An early crypto investor has recently admitted to filing tax returns that misrepresented the capital gains he made from selling a substantial amount of Bitcoin (BTC). Frank Richard Ahlgren III, according to the U.S. Department of Justice (DOJ), purchased around 1,366 BTC back in 2015 when the value of Bitcoin was still relatively low, trading for less than $500.
Fast forward two years, Ahlgren sold 640 BTC at a price of $5,807.53 each, totaling $3.7 million. The majority of the Bitcoin he sold was acquired in 2015. He used the proceeds from this sale to buy a house in Park City, Utah. However, when filing his 2017 tax return with the Internal Revenue Service (IRS), Ahlgren falsely inflated the cost basis of his Bitcoin purchases to lower the reported capital gains from the sale.
In the subsequent years of 2018 and 2019, Ahlgren sold over $650,000 worth of Bitcoin but failed to report these sales on his tax returns. Under U.S. tax law, taxpayers are required to report gains or losses from the sale of cryptocurrency assets on their IRS tax returns. The false filings by Ahlgren resulted in the IRS incurring more than $550,000 in tax losses.
Ahlgren is awaiting sentencing, where he could face up to three years in jail, as well as supervised release, restitution, and monetary penalties. It serves as a reminder to all investors to accurately report their cryptocurrency transactions to avoid legal repercussions.
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