Student Invested $5000 Into Ethereum Owes $400 000 In Taxes
A college student based in California invested $5,000 in Ethereum (ETH), when the digital asset was worth around $50 back in May 2017. The cryptocurrency skyrocketed to $880,000 in value late last year, he is trying to find someone that can help him deal with the $400,000 in taxes that he needs to pay.
In the US, cryptocurrency investors are required to declare taxes using the tax form 1099-K and major cryptocurrency exchanges like Coinbase have tax filing systems in place to automate the process for its investors.
Back in March, subsequent to spending over a million dollars in January in a conflict with the Internal Revenue System (IRS), the revenue service of the United States federal government, Coinbase released new tax tools to help users to establish a complete view of trading activity, calculate gains and losses, and file taxes.
Most of the Redditors that responded to the post were not sympathetic, telling the anonymous student that he needed to get “a tax professional and stop wasting time trying to get free advice” or that he will find a way to handle it. One of the more useful pieces of advice is that he needs to be careful about “questionable accounting methods,” and that his accountant should look for a realistic way of paying it back. Considering the current minimum wage in California, the heat of a $400k bill could be a little more than he can afford.
The student disclosed that a consultation with a tax attorney had been scheduled to resolve the issue.