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Blockchain Taxes? IRS Secrets They Don’t Want You To Know



Why do you believe that because the IRS changed its “1031 exchange” definition from “property” to “real property”, that it somehow imposes a new tax on crypto-graphic currency? There is no tax on crypto-graphic currency, assets, coins or tokens.

However, the centralized exchanges have now been forced to help create the illusion that you owe taxes by producing income reports, such as the “1099”. Your accountant will dutifully include these reports in your tax return, and that is when the “income” becomes taxable, but only because you said under penalties of perjury that the income was taxable.

What is being taxed is your gain in the dollar and the presumption is that the 1099 shows you had taxable gains.

Even though the burden of proof is now in the IRS, you are reporting under penalties of perjury. Maybe you figured out how to report a loss because maybe you had a net loss from “cryptos”.

Wouldn’t you rather avoid the issue altogether, get your money when you want it, and then deal with any tax issues on terms that you normally do, so any gains have nothing to do with cryptos?

How about deferring any taxes, even if you do have a taxable gain, into the future for as long as you want?

The exchange is already acting as a trustee by virtue of it holding your private keys. Let me show you what I’ve been doing for 25 years and how we can use this trust association to maintain the correct accounting and avoid any tax situation.

We created a special purpose trust in order to solve and prevent any tax problem for those who are still using the centralized crypto-currency exchanges, such as Coinbase.

There is no reason to incur any tax liability when using these exchanges; however, it appears that most people don’t understand how to set up their accounts and simply do the same thing they are used to doing with banking. The purpose of this trust is to provide a traditional solution to what might be a new tax situation.

Each blockchain based coin, token or asset can operate in a trust relationship because the nature of the blockchain is an association of computing devices networked together and managed by people. Changes to the manner in which the blockchain operates cannot be changed by a single beneficiary and there must be a consensus with network managers for any changes to take place.

The blockchain is already performing the same functions as a trustee because it is a distributed ledger, giving access to the ledger in a real-time basis. This is the perfect organization to function as a trustee; likewise, no law requires anyone using these coins or tokens to do so in his individual capacity.

First, control over the asset is already given up because of the system architecture of the blockchain. Second, ownership is already maintained by virtue of the exchange owning your private keys. The public and private keys operate like trust certificates.

You can do your own research, but we just wanted to make this point. Some of you incorrectly believe that “gains” between cryptos are taxable. Let’s use the example of moving “your” Bitcoin from Coinbase to another centralized exchange such as Kraken. And let’s say you funded your Coinbase account with $1,000 of after-tax currency (USD). Assuming your principal doubled in value for example, you send $2,000 worth of Bitcoin to your Kraken exchange account to buy Litecoin (or even more Bitcoin for that matter).

Now, let’s act as if there is a taxable gain here and we arrive at the end of the tax period with this gain. The owner of the private key is the de facto trustee, being that you are the grantor who funded the account, and it is the trustee in this situation which has realized the gain. If it is in fact taxable, then the trustee must report to the IRS and remit the proper tax payment. Remember, this is before going back into fiat dollars.

This is a very easy test to demonstrate why exchanges between crypto-graphic currencies, tokens or other assets is not taxable. Let’s say you, the grantor in this example, then move your $2,000 worth of Bitcoin back into your dollar account at the bank. There is a presumption of an income tax liability.

If the correct accounting were reported, you would have a tax on your gain of $1,000; likewise, if your $1,000 was reduced by 50% because the dollar price of Bitcoin fell, you would be able to claim a loss and maybe even qualify for a deduction, in dollars.


Because you received a disbursement from the trust, which is taxable. This is nothing new, like I’ve explained before, the tax has always been there since we began taxing profits and gains, there is no new law needed to collect taxes from crypto-currencies. The tax falls on gains earned from buying low in dollars and selling high in dollars. 

Let’s talk details….

The trust relationship we set up here is irrevocable. It is a trust relationship that is not incorporated and does not derive its existence or function from any statute or legislative enactment.

It is simply a business trust organization that is managed for the benefit of one or more beneficiaries and for the purpose of earning profit and gain. By definition, this is a structure that is not merely exempt from taxation, it is immune. 

The trust is formed inside of the operating agreement written for a limited liability company (LLC). The LLC is the beneficiary and its members act as the trustor or creator of the trust when they contribute or exchange their fiat currency for a blockchain based asset.

The trust is introduced into the operating agreement as a clause that defines a specific class of property to be managed by the LLC and the manner in which it will be managed. The operating agreement must be amended to include the specific terms and include the Blockchain Tax Immunity Trust into the agreement.

This has the same force and effect as enacting a law. The trust provision in the LLC becomes the law of the business and creates two layers of protection, one given by the trust relationship and another given by the manner in which a properly written operating agreement provides protection against charging orders (writs of attachment), tax deferment and pass through attributes for property rights.

The trust does not require any tax identification number (EIN, etc.) and does not require any bank account. You continue using your same exchange accounts and with this structure, you open a new bank account for the LLC to act as beneficiary for the trust. You then fund this account to purchase crypto-graphic coins, tokens and other assets, but maintain those assets as a managing member for the beneficiary.

You can even move your crypto-graphic holdings from your personal wallet to the beneficiary’s wallet. Any tax reports, such as a 1099, are then made in the name of the beneficiary with its tax number. Because the beneficiary is a tax deferred structure, neither the IRS nor any state look to it for the payment of a tax. And because the intent of the trust is to make a profit from this activity, the trustee is not subject to any tax either.

Can you imagine the IRS trying to audit the blockchain? It’s already audited, every moment, in real time.

Can you imagine the IRS expecting the blockchain to file a tax return?

It’s not subject to any taxes, at the very least, because it is the trustee for an irrevocable business trust organized for the benefit of beneficiaries for the purpose of earning profits and gains. By definition, it’s not taxable.

The only situation in which a managing member would cause a taxable event, would be if he reached a consensus with the other managing members under the operating agreement, to disburse fiat currency from the beneficiary to himself, in his personal, individual capacity. Of course this is entirely unnecessary and can easily be avoided.

If you already have an LLC that you can or are using with an exchange, BPB will need to see a copy so that we can make the appropriate amendments. If you don’t have an LLC and want to easily avoid a taxing situation with an exchange, BPB can register an LLC for you in the appropriate jurisdiction.

If you’re in California, we prefer to avoid that state if at all possible.

Once we have your new LLC in place, BPB will provide you the documents you need in order to open its bank account so we can then include the property classification and trust clause, and then I will be able to provide you with a completed Blockchain Tax Immunity Trust.

If you’re interested in BulletProof Banking© 
setting up your BLOCKCHAIN TAX IMMUNITY TRUST or our 
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DISCLAIMER: Legal Information is NOT the same as Legal Advice.
Educational/Entertainment information is provided to help users safely cope with their own legal needs. But legal information is not the same as legal advice. The application of law varies with an individual’s specific circumstances. The laws of every state are in constant change, and although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer if you want professional assurance that our educational information, and your interpretation of it, is appropriate to your particular situation. We do not offer legal, tax, or accounting advice and are not licensed to do so.

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3 Key Government Monetary Policies That May Threaten Your Cryptocurrency



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Secret Crypto Underground Methods To Securely Hold And Protect Wealth



Wealth management is an important part of managing a business. For wealth management, different techniques or methods have been adopted. Among those techniques, converting a portion of wealth into bitcoin or crypto coins could be useful as well as beneficial in several ways.

In this piece of writing, those benefits will be discussed. Understanding the benefits of converting business wealth into cryptocurrency will help in the wealth management process immensely. Discussions related to crypto coins is trending these days.

People are getting more curious about them and it is the right time for the business owners to gather better knowledge of it so that certain benefits can be attained for the purpose of business wealth management.

A Secured Method of Keeping or Holding Money

Bitcoin is based on blockchain open source framework, which delivers excellent security to this virtual currency. The most important feature of blockchain is that once a transaction has been registered it cannot be undone or modified. As a result, it is protected from the threats that intend to change transaction information and divert the fund to another account.

Keeping money in the bank and using that for online payments is highly insecure for this reason. With the advent of time, traditional currency is facing both virtual and physical threats.

Handling traditional money through the internet has plenty of risks. We often hear about malware attacks on the bank servers and various virtual wallets. We also hear about security attacks on the web server of a business house or organization. Such security breaches can lead to loss of wealth.

Undoubtedly, such wealth loss is not at all small. If hackers get a trace of your business bank accounts, your business would end up losing significant amount of money.

On the other hand, blockchain based cryptocurrency is secured. It is almost impossible to conduct a financial scam or mischievous activity with bitcoin or other crypto coins.

Top Benefits of Holding Bitcoin

Apart from giving top-notch security to the wealth, investing into bitcoin has several other benefits and those benefits are important to be known for business owners. Holding crypto coins can help a business in different ways.

Here are those benefits:

• Easy to Convert:

The process of converting money into the cryptocurrency is simple and highly convenient. It takes only a few seconds. There is no extra charge to be paid for the transaction process. It is to be reminded that once converted into bitcoin, the transaction cannot be reversed. Hence, think twice or even more, before converting money into crypto coins.

• Easy to Manage:

Managing cryptocurrency is simple. You shall have a digital wallet, which will be secured with a unique code. This code should be kept confidential for the security of your crypto money stock.

Typically, the crypto wallet comes with a lot of wealth management and planning feature. It can produce graphs of your expenses and help you to get transaction data in different file formats. No charges are there to be paid for managing or maintaining these virtual crypto wallets.

• Protected from Scam:

In small to large business houses, several financial scams take place with various mischievous activities in various departments. Such scams cannot be done with bitcoin or cryptocurrency. Even if there is intent for the scam it can be identified easily, and that is why wealth management is a seamless affair when you are using crypto coins.

• No Loss of Wealth due to Inflation:

Global inflation can cause loss of wealth for an organization. However, cryptocurrency is inflation protected. Global economic inflation does not harm the value of crypto coins. As a result, wealth loss does not take place.

Easy to Invest in Trading

Business owners often have interest towards various kinds of trading options, including stock and currency trading. It is easy to invest in forex trading or commodity trading with bitcoin. Many Forex trading platforms support cryptocurrency and they also encourage the investors to earn money in cryptocurrency.

So, trading with business wealth gets easier with crypto coins. They are extremely useful and always effective in terms of commodity trading or other forms of trading.

Bitcoin Payments to Employees

Businesses, holding wealth in crypto money, can easily disburse employee payments or salaries in Bitcoin. This is a secure way of making salary transaction. The records stay intact on the blockchain database.

The transactions can be downloaded at any time. Nevertheless, salary disbursement will be seamless and instant. It would take hardly a few seconds to disburse the salary. Observing the popularity of Bitcoin or other forms of crypto coins, it is not an exaggeration to claim that employees would also like to get their payments on cryptocurrency. It will help them to get secured payments.

Bitcoin for Business Investments

Business wealth has been kept in different forms, not just in physical or virtual money. Many business owners hold wealth through property investment. On the other hand, money is required for buying business assets as well as types of machinery.

Thankfully, cryptocurrency has been accepted quite extensively by various sellers these days. Reputed real estate groups or agencies always accept payments in crypto coins. Nevertheless, many business assets, as well as machineries, can easily be purchased with the help of the Bitcoin. Thus, holding wealth in cryptocurrency is always helpful as well as useful.

Easy to Trade Internationally

In most of the countries, Bitcoin has been legalized. As a result, international trading has become easier with Bitcoin. It is easier to send money overseas, and no hefty charges are required to be paid for such payments.

Dealing with traditional currency in case of international transactions is always daunting. You need to show the reasons for a transaction to the bank. Upon the bank’s approval, you need to undergo a few steps to finally get your money transaction done. It involves some charges that the bank takes a transaction fee. With crypto coins, there is no such hassle involved in international payments.

The bottom line is that cryptocurrency is the “next big thing” in the domain of global economy. A business can stay ahead of its competitors and attain better wealth management with crypto coin investment.

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