While the cryptocurrency boom made a lot of people millions of dollars, many people who joined later in the craze did not experience the same success as the people who had invested before them. Ted Bauman believes that there may be other problems that could affect investors that turned to cryptocurrency. One of the biggest of these being taxes.
Before bitcoin’s price dropped dramatically, it rose by 1,500%. Ted Bauman published multiple financial newsletters for Banyan Bill Publishing and has written about bitcoin and cryptocurrency previously. As a specialist in low-risk investment, he has a lot of information and advice that he wants potential and current investors to know about cryptocurrency.
Many of the people who made a lot of money from the initial cryptocurrency boom reinvested their money back into it. When the prices dropped, it left many people, including several readers of the newsletters written by Ted Bauman, worried about how these gains and losses would be taxed by the IRS. After all, the IRS will always want their share of the capital gains that were earned by investors in bitcoin. The heavy losses caused by the negative news and fatigue over the investment aren’t a concern to the taxing agency.
While there may be some considerable differences in how cryptocurrency and tradition currency work, they are still both considered assets when it comes to tax purposes. Many cryptocurrency investors have admitted that they have never paid taxes on their purchases or gains. In fact, many of them did not realize that they had to see as the cryptocurrency isn’t connected to any government agency. While the currency may be anonymous and use blockchain technology, it’s almost impossible to hide considerable capital gains from the IRS.
In order to collect these taxes, Ted Bauman reports that the IRS created a team to study the currency and get an idea of just how many people weren’t paying taxes on their gains. The results were quite surprising as they found that only a small percentage had reported any capital gains on their investment. It’s likely that those who did not report will face penalties for their actions.