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did   you   know   that   some   Bitcoin   miners  

 did you know that some Bitcoin miners
 

 did you know that some Bitcoin miners
pay   virtually   zero   taxes   despite  

 pay virtually zero taxes despite
 

 pay virtually zero taxes despite
generating   six   or   even   seven   figures   in  

 generating six or even seven figures in
 

 generating six or even seven figures in
Bitcoin   just   like   the   most   successful  

 Bitcoin just like the most successful
 

 Bitcoin just like the most successful
builders   of   wealth   in   the   world   it's   not  

 builders of wealth in the world it's not
 

 builders of wealth in the world it's not
because   they're   breaking   the   law   It's  

 because they're breaking the law It's
 

 because they're breaking the law It's
because   they   understand   something   that  

 because they understand something that
 

 because they understand something that
most   miners   don't   You   see   Bitcoin   mining  

 most miners don't You see Bitcoin mining
 

 most miners don't You see Bitcoin mining
isn't   just   a   way   to   earn   crypto   It's   one  

 isn't just a way to earn crypto It's one
 

 isn't just a way to earn crypto It's one
of   the   most   tax   advantaged   businesses  

 of the most tax advantaged businesses
 

 of the most tax advantaged businesses
that   you   can   run   today   I   recently   worked  

 that you can run today I recently worked
 

 that you can run today I recently worked
with   a   client   named   Dean   who   was   about  

 with a client named Dean who was about
 

 with a client named Dean who was about
to   pay   taxes   on   over   $400,000   of   income  

 to pay taxes on over $400,000 of income
 

 to pay taxes on over $400,000 of income
which   was   350,000   more   than   he   needed   to  

 which was 350,000 more than he needed to
 

 which was 350,000 more than he needed to
on   his   mining   operation   That   is   until   we  

 on his mining operation That is until we
 

 on his mining operation That is until we
restructured   his   approach   By   the   time   we  

 restructured his approach By the time we
 

 restructured his approach By the time we
finished   his   taxable   income   dropped   to  

 finished his taxable income dropped to
 

 finished his taxable income dropped to
under

 under
 

 under
$50,000   completely   legally   And   in   this  

 $50,000 completely legally And in this
 

 $50,000 completely legally And in this
video   I'm   going   to   show   you   exactly   how  

 video I'm going to show you exactly how
 

 video I'm going to show you exactly how
Bitcoin   mining   can   be   a   tax   gold   mine  

 Bitcoin mining can be a tax gold mine
 

 Bitcoin mining can be a tax gold mine
when   structured   properly   as   a   business  

 when structured properly as a business
 

 when structured properly as a business
Whether   you're   mining   from   your  

 Whether you're mining from your
 

 Whether you're mining from your
apartment   with   a   single   rig   or   running   a  

 apartment with a single rig or running a
 

 apartment with a single rig or running a
warehouse   full   of   AS6   these   strategies  

 warehouse full of AS6 these strategies
 

 warehouse full of AS6 these strategies
could   save   you   thousands   or   even  

 could save you thousands or even
 

 could save you thousands or even
hundreds   of   thousands   of   dollars   Let's  

 hundreds of thousands of dollars Let's
 

 hundreds of thousands of dollars Let's
dive   into   the   world   of   Bitcoin   mining  

 dive into the world of Bitcoin mining
 

 dive into the world of Bitcoin mining
taxes   where   understanding   the   rules  

 taxes where understanding the rules
 

 taxes where understanding the rules
doesn't   just   keep   you   compliant   it   can  

 doesn't just keep you compliant it can
 

 doesn't just keep you compliant it can
dramatically   boost   your   bottom   line  

 dramatically boost your bottom line
 

 dramatically boost your bottom line
Quick   but   important   disclaimer   I   am   not  

 Quick but important disclaimer I am not
 

 Quick but important disclaimer I am not
a   tax   professional   This   video   is   for  

 a tax professional This video is for
 

 a tax professional This video is for
educational   purposes   only   Always   consult  

 educational purposes only Always consult
 

 educational purposes only Always consult
with   a   qualified   tax   adviser   before  

 with a qualified tax adviser before
 

 with a qualified tax adviser before
implementing   any   tax   strategies   Your  

 implementing any tax strategies Your
 

 implementing any tax strategies Your
situation   may   differ   Now   let's   dive   into  

 situation may differ Now let's dive into
 

 situation may differ Now let's dive into
how   mining   taxes   actually   work   Let's  

 how mining taxes actually work Let's
 

 how mining taxes actually work Let's
start   with   the   basics   of   how   mining   is  

 start with the basics of how mining is
 

 start with the basics of how mining is
taxed   because   this   framework   is   the  

 taxed because this framework is the
 

 taxed because this framework is the
foundation   for   all   advantages   that   I'll  

 foundation for all advantages that I'll
 

 foundation for all advantages that I'll
show   you   later   When   you   mine   Bitcoin   the  

 show you later When you mine Bitcoin the
 

 show you later When you mine Bitcoin the
IRS   views   this   activity   in   one   of   two  

 IRS views this activity in one of two
 

 IRS views this activity in one of two
ways   Either   as   a   hobby   or   as   a   business  

 ways Either as a hobby or as a business
 

 ways Either as a hobby or as a business
This   distinction   is   absolutely   crucial  

 This distinction is absolutely crucial
 

 This distinction is absolutely crucial
for   your   tax   situation   If   your   mining   is  

 for your tax situation If your mining is
 

 for your tax situation If your mining is
classified   as   a   hobby   you'll   still   owe  

 classified as a hobby you'll still owe
 

 classified as a hobby you'll still owe
taxes   on   every   coin   that   you   mine   at   its  

 taxes on every coin that you mine at its
 

 taxes on every coin that you mine at its
fair   market   value   when   received   But  

 fair market value when received But
 

 fair market value when received But
here's   the   problem   Since   the   2018   tax  

 here's the problem Since the 2018 tax
 

 here's the problem Since the 2018 tax
law   changes   hobby   expenses   are  

 law changes hobby expenses are
 

 law changes hobby expenses are
essentially   non-deductible   for   most  

 essentially non-deductible for most
 

 essentially non-deductible for most
people   However   when   your   mining  

 people However when your mining
 

 people However when your mining
qualifies   as   a   business   everything  

 qualifies as a business everything
 

 qualifies as a business everything
changes   You   still   report   the   fair   market  

 changes You still report the fair market
 

 changes You still report the fair market
value   of   mined   coins   as   income   but   now  

 value of mined coins as income but now
 

 value of mined coins as income but now
you   can   deduct   all   of   your   legitimate  

 you can deduct all of your legitimate
 

 you can deduct all of your legitimate
business   expenses   electricity   equipment  

 business expenses electricity equipment
 

 business expenses electricity equipment
repairs   space   rental   internet   cooling  

 repairs space rental internet cooling
 

 repairs space rental internet cooling
costs   and   more   The   IRS   looks   at   several  

 costs and more The IRS looks at several
 

 costs and more The IRS looks at several
factors   to   determine   if   you're   a  

 factors to determine if you're a
 

 factors to determine if you're a
business   Do   you   maintain   complete  

 business Do you maintain complete
 

 business Do you maintain complete
records   are   you   mining   with   the  

 records are you mining with the
 

 records are you mining with the
intention   of   making   a   profit   do   you   put  

 intention of making a profit do you put
 

 intention of making a profit do you put
significant   time   and   effort   into   it   have  

 significant time and effort into it have
 

 significant time and effort into it have
you   made   changes   to   improve  

 you made changes to improve
 

 you made changes to improve
profitability   most   dedicated   miners  

 profitability most dedicated miners
 

 profitability most dedicated miners
easily   qualify   as   businesses   once   they  

 easily qualify as businesses once they
 

 easily qualify as businesses once they
understand   these   requirements   and   that's  

 understand these requirements and that's
 

 understand these requirements and that's
when   the   real   tax   advantages   begin   to  

 when the real tax advantages begin to
 

 when the real tax advantages begin to
emerge   Here's   where   mining   as   a   business  

 emerge Here's where mining as a business
 

 emerge Here's where mining as a business
really   shines   Let   me   walk   you   through  

 really shines Let me walk you through
 

 really shines Let me walk you through
the   key   tax   advantages   that   Bitcoin  

 the key tax advantages that Bitcoin
 

 the key tax advantages that Bitcoin
miners   can   leverage   The   first   major  

 miners can leverage The first major
 

 miners can leverage The first major
advantage   is   business   expense   deductions  

 advantage is business expense deductions
 

 advantage is business expense deductions
Nearly   everything   that   you   spend   on  

 Nearly everything that you spend on
 

 Nearly everything that you spend on
mining   becomes   deductible   substantially  

 mining becomes deductible substantially
 

 mining becomes deductible substantially
reducing   your   taxable   income   Let   me   show  

 reducing your taxable income Let me show
 

 reducing your taxable income Let me show
you   how   powerful   this   is   with   a   real  

 you how powerful this is with a real
 

 you how powerful this is with a real
example   One   of   my   clients   mines   Bitcoin  

 example One of my clients mines Bitcoin
 

 example One of my clients mines Bitcoin
as   a   business   and   generated   about   $1.2  

 as a business and generated about $1.2
 

 as a business and generated about $1.2
million   worth   of   Bitcoin   last   year  

 million worth of Bitcoin last year
 

 million worth of Bitcoin last year
without   any   deductions   That's   $1.2  

 without any deductions That's $1.2
 

 without any deductions That's $1.2
million   of   taxable   income   But   as   a  

 million of taxable income But as a
 

 million of taxable income But as a
mining   business   he   deducted   $570,000   in  

 mining business he deducted $570,000 in
 

 mining business he deducted $570,000 in
electricity   costs   $350,000   in   equipment  

 electricity costs $350,000 in equipment
 

 electricity costs $350,000 in equipment
depreciation   $120,000   for   facility  

 depreciation $120,000 for facility
 

 depreciation $120,000 for facility
rental   $50,000   for   networking   and  

 rental $50,000 for networking and
 

 rental $50,000 for networking and
cooling   systems   and   $60,000   for   repairs  

 cooling systems and $60,000 for repairs
 

 cooling systems and $60,000 for repairs
and   maintenance   That's   1.15   million   in  

 and maintenance That's 1.15 million in
 

 and maintenance That's 1.15 million in
legitimate   deductions   reducing   his  

 legitimate deductions reducing his
 

 legitimate deductions reducing his
taxable   mining   income   to   just  

 taxable mining income to just
 

 taxable mining income to just
$50,000   in   a   business   where   he   cleared  

 $50,000 in a business where he cleared
 

 $50,000 in a business where he cleared
$440,000   in   Bitcoin   The   tax   savings   were  

 $440,000 in Bitcoin The tax savings were
 

 $440,000 in Bitcoin The tax savings were
enormous   which   means   he   gets   to   hold   on  

 enormous which means he gets to hold on
 

 enormous which means he gets to hold on
to   more   coins   But   the   advantages   don't  

 to more coins But the advantages don't
 

 to more coins But the advantages don't
stop   there   When   you   later   sell   those  

 stop there When you later sell those
 

 stop there When you later sell those
mine   coins   after   holding   them   for   over   a  

 mine coins after holding them for over a
 

 mine coins after holding them for over a
year   you   qualify   for   long-term   capital  

 year you qualify for long-term capital
 

 year you qualify for long-term capital
gains   rates   These   rates   range   from   zero  

 gains rates These rates range from zero
 

 gains rates These rates range from zero
up   to   20%   depending   on   your   income   which  

 up to 20% depending on your income which
 

 up to 20% depending on your income which
is   much   lower   than   the   ordinary   income  

 is much lower than the ordinary income
 

 is much lower than the ordinary income
tax   rates   up   to   37%   This   creates   a  

 tax rates up to 37% This creates a
 

 tax rates up to 37% This creates a
powerful   two-step   tax   strategy   You  

 powerful two-step tax strategy You
 

 powerful two-step tax strategy You
deduct   most   of   your   expenses   against  

 deduct most of your expenses against
 

 deduct most of your expenses against
ordinary   income   when   mining   and   then   you  

 ordinary income when mining and then you
 

 ordinary income when mining and then you
pay   lower   capital   gains   rates   when  

 pay lower capital gains rates when
 

 pay lower capital gains rates when
eventually   selling   Or   if   you're   like  

 eventually selling Or if you're like
 

 eventually selling Or if you're like
most   hardcore   Bitcoiners   you   can   choose  

 most hardcore Bitcoiners you can choose
 

 most hardcore Bitcoiners you can choose
to   never   sell   and   thus   never   be   taxed   on  

 to never sell and thus never be taxed on
 

 to never sell and thus never be taxed on
the   gain   and   instead   borrow   against   your  

 the gain and instead borrow against your
 

 the gain and instead borrow against your
holdings   to   get   cash   without   any   tax  

 holdings to get cash without any tax
 

 holdings to get cash without any tax
penalty   It's   completely   legal   and   it's  

 penalty It's completely legal and it's
 

 penalty It's completely legal and it's
one   of   the   most   efficient   tax   structures  

 one of the most efficient tax structures
 

 one of the most efficient tax structures
that's   available   to   small   business  

 that's available to small business
 

 that's available to small business
owners   today   Now   let's   explore   some   more  

 owners today Now let's explore some more
 

 owners today Now let's explore some more
advanced   strategies   that   can   take   your  

 advanced strategies that can take your
 

 advanced strategies that can take your
mining   tax   situation   to   the   next   level  

 mining tax situation to the next level
 

 mining tax situation to the next level
Section   179   expensing   is   a   gamecher   for  

 Section 179 expensing is a gamecher for
 

 Section 179 expensing is a gamecher for
professional   miners   Instead   of  

 professional miners Instead of
 

 professional miners Instead of
depreciating   your   mining   equipment   over  

 depreciating your mining equipment over
 

 depreciating your mining equipment over
5   years   this   provision   lets   you   deduct  

 5 years this provision lets you deduct
 

 5 years this provision lets you deduct
the   full   cost   in   year   1   up   to   1.25  

 the full cost in year 1 up to 1.25
 

 the full cost in year 1 up to 1.25
million   in   2025   if   mining   is   your  

 million in 2025 if mining is your
 

 million in 2025 if mining is your
primary   business   activity   This   means  

 primary business activity This means
 

 primary business activity This means
that   you   can   write   off   those   expensive  

 that you can write off those expensive
 

 that you can write off those expensive
ASIC   miners   immediately   For   example   if  

 ASIC miners immediately For example if
 

 ASIC miners immediately For example if
you   invest   $200,000   in   mining   equipment  

 you invest $200,000 in mining equipment
 

 you invest $200,000 in mining equipment
you   could   potentially   deduct   the   entire  

 you could potentially deduct the entire
 

 you could potentially deduct the entire
amount   in   the   first   year   rather   than  

 amount in the first year rather than
 

 amount in the first year rather than
spreading   it   out   over   5   years   This  

 spreading it out over 5 years This
 

 spreading it out over 5 years This
matching   of   expenses   with   income   is  

 matching of expenses with income is
 

 matching of expenses with income is
especially   valuable   in   the   volatile  

 especially valuable in the volatile
 

 especially valuable in the volatile
world   of   cryptocurrency   Even   better   if  

 world of cryptocurrency Even better if
 

 world of cryptocurrency Even better if
you're   able   to   get   financing   on   your  

 you're able to get financing on your
 

 you're able to get financing on your
equipment   you   may   be   able   to   offset   more  

 equipment you may be able to offset more
 

 equipment you may be able to offset more
money   on   your   tax   bill   than   you   actually  

 money on your tax bill than you actually
 

 money on your tax bill than you actually
spend   out   of   pocket   to   get   it   This   is   an  

 spend out of pocket to get it This is an
 

 spend out of pocket to get it This is an
advanced   strategy   that   high   net   worth  

 advanced strategy that high net worth
 

 advanced strategy that high net worth
investors   use   frequently   but   is   not  

 investors use frequently but is not
 

 investors use frequently but is not
commonly   understood   Business   structure  

 commonly understood Business structure
 

 commonly understood Business structure
also   matters   tremendously   Many   minors  

 also matters tremendously Many minors
 

 also matters tremendously Many minors
start   as   sole   proprietors   but   eventually  

 start as sole proprietors but eventually
 

 start as sole proprietors but eventually
benefit   from   forming   an   S   corporation  

 benefit from forming an S corporation
 

 benefit from forming an S corporation
Why   with   an   S   corp   you   can   pay   yourself  

 Why with an S corp you can pay yourself
 

 Why with an S corp you can pay yourself
a   reasonable   salary   and   take   the   rest   as  

 a reasonable salary and take the rest as
 

 a reasonable salary and take the rest as
distributions   that   aren't   subject   to  

 distributions that aren't subject to
 

 distributions that aren't subject to
self-employment   tax   This   can   save   you  

 self-employment tax This can save you
 

 self-employment tax This can save you
approximately

 approximately
 

 approximately
15.3%   on   a   huge   portion   of   your   income  

 15.3% on a huge portion of your income
 

 15.3% on a huge portion of your income
Entity   type   and   timing   is   also   crucial  

 Entity type and timing is also crucial
 

 Entity type and timing is also crucial
If   Bitcoin's   price   is   down   when   you   mine  

 If Bitcoin's price is down when you mine
 

 If Bitcoin's price is down when you mine
it   but   you   expect   it   to   rise   an   entity  

 it but you expect it to rise an entity
 

 it but you expect it to rise an entity
that   allows   for   pass   through   taxation  

 that allows for pass through taxation
 

 that allows for pass through taxation
could   be   advantageous   This   lets   you  

 could be advantageous This lets you
 

 could be advantageous This lets you
claim   the   business   deductions  

 claim the business deductions
 

 claim the business deductions
immediately   while   potentially   paying  

 immediately while potentially paying
 

 immediately while potentially paying
lower   capital   gains   taxes   later   For  

 lower capital gains taxes later For
 

 lower capital gains taxes later For
miners   with   significant   operations   you  

 miners with significant operations you
 

 miners with significant operations you
should   also   consider   exploring  

 should also consider exploring
 

 should also consider exploring
opportunity   zone   investments   If   you  

 opportunity zone investments If you
 

 opportunity zone investments If you
establish   mining   operations   in  

 establish mining operations in
 

 establish mining operations in
designated   opportunity   zones   you   can  

 designated opportunity zones you can
 

 designated opportunity zones you can
defer   and   potentially   reduce   your  

 defer and potentially reduce your
 

 defer and potentially reduce your
capital   gains   taxes   And   I've   seen   miners  

 capital gains taxes And I've seen miners
 

 capital gains taxes And I've seen miners
relocate   operations   to   these   zones  

 relocate operations to these zones
 

 relocate operations to these zones
specifically   for   the   tax   benefits   One  

 specifically for the tax benefits One
 

 specifically for the tax benefits One
fascinating   area   where   Bitcoin   mining  

 fascinating area where Bitcoin mining
 

 fascinating area where Bitcoin mining
stands   out   is   at   the   intersection   of  

 stands out is at the intersection of
 

 stands out is at the intersection of
energy   use   and   tax   incentives   Contrary  

 energy use and tax incentives Contrary
 

 energy use and tax incentives Contrary
to   popular   belief   Bitcoin   mining   can  

 to popular belief Bitcoin mining can
 

 to popular belief Bitcoin mining can
actually   support   environmental   goals   and  

 actually support environmental goals and
 

 actually support environmental goals and
unlock   additional   tax   benefits   in   the  

 unlock additional tax benefits in the
 

 unlock additional tax benefits in the
process   Miners   using   renewable   energy  

 process Miners using renewable energy
 

 process Miners using renewable energy
sources   like   solar   wind   or   hydropower  

 sources like solar wind or hydropower
 

 sources like solar wind or hydropower
may   qualify   for   various   energy   tax  

 may qualify for various energy tax
 

 may qualify for various energy tax
credits   The   federal   investment   tax  

 credits The federal investment tax
 

 credits The federal investment tax
credit   can   offset   up   to   30%   of   the   cost  

 credit can offset up to 30% of the cost
 

 credit can offset up to 30% of the cost
of   installing   renewable   energy   systems  

 of installing renewable energy systems
 

 of installing renewable energy systems
to   power   your   mining   operation   There   are  

 to power your mining operation There are
 

 to power your mining operation There are
miners   in   Texas   who   partnered   with   the  

 miners in Texas who partnered with the
 

 miners in Texas who partnered with the
wind   farm   to   utilize   excess   capacity  

 wind farm to utilize excess capacity
 

 wind farm to utilize excess capacity
during   off-   peak   hours   Not   only   did   they  

 during off- peak hours Not only did they
 

 during off- peak hours Not only did they
secure   discounted   electricity   but   they  

 secure discounted electricity but they
 

 secure discounted electricity but they
qualified   for   substantial   energy   credits  

 qualified for substantial energy credits
 

 qualified for substantial energy credits
creating   another   layer   of   tax   advantages  

 creating another layer of tax advantages
 

 creating another layer of tax advantages
Natural   gas   flaring   provides   another  

 Natural gas flaring provides another
 

 Natural gas flaring provides another
opportunity   In   oil   fields   as   well   as  

 opportunity In oil fields as well as
 

 opportunity In oil fields as well as
landfills   excess   natural   gas   is   often  

 landfills excess natural gas is often
 

 landfills excess natural gas is often
burned   off   or   flared   as   waste   or   it's  

 burned off or flared as waste or it's
 

 burned off or flared as waste or it's
even   released   into   the   atmosphere  

 even released into the atmosphere
 

 even released into the atmosphere
completely   untouched   Miners   who   capture  

 completely untouched Miners who capture
 

 completely untouched Miners who capture
this   otherwise   wasted   energy   to   power  

 this otherwise wasted energy to power
 

 this otherwise wasted energy to power
their   operations   can   potentially   qualify  

 their operations can potentially qualify
 

 their operations can potentially qualify
for   carbon   capture   credits   while  

 for carbon capture credits while
 

 for carbon capture credits while
securing   extremely   lowcost   energy   Heat  

 securing extremely lowcost energy Heat
 

 securing extremely lowcost energy Heat
recycling   is   emerging   as   another  

 recycling is emerging as another
 

 recycling is emerging as another
innovative   area   Miners   who   capture   and  

 innovative area Miners who capture and
 

 innovative area Miners who capture and
repurpose   the   heat   generated   by   their  

 repurpose the heat generated by their
 

 repurpose the heat generated by their
operations   for   example   to   heat   buildings  

 operations for example to heat buildings
 

 operations for example to heat buildings
or   for   agricultural   purposes   like  

 or for agricultural purposes like
 

 or for agricultural purposes like
greenhouse   warming   may   qualify   for  

 greenhouse warming may qualify for
 

 greenhouse warming may qualify for
additional   efficiency   related   tax  

 additional efficiency related tax
 

 additional efficiency related tax
incentives   The   key   here   is   understanding  

 incentives The key here is understanding
 

 incentives The key here is understanding
that   mining's   energyintensive   nature  

 that mining's energyintensive nature
 

 that mining's energyintensive nature
when   it's   approached   thoughtfully   can  

 when it's approached thoughtfully can
 

 when it's approached thoughtfully can
align   with   both   environmental   goals   and  

 align with both environmental goals and
 

 align with both environmental goals and
tax   incentives   creating   additional  

 tax incentives creating additional
 

 tax incentives creating additional
avenues   for   tax   savings   that   most   miners  

 avenues for tax savings that most miners
 

 avenues for tax savings that most miners
overlook   While   the   tax   advantages   of  

 overlook While the tax advantages of
 

 overlook While the tax advantages of
mining   are   substantial   there   are   several  

 mining are substantial there are several
 

 mining are substantial there are several
critical   pitfalls   that   you   need   to   avoid  

 critical pitfalls that you need to avoid
 

 critical pitfalls that you need to avoid
The   biggest   mistake   that   I   see   miners  

 The biggest mistake that I see miners
 

 The biggest mistake that I see miners
make   is   poor   recordkeeping   The   IRS  

 make is poor recordkeeping The IRS
 

 make is poor recordkeeping The IRS
requires   you   to   record   the   fair   market  

 requires you to record the fair market
 

 requires you to record the fair market
value   of   each   Bitcoin   received   through  

 value of each Bitcoin received through
 

 value of each Bitcoin received through
mining   at   the   time   that   it   was   received  

 mining at the time that it was received
 

 mining at the time that it was received
Without   this   documentation   you   could  

 Without this documentation you could
 

 Without this documentation you could
face   significant   issues   during   an   audit  

 face significant issues during an audit
 

 face significant issues during an audit
You   can   use   your   mining   pool   reports  

 You can use your mining pool reports
 

 You can use your mining pool reports
blockchain   explorers   and   cryptocurrency  

 blockchain explorers and cryptocurrency
 

 blockchain explorers and cryptocurrency
tax   software   to   maintain   accurate  

 tax software to maintain accurate
 

 tax software to maintain accurate
records   screenshot   or   download   price  

 records screenshot or download price
 

 records screenshot or download price
data   on   mining   days   as   additional   backup  

 data on mining days as additional backup
 

 data on mining days as additional backup
And   remember   the   burden   of   proof   is   on  

 And remember the burden of proof is on
 

 And remember the burden of proof is on
you   as   the   taxpayer   Another   common  

 you as the taxpayer Another common
 

 you as the taxpayer Another common
mistake   is   comingling   personal   and  

 mistake is comingling personal and
 

 mistake is comingling personal and
business   funds   Maintain   separate   wallets  

 business funds Maintain separate wallets
 

 business funds Maintain separate wallets
and   accounts   for   your   mining   business  

 and accounts for your mining business
 

 and accounts for your mining business
Not   only   does   this   strengthen   your   case  

 Not only does this strengthen your case
 

 Not only does this strengthen your case
that   you're   running   a   legitimate  

 that you're running a legitimate
 

 that you're running a legitimate
business   but   it   also   makes   accounting  

 business but it also makes accounting
 

 business but it also makes accounting
dramatically   easier   Mclassifying   mining  

 dramatically easier Mclassifying mining
 

 dramatically easier Mclassifying mining
status   is   another   pitfall   Some   miners  

 status is another pitfall Some miners
 

 status is another pitfall Some miners
incorrectly   treat   their   activities   as  

 incorrectly treat their activities as
 

 incorrectly treat their activities as
investments   rather   than   business   income  

 investments rather than business income
 

 investments rather than business income
You   see   mining   generates   ordinary   income  

 You see mining generates ordinary income
 

 You see mining generates ordinary income
when   the   coins   are   received   Treating   it  

 when the coins are received Treating it
 

 when the coins are received Treating it
otherwise   can   trigger   IRS   scrutiny  

 otherwise can trigger IRS scrutiny
 

 otherwise can trigger IRS scrutiny
Finally   be   wary   of   the   hobby   loss   rules  

 Finally be wary of the hobby loss rules
 

 Finally be wary of the hobby loss rules
If   your   mining   operation   shows   losses  

 If your mining operation shows losses
 

 If your mining operation shows losses
for   several   years   the   IRS   may   reclassify  

 for several years the IRS may reclassify
 

 for several years the IRS may reclassify
it   as   a   hobby   disallowing   your  

 it as a hobby disallowing your
 

 it as a hobby disallowing your
deductions   To   prevent   this   document   your  

 deductions To prevent this document your
 

 deductions To prevent this document your
profit   motive   through   business   plans  

 profit motive through business plans
 

 profit motive through business plans
operational   improvements   and   eventually  

 operational improvements and eventually
 

 operational improvements and eventually
profitability   Looking   toward   the   future  

 profitability Looking toward the future
 

 profitability Looking toward the future
several   trends   could   impact   your   Bitcoin  

 several trends could impact your Bitcoin
 

 several trends could impact your Bitcoin
mining   tax   strategy   First   regulatory  

 mining tax strategy First regulatory
 

 mining tax strategy First regulatory
clarity   is   improving   The   IRS   is  

 clarity is improving The IRS is
 

 clarity is improving The IRS is
providing   more   guidance   specifically  

 providing more guidance specifically
 

 providing more guidance specifically
addressing   cryptocurrency   activities  

 addressing cryptocurrency activities
 

 addressing cryptocurrency activities
including   mining   While   the   fundamental  

 including mining While the fundamental
 

 including mining While the fundamental
tax   principles   remain   constant   expect  

 tax principles remain constant expect
 

 tax principles remain constant expect
more   detailed   guidelines   in   the   coming  

 more detailed guidelines in the coming
 

 more detailed guidelines in the coming
years   Second   entity   structures   continue  

 years Second entity structures continue
 

 years Second entity structures continue
to   evolve   We're   seeing   increasing  

 to evolve We're seeing increasing
 

 to evolve We're seeing increasing
interest   in   mining   cooperatives   and  

 interest in mining cooperatives and
 

 interest in mining cooperatives and
partnerships   that   allow   for   more  

 partnerships that allow for more
 

 partnerships that allow for more
flexible   tax   treatment   These   structures  

 flexible tax treatment These structures
 

 flexible tax treatment These structures
can   distribute   tax   benefits   more  

 can distribute tax benefits more
 

 can distribute tax benefits more
efficiently   among   their   participants   And  

 efficiently among their participants And
 

 efficiently among their participants And
third   jurisdictional   considerations   are  

 third jurisdictional considerations are
 

 third jurisdictional considerations are
becoming   more   important   States   like  

 becoming more important States like
 

 becoming more important States like
Texas   and   Wyoming   are   creating   mining  

 Texas and Wyoming are creating mining
 

 Texas and Wyoming are creating mining
friendly   policies   including   energy  

 friendly policies including energy
 

 friendly policies including energy
incentives   and   favorable   tax   treatment  

 incentives and favorable tax treatment
 

 incentives and favorable tax treatment
Strategic   relocation   could   become   part  

 Strategic relocation could become part
 

 Strategic relocation could become part
of   your   long-term   tax   planning   And   as  

 of your long-term tax planning And as
 

 of your long-term tax planning And as
one   client   recently   told   me   after  

 one client recently told me after
 

 one client recently told me after
implementing   these   strategies   I   knew  

 implementing these strategies I knew
 

 implementing these strategies I knew
mining   would   be   profitable   from   a  

 mining would be profitable from a
 

 mining would be profitable from a
Bitcoin   accumulation   perspective   but   I  

 Bitcoin accumulation perspective but I
 

 Bitcoin accumulation perspective but I
never   realized   the   tax   benefits   would  

 never realized the tax benefits would
 

 never realized the tax benefits would
actually   double   my   effective   return   and  

 actually double my effective return and
 

 actually double my effective return and
operate   like   a   turnkey   business   The   tax  

 operate like a turnkey business The tax
 

 operate like a turnkey business The tax
advantages   of   Bitcoin   mining   as   a  

 advantages of Bitcoin mining as a
 

 advantages of Bitcoin mining as a
business   represent   one   of   the   most  

 business represent one of the most
 

 business represent one of the most
overlooked   aspects   of   the   cryptocurrency  

 overlooked aspects of the cryptocurrency
 

 overlooked aspects of the cryptocurrency
space   broadly   When   structured   properly  

 space broadly When structured properly
 

 space broadly When structured properly
mining   offers   a   powerful   combination   of  

 mining offers a powerful combination of
 

 mining offers a powerful combination of
business   deductions   favorable   capital  

 business deductions favorable capital
 

 business deductions favorable capital
gains   treatment   and   specialized   tax  

 gains treatment and specialized tax
 

 gains treatment and specialized tax
incentives   that   few   other   business  

 incentives that few other business
 

 incentives that few other business
models   can   match   The   key   is   approaching  

 models can match The key is approaching
 

 models can match The key is approaching
mining   deliberately   with   proper  

 mining deliberately with proper
 

 mining deliberately with proper
documentation   clear   business   practices  

 documentation clear business practices
 

 documentation clear business practices
and   strategic   planning   The   difference  

 and strategic planning The difference
 

 and strategic planning The difference
between   treating   mining   as   a   casual  

 between treating mining as a casual
 

 between treating mining as a casual
hobby   versus   a   structured   business   can  

 hobby versus a structured business can
 

 hobby versus a structured business can
literally   mean   tens   or   even   hundreds   of  

 literally mean tens or even hundreds of
 

 literally mean tens or even hundreds of
thousands   of   dollars   in   tax   savings   And  

 thousands of dollars in tax savings And
 

 thousands of dollars in tax savings And
working   with   the   right   mining   partner  

 working with the right mining partner
 

 working with the right mining partner
from   the   start   can   put   these   action  

 from the start can put these action
 

 from the start can put these action
items   on   easy   street   Remember   Dean   from  

 items on easy street Remember Dean from
 

 items on easy street Remember Dean from
the   beginning   of   the   video   his  

 the beginning of the video his
 

 the beginning of the video his
$350,000   tax   savings   didn't   happen   by  

 $350,000 tax savings didn't happen by
 

 $350,000 tax savings didn't happen by
accident   It   came   from   understanding   and  

 accident It came from understanding and
 

 accident It came from understanding and
applying   these   simple   principles  

 applying these simple principles
 

 applying these simple principles
systematically   If   you're   serious   about  

 systematically If you're serious about
 

 systematically If you're serious about
mining   consider   consulting   with   a   tax  

 mining consider consulting with a tax
 

 mining consider consulting with a tax
professional   who   understands   the  

 professional who understands the
 

 professional who understands the
cryptocurrency   markets   The   investment   in  

 cryptocurrency markets The investment in
 

 cryptocurrency markets The investment in
proper   tax   planning   almost   always   pays  

 proper tax planning almost always pays
 

 proper tax planning almost always pays
for   itself   many   times   over   Thanks   for  

 for itself many times over Thanks for
 

 for itself many times over Thanks for
watching   If   you   found   this   helpful   hit  

 watching If you found this helpful hit
 

 watching If you found this helpful hit
like   and   subscribe   for   more   Bitcoin  

 like and subscribe for more Bitcoin
 

 like and subscribe for more Bitcoin
content   and   drop   your   questions   in   the  

 content and drop your questions in the
 

 content and drop your questions in the
comments   below   and   I'll   do   my   best   to  

 comments below and I'll do my best to
 

 comments below and I'll do my best to
address   them   in   a   future