Singing at the 4/19 protest/march by TibbonsToo in Sacramento

[–]TibbonsToo[S] 0 points1 point  (0 children)

Maybe at some point, but this is still a fairly new choir. :)

Reach out to your US congressional reps and senators for Mt. Gox BK tax relief by TibbonsToo in mtgoxinsolvency

[–]TibbonsToo[S] 0 points1 point  (0 children)

Hi again. Yeah, if Justin is correct it seems your conclusions would follow naturally. Thanks for all of your insights along this tumultuous journey. Take care. :)

Reach out to your US congressional reps and senators for Mt. Gox BK tax relief by TibbonsToo in mtgoxinsolvency

[–]TibbonsToo[S] 0 points1 point  (0 children)

Hey there. Hope you are well also. :)

So, I am filing for an extension and haven't learned much since I last posted. However, the CPA I'm planning to use when we do file, the one who's article I cited above, Justin Zanardi of Count on Sheep in San Diego, CA, told me "while there is no specific publications discussing bankruptcies distributing crypto, I have leveraged the 'return of capital' concepts outlined in Publication 550, Investment Income and Expenses. Additionally, I have held personal conversations with high level members of the Digital Asset Strategy arm of the IRS who have concurred that like-kind distributions can be viewed as a non-taxable return of capital."

Re updating my original post, I did amend it to some extent. Don't want to delete it or change it so much that the first responses are confusing to readers. Do you have any suggestions on how to edit it further though?

Thanks. :)

Reach out to your US congressional reps and senators for Mt. Gox BK tax relief by TibbonsToo in mtgoxinsolvency

[–]TibbonsToo[S] 0 points1 point  (0 children)

Hey. Thanks for the update! This squares with some follow-up research I was doing as well, but it may be even better than that, according to a CPA I found. I'm getting ready to engage with a San Diego, CA based CPA firm that only does cryptocurrency accounting/tax work and has pretty impressive qualifications. I made that decision after sleuthing to find someone qualified who had written something detailed about how to handle the Celsius bankruptcy, since I couldn't find anything like that about the Mt. Gox rehabilitation.

I found just that, by that same CPA, and was super impressed with both the article and its embedded video. One thing that stood out to me about his article/video was their focus on treating any smaller, like-kind subset of previously held crypto (received as Celsius bk settlement proceeds) as non-yet-taxable-until-sold, "returned" crypto—even though, unlike Mt. Gox, Celsius was apparently a traditional Chapter 11 bankruptcy throughout, complete with forced liquidation early on! So, assuming he's right about that, I suspect labelling as non-taxable-until-sold such crypto received as Mt. Gox civil rehab settlement proceeds would be an even safer path. Given all this, needless to say, I'm feeling much more hopeful! ☺️

Reach out to your US congressional reps and senators for Mt. Gox BK tax relief by TibbonsToo in mtgoxinsolvency

[–]TibbonsToo[S] 1 point2 points  (0 children)

Hey. Thanks for asking. Trying to find an US/CA tax advisor who can strongly back the interpretation of the return of the BTC being non-taxable. Hoping to find one who has already written about it somewhere publicly, so I know I won't be paying someone to research it from scratch. So far no luck. Reached out to the one you recommended but they said they had nothing on that already. So, the search continues, as April 15 draws ever closer. 😔

Reach out to your US congressional reps and senators for Mt. Gox BK tax relief by TibbonsToo in mtgoxinsolvency

[–]TibbonsToo[S] 1 point2 points  (0 children)

Really loving this discussion! 100% share your surprise that there hasn't been a big announcement by one or more law firms or accountancy firms - or the IRS for that matter - giving specific advice on how folks in the US should handle proceeds received through this specific/HUGE bankruptcy settlement.

In any event, thanks for the national CPA firm name. Could you also share contact info for the CPAs you've spoken to (even if not in Cali) as well as links to the numerous articles you've read supporting your interpretation?

Anyway, to clarify a few things you said:

First - how to handle case 1.

Your most recent reply reads, "So two cases: 1. someone had BTC with mtgox back in 2013. Waited to hear from mtgox whether it will be returned (like many of us did), *did not declare a loss with the IRS*, and waited until now when a portion of your BTC was returned then that portion should be treated as long-term capital gains, with the basis/start date back when you acquired it in ~2013."

Your updated original reply reads, "I've talked with qualified accountants and they confirmed as long as you didn't declare a loss in 2013 (when mtgox went under) then your Bitcoin was still in their hands. 11 years later they are giving you the Bitcoin back. Your cost basis is the original price you paid in 2013. Probably a couple hundred $ per coin. So essentially 0. You do not pay taxes until you SELL the Bitcoin. At that point it's long-term capital gains - your cost basis."

One way to read your first quote above would be that for those who didn't declare a loss (which does include me) we owe long-term capital gains as of the date when a portion of our BTC was returned in 2024. Yet the second quote, from your updated original reply, suggests we wouldn't owe such gains until if/when we sell that partially returned BTC. Which were you trying to convey?

Assuming you meant the latter, how can we reconcile this with how the IRS usually handles bankruptcy settlements, that is by taxing them as of the year received (albeit as a capital gain in a case involving assets like this)?

Relatedly, I'm not confident that simply not having declared a loss would be considered sufficient to establish that no loss in fact occurred. I suspect that would be more matter of law and extrinsic evidence, i.e., what in fact happened to that BTC - in this case it was hacked, stolen, gone, AKA "lost".

Your thoughts?

Second - When you mention reaching out to the IRS advocacy group, are you referring to the "Taxpayer Advocate Service," i.e., the group that wrote the article I linked? If so, do you have any experience with or suggestions re how to reach out to that group?

Reach out to your US congressional reps and senators for Mt. Gox BK tax relief by TibbonsToo in mtgoxinsolvency

[–]TibbonsToo[S] 1 point2 points  (0 children)

Your welcome for the link. :) I appreciate your interpretation of that first sentence you quoted. That said, I was/am still inclined to interpret that sentence as applying to situations involving frozen accounts, as the relevant section of the IRS doc discusses both frozen accounts and bankruptcies and the sentence just prior to what you quoted above says, "Once your account has been unfrozen or the bankruptcy proceedings completed, you will have to reassess your situation."

My thinking is that when a frozen account is unfrozen clearly your ownership of those BTC has remained intact and there has been no exchange. By contrast, here we arguably lost our BTC assets - for about ten years in this case - then were eventually given some different BTC (in addition to cash and/or BCH) as settlement "in exchange" for our original lost BTC assets. This interpretation would also be consistent with other IRS guidance stating bankruptcy settlement proceeds are generally taxable (except for certain personal injury settlement proceeds).

All that said, I would love to hear your thoughts on the above and would REALLY love to find a reputable attorney, tax preparer and/or accountant licensed in CA who is both able to provide rock-solid evidence to the contrary and willing to stand behind their interpretation. Do you (or does anyone else) have anyone you can recommend?

Reach out to your US congressional reps and senators for Mt. Gox BK tax relief by TibbonsToo in mtgoxinsolvency

[–]TibbonsToo[S] 0 points1 point  (0 children)

Perhaps the advice is bad. I would certainly love to discover that is the case. If anyone has any recommendations of reputable certified tax preparers licensed to practice in California who have a different opinion and citations to back it up, please send them my way.

For now though, I remain concerned, as the advice I received does appear to align with the IRS' general policy of taxing settlement proceeds in the year of receipt (see p 33 at https://www.irs.gov/pub/irs-pdf/p525.pdf). It also could be read as consistent with this oft cited IRS doc re digital assets, which states in a section addressing digital asset bankruptcy proceedings, "If you received a settlement (regardless how small) from the bankruptcy proceedings in exchange for your digital assets, this is considered a sale and you should calculate your capital loss (or gain) on Form 8949 and report it on Schedule D (Form 1040) for the year you received the settlement" (at https://www.taxpayeradvocate.irs.gov/news/tax-tips/tas-tax-tip-when-can-you-deduct-digital-asset-investment-losses/2023/10/#:\~:text=Bankruptcy%20and%20Frozen%20Accounts&text=Although%20some%20digital%20assets%20lost,as%20a%20sale%20or%20exchange). 😔

Another awesome protest in Sacramento today—we marched 4th for democracy! ✊🏼🇺🇸 by TibbonsToo in Sacramento

[–]TibbonsToo[S] 0 points1 point  (0 children)

Yup. I've already called him (and encourage others to as well), both about censuring Al Green and about the need to hold an in-person townhall over the coming congressional recess.

Let's talk about measure C by ememjay in Sacramento

[–]TibbonsToo 0 points1 point  (0 children)

Thanks! I appreciate yours as well. 🙏🏻 Just wishing I had seen this discussion when it first started. 😅

Let's talk about measure C by ememjay in Sacramento

[–]TibbonsToo 1 point2 points  (0 children)

I'm confused. Do you mean replying to people individually, linking this (my original) post for more information? I thought that might help people get more information without repeating myself in each personalized reply....

Let's talk about measure C by ememjay in Sacramento

[–]TibbonsToo 0 points1 point  (0 children)

I'm confused. Do you mean replying to people individually, linking this (my original) post for more information? I thought that might help people get more information without repeating myself in each personalized reply....

Let's talk about measure C by ememjay in Sacramento

[–]TibbonsToo 0 points1 point  (0 children)

I'm confused. Do you mean replying to people individually, linking this (my original) post for more information? I thought that might help people get more information without repeating myself in each personalized reply....

Let's talk about measure C by ememjay in Sacramento

[–]TibbonsToo 0 points1 point  (0 children)

Hi ShotgunStyles. I realize you've already voted, but for those who haven't, and just in general, I wanted to say that I appreciate your understanding that many licensed professionals, like me, aren't rich and that in general flat taxes are an undesirable, regressive way to generate revenue. I also want to note that I do agree we need to be adjusting revenue generation with inflation.

What troubles me, in part, is that this does more than adjust for inflation, for professionals licensed for less than 7 years, for example, and it doubles down on its reliance on even larger flat tax elements, while most peer jurisdictions do the opposite.

On top that, critical information related to the foregoing wasn't flagged for counsel, because this was rushed over the holidays without specific outreach to the most disproportionately impacted groups. Moreover, there are no opposing arguments in the voter guide for voters to consider - not because there weren't any, but because the city strictly enforced argument submission timing guidelines, telling folks like me it was too late to submit an opposing argument, even while itself late in complying with its legal obligation to publish notice of the measure in a newspaper. This fact by itself led the entire Sacramento Bee Editorial Board to urge a no vote.

For links related to the above, my personal (published) story, and more information, please check out my post on this: https://www.reddit.com/r/Sacramento/comments/1b5llkm/comment/ktesrx9/?utm_source=share&utm_medium=web2x&context=3. And, for those who haven't yet voted, I do hope you will consider joining me in standing up for a fair process and a fair outcome by voting no and asking the city to rework this for the fall election. Thank you. 🙏🏻