even like you know, you’re going to Starbucks and you want to spend the most tax advantages coin to buy your copy.
Matt Zahab
Interesting.So the phrase you use, or the term rather is Highest In First Out.
Shehan Chandrasekera
Yeah.So these are called disposal methods.So there’s this bunch, the Irish really is that if you keep detailed records of all your lots and all your coins, you can use specific ID.Specific IDs in simple terms, what it means is you can pick and choose whatever the coin that you want to calculate the gain or loss purposes.
Now, if you don’t keep all the detail records, your cost basis method defaults to what’s called FIFO.First In First Out.So again, if you don’t have records, no matter which coin you spin for taxpayer funds, you’re always spending the oldest coin first, which when most cases if the market has gone up, you’re creating more capital gains because the oldest coin has the lowest cost basis.Now HIFO Highest In First Out is kind of a subset of that specific identification.So you can pick and choose, but we’re optimizing that specific identification by allowing you to pick the highest cost basis coin first, which results in the least amount of capital gains.
So yeah, so you have FIFO, you have HIFO and, then the LIFO is it like a like another method it’s essentially the opposite of FIFO.Instead of selling the oldest coin first you’re selling the latest, most recently purchase coin first.
Again, depending on like when you purchase the coins and the evaluation, sometimes the life could be useful as well.But generally speaking, for 99% of the people like HIFO Highest In First Out service as at least amount of capital gains.
Matt Zahab
So obviously CoinTracker has a multitude of tools that can help you know the average Joe or Josephine to get their taxation ducks in a row.But if you were to not use a program or piece of software like CoinTracker, would you have any non-obvious tips besides just like having a Google Sheet or an Excel Doc with literally like, date, time point purchased? You know price, all the appropriate data needed any non-obvious tips that perhaps the average person wouldn’t be cognizant of?
Shehan Chandrasekera
Yeah.So the good news is that I mean, if you’re just dealing with just one exchange, without transferring coins in or out and, plus assuming that you have you know, I don’t know, maybe 10 15 transactions that you’re doing in any given year, or you could be somebody who is just buying it and just HODLing it for a longer period of time.
In those cases, yes you can use something like Excel or Google Sheet, but you need to know like all these data points and, you need to keep good records of this.So you need to know exactly when you purchased that coin.If you were to sell it when you sold it, when you purchase it, how much you paid for it and also have some receipt or some type of confirmation documents so you can prove that if you were to sell it how much you sold it For.So those are the and then you had to kind of maintain those records like each coin by coin and also by each location as well like okay in Coinbase, I have this queue in my Metamask, I have this queue.So it’s possible for you to do this manually, but I wouldn’t encourage you to do this.Whenever you have multiple wallets and exchanges, which is typically the case among the average Crypto users in the US, they have multiple wallets and exchanges, there’s transfers going in and between them and either you buy coin from Coinbase and, so you’re selling it somewhere else.So it’s really hard to do it on an Excel Sheet on this year, like a super simple Crypto user.
Matt Zahab
Folks we are gonna take a quick break and when we get back we’re gonna talk about some of the non taxable transactions, the stuff we absolutely love to see in the Cryptonews Pod.Got to give a huge shout out to PrimeXBT, we love PrimeXBT they have been incredible friends at the Cryptonews Podcast, we’ve been using them for a hot minute.
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Shen let’s talk about non taxable transactions.There’s five of them.We have HODLing.We have gifting.
We have transferring we have donations, and we have buying Crypto and Fiat.We love all five of those because you don’t get taxed on them.Let’s dive into them.Tell me more about all five of them.
Shehan Chandrasekera
Yeah, so again, at a high level like obviously, this is not an X horsetail list stuff like all the non taxable transaction, but these are some of the common non taxable transactions.So number one is transferring coins or NFT from one wallet or exchange you own to another wallet or exchange account to you.It’s pretty self explanatory.
It’s just you know, transferring things, so don’t have to worry about taxation.But however, you had to keep track of like the cost basis now, because as I mentioned earlier.Another transaction is like gifting.Like you know, receiving a gift is generally not a taxable event.And if you’re sending a gift to somebody, that’s not a taxable event either generally speaking and, you don’t have any reporting obligation if the gift that you’re sending is less than 15,000.
If the gift you’re sending is more than 15,000, you have to file this phone call form zero nine with the IRS kind of disclosing information about the gift.But again, it is an information form that you need to fill out this there’s no taxes involve.So yep, so gift receiving a gift and sending a gift are generally non taxable events.
Matt Zahab
Hold up Shen why 15k? Any reason for that or just, that’s the magic number.
Shehan Chandrasekera
That’s their annual exclusion amount that the IRS sets every year, I’m just running the numbers up, there’s some like you know, hundreds there each year, like they kind of just definitely inflation.So yeah, the TLDR is like you can give $15,000 worth of Crypto anything to anybody.And you don’t have to report that information to the IRS.
But if it’s more than 15,000 per person, then you have to file that form.
Matt Zahab
So if I wanted to give 15k in Bitcoin to you know, every one of my family members, can I do that?
Shehan Chandrasekera
You can so you can do first you can do 14,000 to family member number one 14,000 number two.So that yeah, that applies per person basis.
Matt Zahab
Gotcha.Okay.Understood.Thank you keep buzzin and keep going on there.
Shehan Chandrasekera
So yeah, so the gifts are generally good, have a, you know more favorable treatment out of the tax code.
Another situation where there’s no taxes involved is, when you didn’t donate Crypto to or qualify charity that again doesn’t involve any taxes.
Like say for example, you bought a Bitcoin for 10,000 like you know, a few years ago, let’s say 1000, then a few years ago and, then you are donating it to charity, been its valued at 50,000.So in that case, because you’re donating it directly to a charity, you get to skip the capital gain taxes on that $49,000.And you also get a write-off in your taxes.So it’s a very beneficial thing to do if you’re if you want to help out charities using digital assets.So yeah, so those are some of the examples where like you’re transacting in Crypto but they don’t necessarily result in a taxable event, which you had to file any additional form except for a gift that’s in excess of 15,000.But still, it’s really important for you to track where your cost basis is going to and, going like going from and how much you paid for those each coin because those numbers are important when you later sell those coins at a gain or loss because you need to calculate your gains and losses as we discussed earlier during our five taxable event session.
Matt Zahab
Interesting.So there are a bunch of ways to I don’t wanna say you know, not pay taxes per se, but like there are ways to lessen your tax burden perhaps is the appropriate term.
Shehan Chandrasekera
Yeah.So in their field they call it this, you know tax planning, right? So we’ve mentioned earlier like you know, donations it’s a great way for you to not pay that capital gain taxes on the appreciation and, also get a write- off.
So that’s a great that’s one way.There are other ways you can reduce your taxes.I mean, we briefly spoke about this high format that highest in first out.
So obviously, that’s not going to eliminate your tax bill.But that will significantly reduce your tax bill compared to using something like FIFO, because under HIFO, you’re always selling the coin with the highest cost basis first.So yeah, they’re those things that you can do.And then the other thing that a lot of people are doing, especially given the volatility of Crypto is what’s called taxes harvesting.So whenever you have physicians are in the red feeding the market value of the coin is below how much you’ve paid for it, what you can do is you can sell it, harvest a loss for tax purposes and buy back the same coin, if you really believe in that coin.
And if you were to keep HODLing it, you’re not getting the benefit of that loss.But if you’re to sell it, you can harvest that loss.Or which you can that you can use that harvest loss to offset your Crypto gains, your stock gains and, even other incomes, I could a W-2 and etc.Depending on your situation.
Matt Zahab
And that’s 100% legal? Obviously.
Shehan Chandrasekera
Yeah it is 100% legal.I mean, this is a practice that’s not only limited to Crypto like we can do it in stocks, right? There’s a difference between stocks and Crypto when it comes to this harvesting losses.Now, in the stock world you have to wait at least 30 days before you buy back the same stock.Right? If you don’t wait that 30 day period, your loss will be disallowed, meaning like you’re not getting the benefit of that loss.Now in the Crypto World, Crypto is not subject to that Wash Sale Rule that I just described that stocks are subject to.
So you can technically buy back the same coin without waiting that 30 day period.But again, I wouldn’t do this like super aggressively to create these artificial losses.Because there are other code section of the tax code that disallows these artificial type of transaction that you’re merely doing to create the losses, it’s called substance that will form because you’ve aren’t like you know, buying something and selling something in the very next second and, keep doing it again and again to rack up the losses, those transactions don’t have a substance so therefore, like you could still be disallowed under that group.So the best practice is yes, Crypto is now subject to that 30 day rule, maybe like you can technically buy it on the very next second, but I will just wait like a reasonable period of time.So that way you can have a meaning to that transaction, versus doing a cross section just to kind of create these losses.And you could get into trouble that way.
Matt Zahab
Love that.Well said let’s get into CoinTracker.Give me a very just sort of quick TLDR high level overview of what you and the team are working on at CoinTracker at the moment.
Shehan Chandrasekera
Yeah so CoinTracker, it’s a Crypto tax.
What it does it connects with 1000s of your wallets or exchanges and reads the Blockchain reads the activity on your wallet automatically reconciles your gains and losses and generates the accurate tax returns, you need to file with your DIY software like TurboTax, or the forms that you need to submit to your CPA.That’s essentially what contractor does, as I mentioned earlier it’s really hard and, in most cases, virtually impossible for anybody to kind of track these information going from one wallet to another track the cost basis.And we make that process super easy for you.All you have to do is sign up for a contract account, connect your wallet and exchanges on a read only basis.So we don’t have the ability to control your funds anything like that.And then again, once you connect the wallets and exchanges, we generate the tax reforms applicable to you.
Matt Zahab
So it really just takes care of all the headache in the Crypto taxation part.
Shehan Chandrasekera
Yeah, I mean, yep.So just to kind of give a little bit more background as to we’ve been in the business since 2017.We be several million users.
So yeah, we’re super happy to be in this space.When it comes to Crypto I guess a lot of people don’t think about some of these tools that’s going to alleviate some of these pain in the Crypto space.And I think like you know, we are that tool because tax is like a huge pain point for Crypto users and even non Crypto users.So anything that we can make to help people like you know, do more cross section in the Crypto space and get more comfortable in the Crypto space.
We’d love to do that.And that’s one of our missions.That’s our main mission as well like enable anybody in this in the world to use Crypto with a peace of mind and we believe helping them a taxation is one of the ways we can contribute to that cause.
Matt Zahab
Shen you’re on a roll by the way, this is like alpha city population.You absolutely love this.What we’ll finish off with some alpha but let’s talk about some actual forms.Which tax forms should you really sort of file to report your Crypto taxes accurately, you have the 1040, you have the 8949, the Schedule D and the Schedule 1.
I’m Canadian, so these are extremely foreign to me.I’ve heard all of these many times before, but if you just sort of walk me through all four of them and, which one is appropriate at which given time that’d be great.
Shehan Chandrasekera
Yeah.So the form 1040, so that’s their tax region that everybody files irrespective of your affiliation with Crypto, that’s the main tax region.
So just know that in that main tax return on the front and center of that form, there’s a question about Cryptos is pretty much asking you, I’m just you know, summarizing the question and, it’s pretty much asking like, have you dealt with any Crypto just a simple yes or no question.So make sure you answer that question correctly.So that’s form 1040.Now, if you had capital gains or capital losses, you need to file Form 8949 and Schedule D.Again, if you’re using a tool like CoinTracker, like we generate those forms to you.But if you’re doing it manually, you had to kind of fill this out manually.The other form is Schedule 1 is typically used to report income that you got from let’s say, like sagging income you know, Airdrops and Hard Forks or that type of income goes in Schedule 1.
So the forms that are like 1040, just make sure you answer the question and 949 and Schedule D the second most frequently used forms, because a lot of you know, these as we find like in a lot of Crypto Investors, so they have capital gains and capital losses report on those forms and, then Schedule 1 for those other types of income events.
Matt Zahab
And getting those forms on the consumer side of things very easy.Like, can you do it yourself? Obviously, anything Crypto related, I personally would always recommend going through or with working with an accountant rather, as this is just so complex, but like is this easy to fill out and send on your own if you wanted to?
Shehan Chandrasekera
Honestly, it depends on your case, right? I mean, if you just had just like one transaction monitor transactions, I mean, you might be able to do this on your own.
If it’s anything more than that, I would obviously depending on, you know how much you know by taxes, you could use a tool like CoinTracker and kind of do your own research and kind of help, you could use a kind of knowledge to kind of fill out these forms.Now if you’re like an advanced or more complex to have a user with the say, for example exposure to these liquidity pools, you did some rapid you did some yield farming, you are getting royal discernment NFT is in that case, I would encourage you to use a tool like CoinTracker and, we can connect you with their qualified tax professional inside our platform.
So you can get that benefit of the software and also the benefit of the tax professional who can really look into your entire tax profile and advise you on how to take certain positions on certain transactions when we don’t have any clear guidance.
Matt Zahab
Shen you’ve been on a roll man, any that like truly did this is has been one of the biggest alpha pods we’ve ever had and, we’re 200 in here.Any other bits of alpha that we haven’t covered for again, the average Joe or Josephine, or perhaps even just the absolute Crypto veteran who wants to be better in their tax planning, I believe is the appropriate phrase and word that you use, but not in things that we haven’t already discussed, like using CoinTracker, like tax loss, harvesting, anything else that you recommend doing just to sort of plan your taxes a little better.
Shehan Chandrasekera
I think maybe it’s worth summarizing the some of these tax planning ideas.So we spoke about the HIFO, FIFO, LIFO method.So if you’re using a tool like CoinTracker, we default to the highest format that highest in first out.So that’s going to naturally reduce your taxes.Donations are great, especially if you have appreciated asset that helps you can skip that capital gain taxes and also get your righto.Or another thing that we didn’t discuss earlier is you can use self-directed Crypto IRAs.And inside those IRAs, you can invest Cryptocurrencies.
And the advantage is that you don’t have to pay capital gains taxes today.And obviously, when you take it out in the retirement, depending on whether it’s a Roth or in a regular IRA, we will have some tax consequences.
But the idea here is that instead of paying that tax money to the government today, you get to compound those tax money inside that IRA.And then again with the time period that you have from today to until your retirement, your returns could be much higher because again, you’re not paying taxes on those gains today.So those are some of the ways again, depending on your entire tax.There could be other ways you could save on taxes in general as well using Crypto I highly recommend talking to a qualified advisor and we’re happy to connect you with one if you’re a contractor user.
Matt Zahab
Shen what an episode man wow, you absolutely brought the noise.We always have a segment on the show called the hot take factory.
It doesn’t have to be Crypto or you know, or tech or anything related.
It can be health, wealth, happiness, sports, politics, geo, space, AI, you name it, any Shen hot takes perhaps a couple of things that only you believe in, whereas most other people do not.
Shehan Chandrasekera
Um, this might not be a hot take, but this is I know a question that’s in probably a lot of people’s mind.
I see this on Twitter and other social media as well are a lot of People think that Crypto is completely invisible from the tax regulators because of this unanimous nature.But that’s like, that couldn’t be further from the truth.Because whenever you do a transaction, there’s a permanent record about your transaction on the Blockchain.There have been many cases where regulators have to hide that transaction to real world identities.So please don’t think that Crypto is invisible from the regulators.
And therefore you have this for me to kind of not report anything, it just a matter of time.They use that transaction data to tie to your personal identification information and you don’t want to get into trouble.
So yeah, in simple terms, Cryptocurrency is like the worst asset class to evade taxes because everything that you do is publicly available on the Blockchain.
Matt Zahab
Well said.
It’s not like you’re getting you know, it’s not like you own a laundromat and you’re getting paid in cash.Yes.It’s all there.It’s all available Shen what an episode man like I said crazy off I really appreciate you coming on before you go.Can you please let our listeners know where they can find you? And CoinTracker online and on socials?
Shehan Chandrasekera
Yeah, so the CoinTracker you know, you can just Google www.cointracker.io I highly encourage you set up an account and tested out.Me are I think I’m pretty active on Twitter @TheCryptoCPA so yeah.That’s where I am.
Matt Zahab
Amazing you will most definitely be on for round two my friend that again, incredible episode really appreciate it.
Cannot wait for the next one.And until then, thanks again and wishing you all the best.
Shehan Chandrasekera
Okay thank you, Matt.See you.
Original source: https://crypto247.news/shehan-chandrasekera-head-of-tax-strategy-at-cointracker-on-crypto-taxation/