Digital Assets

by Anni Irish

featuring Asher Rubinstein, Partner with Gallet Dreyer & Dreyer, LLP.

What’s with all the hype around NFTs? A beginner’s guide on everything you need to know.

If you’re an investor, chances are you’ve been following the development of Non-Fungible Tokens — NFTs over the last year.

The artist Michael Joseph Winkelmann (aka Beeple) made headlines in 2021 when his NFT sold at Sotheby’s for a jaw-dropping $69 million dollars. Then, CryptoPunks, an NFT collective led by Canadian software developers Matt Hall and John Watkinson, sold the rare ape NFT for $10 million in December.

This new asset class has swept the art world (and, let’s be honest, the Twittersphere) but it’s still something that many people aren’t exactly sure how to define, and even if we can muster a reasonable definition, we have no idea how to go about investing, or whether or not that’s even something we’d want to do. Because let’s face it, sometimes the hottest new trend is something that’s here to stay — and other times it’s a flash in the pan that’s best avoided. Here’s a breakdown on what’s really going on with NFTs.

Read the Full Article on GDBLaw.com

By Asher Rubinstein and Adam J. Berkey

In early March, the Internal Revenue Service (IRS) announced “Operation Hidden Treasure,” a new fraud enforcement initiative focused on detecting unreported crypto-related income.

The Operation, announced at a Federal Bar Association virtual tax conference, is a joint effort between the IRS Criminal Investigation (CI) Division and the newly created IRS Office of Civil Fraud Enforcement.

At the Bar Association conference, the IRS revealed that a dedicated team of agents has been trained to identify the digital “signatures” of crypto-related tax evasion — e.g. “structuring” a higher-value transaction as several sub-$10,000 transactions to avoid reporting obligations, and using anonymized ownership vehicles (a/k/a “shell” corporations) — and in methods of attributing seemingly unrelated transactions (whether effectuated on-chain or even “off-chain”) to a common U.S. taxpayer.

Failing to report crypto-source income completely and accurately may result in criminal tax charges and jail time and/or civil penalties of up to seventy-five percent (75%) of the understated tax liability. If digital assets are held in offshore entities, additional charges may apply.

We have been advising on tax compliance for digital assets for many years. Please see our articles here. For questions or concerns about crypto-related tax compliance, please contact our tax and asset protection attorneys at Gallet Dreyer & Berkey, LLP. We remain at the forefront of tax-planning and wealth-preservation strategies incorporating digital assets.

A Beginner’s Guide To NFTs: What They Are, How To Invest, And More

IRS Continues to Target Crypto Assets: Are You Compliant?