In planning – implementation is everything. Cryptocurrency for example is evolving in the eyes of the government and the IRS. To protect your gains you need an airtight plan that’s informed by multiple overlapping and integrated considerations – tax, financial, trust, estate, insurance, etc. – in a manner that allows each to work in concert together. With clients mostly involved in more legacy products/investments you probably won’t face so many considerations each year.

Mountain Crypto Advisers is the one-stop-shop for your planning needs and there’s a reason for that. There’s no doubt that other talented and experienced professionals exist outside of MCA, but rarely do we find talented and experienced professionals that are able to effectively communicate and integrate their plan into the larger plan. Clients that engage multiple service providers (e.g., attorney, trustee, CPA, insurance agent, etc.) often end up with isolated plans – a tax plan, an estate plan, a trust plan, an insurance plan – plans that don’t effectively consider and account for the overlap across other planning disciplines. Ensuring your plan works in harmony across all planning arenas is what makes a plan effective and it’s why MCA quarterbacks the planning process across all planning disciplines.

Learn more about why holistic and integrated planning is important and how it may benefit you by watching this film.

We’re highlighting three trusts, but there’s more third-party legal team may consider based on our client’s situation, goals, and objectives. Most clients ask why more than one trust is needed, and it’s a valid question. The reality: each trust optimizes a particular benefit. In an ideal world, you would have one trust that optimizes all benefits, but it doesn’t exist. If it did, the trust would conflict with itself – because certain benefits of a trust preclude it from taking advantage of other planning benefits, hence the need for trusts focused on optimizing specific benefits – privacy, protection, tax, etc. Our trusts are built to hold your assets (e.g., crypto and non-crypto) before and after you sell them. When you sell your crypto, the cash proceeds are put to work within the trusts in a manner focused on income production.  The Revocable Living Trust, the Domestic Asset Protection Trust, and the Charitable Remainder Trust are topics of this conversation, but our conversation may expand into other trust planning realms based on your facts and circumstances. Learn more about how each trust may benefit you by watching this film. You can also learn more about each trust in the films specific to each trust, below.

This is a trust that owns your life insurance policy so upon death, the money is not subject to estate taxes in the event your net worth exceed certain estate tax thresholds.

You CAN add personal income to the trusts beyond proceeds resulting from crypto

You can repurchase crypto from your revocable living trust. The irrevocable trusts will likely be less adaptable to the repurchase of crypto.

You can use margin, which is a type of collateralized borrowing, but institutional custodians won’t let you use crypto as collateral. So, it would only be able to be used against the fiat positions you hold in your trust. We’re working on a solution for collateralizing crypto for purposes of loans. 

Loans are generally always considered a non-taxable event.

Cryptocurrency exchanges are platforms that facilitate the trading of cryptocurrencies for other assets (digital currencies aka crypto-to-crypto and fiat currencies). Cryptocurrency exchanges act as an intermediary between a buyer and a seller and tend to make money through commissions they put on that trade and transaction fees. 

Every exchange charges different fees to trade, exchange and send crypto & fiat currencies. 

There are several ways to buy cryptocurrencies, from OTC (over the counter), to exchanges, even some non-digital wallets now allow you to buy bitcoin (depending on country). 

1. Choose what exchange/broker you want to use to purchase your crypto
2. Setup and verify the account (KYL, AML)
3. Deposit cash or use credit card to fund your purchase
4. Purchase your crypto
5. Select storage method- No matter what crypto you buy DO NOT leave it in your exchange wallet, it is NOT safe!

A taxable event in the United States is when you exchange one crypto for another, when you exchange a crypto for a fiat/stable coin, mining cryptocurrencies, or taking profits off your holdings. That being said you also have to state crypto losses. 

Crypto miners will generally face tax consequences (1) when they are rewarded with cryptocurrency for performing mining activities, and (2) when they sell or exchange the reward tokens. 

You owe tax on the entire fair market value of the crypto on the day you received it, at your regular income tax rate.

And if you hold the same cryptocurrency you mined or earned from these activities its value increases, and you either spend it or sell later at a profit, you would also owe capital gains taxes on the profits, based on how long you’ve held it.

Loans are generally always considered a non-taxable event, the issue is will Liquid Loans the coin/project be classified as that by the IRS? We don’t know yet. 

Airdrops are taxable at their value upon receipt. One of the reasons why they made it $0 launch is to make it untaxable. That said, the IRS could poke holes in that but under the current rules that’s how it works.