Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

I purchased some crypto currency in late 2016 for just a few…

Customer Question
I purchased some crypto currency...
I purchased some crypto currency in late 2016 for just a few hundred dollars and also in early 2017. Since then the dollar value of my crypto currency has grown a lot. I also made some crypto to crypto trades.Can I start an IRA LLC and retroactively contribute my initial crypto currency investment so that I can defer taxes on my crypto to crypto trades afterwards?Thanks.
Submitted: 4 months ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 7 minutes by:
1/18/2018
Tax Professional: Carter McBride, Certified Public Accountant (CPA) replied 4 months ago
Carter McBride
Carter McBride, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,135
Experience: Adjunct Professor
Verified

Hey! I'm Carter, I'm a CPA and can help you with this.

Unfortunately, the only way to put a cryptocurency into an IRA, LLC is to first sell it, put the money into the IRA, LLC and then buy the cryptocurrency again. So, you would need to recognize the gains you had.

Huff Post ran a great article on what to do to set up the IRA, LLC and how to contribute to it. You can find that here:

https://www.huffingtonpost.com/entry/bitcoin-ira-reviews-how-to-put-bitcoins-in-your-retirement_us_599dcd01e4b02289f76191ee

Hope that helps. If you need anything else, just let me know. If not, please leave a review. Thanks!

Ask Your Own Tax Question
Customer reply replied 4 months ago
I don't see how that could be valid, considering I know an LLC IRA can own property.
Customer reply replied 4 months ago
You are saying the currency has to go to the LLC first and the LLC has to make the purchase?
Tax Professional: Carter McBride, Certified Public Accountant (CPA) replied 4 months ago

Yes. the LLC needs to make the purchase. If it wasn't like that, anyone who had a large gain on a capital asset would just put it into an IRA LLC and avoid tax on the gain.

Ask Your Own Tax Question
Customer reply replied 4 months ago
But I can transfer the crypto currency to a regular LLC and avoid taxes, right? Can I contribute it to a foreign LLC?
Tax Professional: Carter McBride, Certified Public Accountant (CPA) replied 4 months ago

Correct, but it would not allow you to avoid taxes. If you transfer it to a regular LLC, then whenever you sell it, it will still be taxed at the gain that you currently have. For example, if you buy it for $100 and then transfer it to the LLC, the LLC's basis is $100. So you cannot avoid any tax that way. Same goes for the foreign LLC.

Ask Your Own Tax Question
Customer reply replied 4 months ago
Ok, so I could transfer it to a foreign LLC, for example, and the tax basis would also transfer to the foreign LLC. So I would owe taxes on what I already owe but the LLC would face the taxes on future gains?
Tax Professional: Carter McBride, Certified Public Accountant (CPA) replied 4 months ago
Single Member LLCs are can either be a sole proprietorship, S Corp or C Corp. All but the C corp get taxed on your personal tax return. So, you transfer it to an LLC, foreign or domestic, as soon as the LLC sells the currency the gain will fall to your personal return and you will pay the tax.
Don't turn an LLC holding just securities into a C Corp or it'll lead to a higher tax rate on the securities than if you just let it flow through to your personal return.
Ask Your Own Tax Question
Customer reply replied 4 months ago
But if the LLC is foreign in a country where they don't tax crypto to crypto trades (or tax crypto at all) I could avoid taxes altogether instead of using a domestic LLC where all crypto to crypto trades create a taxable event?
Tax Professional: Carter McBride, Certified Public Accountant (CPA) replied 4 months ago
Americans are taxed on worldwide income. So, even if it's in a foreign country, and if you're an American, then you will pay tax on it one way or another in America.
Ask Your Own Tax Question
Customer reply replied 4 months ago
What if I want to contribute it to a foreign corporation with cryptocurrency friendly taxes? If that c-corp complied with the laws of that country and converted crypto into real estate. If it's still under protection of the c-corp then there would be no pass-through income to me unless I took a distribution, correct?
Tax Professional: Carter McBride, Certified Public Accountant (CPA) replied 4 months ago
You wouldn't be able to get the money out of the corporation. The second you take it out and repatriate it, you will be hit with a repatriation of foreign dividends tax. To go along with that, there are several complicated filings you need to do personally like Form 5471, where failure to file is $10,000 per year, and Form 926 that can carry penalties as high as $100,000.
Ask Your Own Tax Question
Tax Professional: Carter McBride, Certified Public Accountant (CPA) replied 4 months ago
There is no way to get the gains you currently have tax free.
Ask Your Own Tax Question
Customer reply replied 4 months ago
I'm not trying to get the gains I currently have tax free. I'm trying to get future gains tax free.
Tax Professional: Carter McBride, Certified Public Accountant (CPA) replied 4 months ago
Then sell off what you have. Pay tax on those gains. Setup the IRA, LLC. Contribute what you sold the currency for to the IRA, LLC and direct the IRA, LLC to purchase the cryptocurrency. You can review the earlier article I sent in how to do that.
Ask Your Own Tax Question
Tax Professional: Carter McBride, Certified Public Accountant (CPA) replied 4 months ago
If yoi need anything dlse, let me know. If not, please leave a rating.
Ask Your Own Tax Question
Customer reply replied 4 months ago
I don't think that helps because doesn't the IRA LLC have a $5500 contribution limits?
Tax Professional: Carter McBride, Certified Public Accountant (CPA) replied 4 months ago
they do.
Ask Your Own Tax Question
Was this answer helpful?
Ask Carter McBride Your Own Question
Carter McBride
Carter McBride
Carter McBride, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,135
1,135 Satisfied Customers
Experience: Adjunct Professor

Carter McBride is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,338 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,495 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

59 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

15,272 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

< Previous | Next >

Related Tax Questions
My old law law firm, a pass through PLLC, loosely "received"
My old law law firm, a pass through PLLC, loosely "received" a CP171 Notice for tax year 2013 (calendar year) dated April 16, 2018. Return was filed on time on time in September or October 2017, which… read more
Dr. Fiona Chen
Dr. Fiona Chen
President
Ph.D.
1,027 satisfied customers
I need to file a tax form. Its a new LLC with no income, no
I need to file a tax form. Its a new LLC with no income, no business was generated. Is someone avaiable to help me with this now?… read more
Shan-Nel Simmons
Shan-Nel Simmons
Tax Professional/Owner
Master\u0027s Degree
43 satisfied customers
I filed a personal tax return because I paid myself out of
I filed a personal tax return because I paid myself out of my small business LLC. I then tried to file a small business LLC sole proprietor tax return for my business and it was rejected. How do I cha… read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
Wanted to know about foreign tax. I filed tax return in
I filed tax return in India do I need to show India income in fbar form only or do I need to pay tax of foreign income … read more
Dr Arthur Rubin
Dr Arthur Rubin
Doctoral Degree
24 satisfied customers
I am filing a final 1120S return. The only asset is an auto
I am filing a final 1120S return. The only asset is an auto with a depreciated basis equal to the fair market value, and this auto is being transferred to the shareholder who made the loan. A sharehol… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Foreign funds related - if the foreign asset is more than
Second opinion] foreign funds related - if the foreign asset is more than 10K in foregin bank account, and 100% of that fund was actually transferred from US bank. which means all the US tax on that f… read more
Mike-USACPA
Mike-USACPA
9 satisfied customers
Foreign funds related - if the foreign asset is more than
foreign funds related - if the foreign asset is more than 10K in foregin bank account, and 100% of that fund was actually transferred from US bank. which means all the US tax on that fund was paid to … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,272 satisfied customers
Do i pay income tax,on dividends on stocks,if they are
do i pay income tax,on dividends on stocks,if they are rolled over into more stocks. Or when i withdrawl, from my stocks… read more
abci168
abci168
Principal
27 satisfied customers
In an LLC with a Foreign partner (22,000 income) must
In an LLC with a Foreign partner (22,000 income) must withholding be sent (over 8000) as the actual pass through tax bill is much,much lower! … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,272 satisfied customers
Are distribution from 404(k) Pass Through ESOP taxable on
are distribution from 404(k) Pass Through ESOP taxable on state level, are we required to withhold state tax? … read more
Rakhi Vasavada
Rakhi Vasavada
Financial / Legal Advisor
Bachelor\u0027s Degree
1,812 satisfied customers
TRUST RETURN FORM 1041. THE ONLY ASSET (THE DECEDENT'S HOME)
I AM FILING TRUST RETURN FORM 1041. THE ONLY ASSET (THE DECEDENT'S HOME) WAS USED AS A RENTAL PROPERTY FOR 9 YEARS AND THERE IS CAPITAL GAIN. … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
OH State income tax - Schedule A - personal tax return line
OH State income tax - Schedule A - personal tax return line 31. 1. What is the difference between "survivorship benefits" and "pension continuation benefits"? * New client for me. * OH resident * Spou… read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,119 satisfied customers
My mother in law passed away in 2016 and a final tax return
My mother in law passed away in 2016 and a final tax return was filed for that year. She received a 1099-int form issued with her ss# in 2017 for prepaid funeral expenses that the funeral director did… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,272 satisfied customers
I've got a couple who want to file on their personal return
I've got a couple who want to file on their personal return next year rather than continuing filing in their LLC as a partnership. On the Federal form, 8832 Entity Classification Election, Part 1, Que… read more
abci168
abci168
Principal
27 satisfied customers
With the new tax bill what is the impact on pass through
With the new tax bill what is the impact on pass through income for LLC's 2018 income? … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
If I move my rental properties from my personal return to a
If I move my rental properties from my personal return to a 1065 partnership, how is the basis calculated?… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,213 satisfied customers
A CPA prepared a filed a personal return last april. There
A CPA prepared a filed a personal return last april. There was a NYS and NYC refund due. The check never was received. The CPA is not helping procure a replacement check, whom should the person call o… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Is income from an LLC passed through to personal tax return
Is income from an LLC passed through to personal tax return considered earned income, enabling me to contribute to a traditional IRA?… read more
abci168
abci168
Principal
27 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x