A college student from California, who had invested $5 000 in ethers last year is now facing a $400 000 tax bill.
Anonymous student is now seeking advice on Reddit about what to do with massive tax bills he had received from the U.S. Internal Revenue Service (IRS). The taxes proceed from his cryptocurrency trading activity on Coinbase crypto exchange.
He explained, that after “hitting 10x’altcoinsiple alt coins,” he eventually turned the $5 000 investment “all the way up to an $880,000 portfolio in December 2017.” His gains quickly melted down to $ 125 000, as a result of this year’s bear market and several unlucky investments in ICO projects.
The main problem is that he is now facing an estimated 2017 tax liability of $ 400 000. The trader confessed to the cryptocommunity on Reddit, that he neglected to allocate money for taxes because “they really never do teach this stuff” in his college.
In the post, the student admits they neglected to allocate money for taxes because “they really never do teach this stuff.” He claims that he has been doing only crypto-to-crypto trading and did not “ever cash out to fiat and transfer any USD into bank accounts from these tradings.”
Another Reddit user, who said he has “done a number of cryptocurrency returns” already, tried to cheer up the hapless trader somehow by saying that this would “not be a high point in your life, but you will get through it.” Experienced crypto traders advised the student against using “questionable accounting methods” and to immediately seek the assistance of a professional accountant in addressing the problem, while also urging him to possibly work out an installment agreement, or an Offer in Compromise with relevant authorities.
It is worth noting, that according to a poll held on Twitter back in April 2018, more than a half of respondents in the U.S. preferred “catch me if you can” quiz option to more law-obedient ones, when asked about the way they handled their taxes associated with crypto trading and investing.