Andrew Gordon

We could generate billions in crypto tax revenue from people who want to pay. They’re not hiding. They’re confused and scared of getting crushed for mistakes. 1099-DA Forms are putting the crypto industry in a terrible position: comply perfectly or risk penalties. There’s a solution: a Crypto Voluntary Disclosure Program. Let people come forward, pay tax + a manageable penalty, and move on. In the past, a voluntary disclosure program allowed people to come forward, report their assets, pay a small penalty and tax, and move on. We need the same type of program for the crypto industry. #CryptoTaxes #Crypto #GordonLaw

The scariest thing I'll see this tax season isn't a hack. It's a 1099-DA like this: $40,000 of crypto sales, no cost basis reported. If you can't prove what you paid, the IRS can treat the whole $40,000 as gain. Do you know your basis on every coin you sold?

Your 2026 1099-DA will show cost basis. For a lot of you, that's a problem. Starting with 2026 sales, exchanges have to report cost basis for coins bought in that account in 2026 or later. That sounds like good news. For a lot of people, it won't be. Here's the rule in plain English. Basis only gets reported for crypto you bought on or after January 1, 2026, inside that same exchange account. Anything you bought earlier is "noncovered." Anything you moved in from another wallet or exchange is usually noncovered too. For those, the form can show your sale with no basis reported. Here's a scenario I see all the time. Someone bought BTC in 2021 on one exchange. They moved it to a hardware wallet, then to a different exchange, and sold it this year. The new exchange has no idea what they paid. The IRS still sees the full sale proceeds. If the basis never makes it onto the return, the whole sale can look like profit. What to do before December 31: 1. List every exchange and wallet you've used, not just the current ones. 2. Pull purchase records for anything you've moved between platforms. 3. Check whether your exchange shows basis for older or transferred-in coins. 4. Run your numbers now, while you can still harvest losses this year (crypto isn't under the wash-sale rule yet). 5. Fix any past-year gaps before a letter shows up. The 1099-DA doesn't create new tax. It just makes the gaps easier for the IRS to see.

Over $1.5 billion in crypto positions got liquidated after the Binance hack. Many of those forced closes create a tax bill. Most people won't find out until April. Here's the rule in plain English. When your crypto collateral gets sold to cover a margin call or a loan, the IRS generally treats it like you sold it yourself. It doesn't matter that you didn't click the button. You disposed of property, so you have a gain or a loss. Caveat: not every "liquidation" is a sale of your coins. Perp closes are derivatives PnL — different from selling spot collateral. Here's a scenario I see every cycle. Someone bought ETH years ago at a low price. They borrowed against it instead of selling, to avoid a tax bill. The market drops, the loan gets liquidated, and the ETH is gone. Now they have no ETH, no cash, and a capital gain on old basis vs. the liquidation price. The flip side is real too. If you bought near the top, a collateral liquidation can lock in a usable capital loss. What to do this week: 1. Pull every forced-sale / liquidation record from CeFi and DeFi. 2. Separate collateral sales from perp closes. 3. Match each to cost basis and date; split short-term vs long-term. 4. See whether losses offset gains you already took this year. 5. Don't count on a 1099-DA for the whole story. Custodial CeFi may report some sales; DeFi liquidations generally won't (DeFi broker rule repealed in 2025). Getting liquidated hurts. Getting surprised by the tax bill on it hurts twice.

The IRS is mailing thousands of crypto holders right now. If yours says Letter 6173 you have a response deadline. It's printed on the letter. Ignore it and an exam or notice could follow. Sign it without reviewing and you could agree to tax you don't owe. Watch before you respond or ignore crypto reporting, the IRS is coming👇

Binance says it'll cover every dollar lost in the $6.3B hack. But what if it doesn't cover yours? Since 2018, personal theft losses are deductible only if tied to a federally declared disaster, a limit Congress made permanent in 2025. So most people assume stolen crypto is just gone, tax-wise. You know why that's not the whole story? Section 165(c)(2). It allows a deduction for losses on transactions entered into for profit, and the disaster limit doesn't apply. Crypto held on Binance as an investment is a profit-motive position. IRS Chief Counsel's 2025 memo on crypto scams (CCA 202511015) applies the same reasoning, though it didn't address an exchange hack directly. The catch is timing. You can't claim a loss while there's a reasonable prospect of reimbursement. Binance has promised to make users whole, so for most people there's no deduction now, and there may never be one. If Binance falls short, it gets interesting. Hypothetical: you bought $40K of BTC, held it on Binance, and only part is restored. Once it's reasonably certain the rest isn't coming back, that shortfall may be deductible, generally limited to your cost basis. Two wrinkles: • A theft loss here is an itemized deduction. No itemizing, no benefit. • Because Binance held the coins, the IRS could treat it as a bad debt (a capital loss, $3K/yr limit) instead of theft. Still unsettled. Do this now: • Screenshot balances and history • Document basis for every asset there • Save every Binance notice • Track what's restored, and when Made whole? No loss. Left short? Have your records ready.

Crypto PACs have spent ~$176M on the midterms, per Reuters. I've met with 60+ congressional offices on crypto tax. The cheapest fix in DC: a low-penalty path (Section 502: 0%/5% early) for honest people to correct old crypto returns. Why isn't that on every candidate's list?

Crypto still has no wash sale rule. Sell a loser in December, buy it right back, keep the loss. Stock traders can't do that. Congress is moving to close it. The crypto tax bill that cleared Ways and Means adds wash sale rules for crypto. How many Decembers are left?

The IRS is mailing crypto holders right now. One letter asks you to sign a statement under penalty of perjury. Sign it without checking your records first, and you've locked in your story. Watch this before you sign anything: youtu.be/JYcpav6W_aU

Got crypto stolen? The IRS might let you write it off. Or it might not. It comes down to one question. Most people assume stolen crypto is just gone, tax-wise. That's only half true. Since 2018, personal theft losses are deductible only when tied to a federally declared disaster, a limit Congress made permanent in 2025. But there's a second door: losses from a transaction entered into for profit. That's Section 165(c)(2). In 2025, IRS Chief Counsel walked through five crypto scam scenarios (CCA 202511015). Handed over crypto to invest, or to "protect" an investment? Deductible. Romance scam or fake kidnapping, with no profit motive? Not deductible. The problem: real cases aren't always that clean. And a big theft deduction is exactly what gets a second look. You know what helps if the IRS disagrees? A tax opinion letter. A written analysis that applies the law to your facts: what happened, why it was theft, why your motive was profit, and how basis was traced. If the deduction is disallowed, you still owe the tax, and you can face a 20% accuracy-related penalty on top. But good-faith reliance on a competent professional's opinion, based on complete and accurate facts and obtained before you file, can support a reasonable-cause defense to that penalty. No guarantee. Real protection. That's why we draft these for clients claiming crypto theft losses: trace the coins, document basis and evidence, and put the analysis in writing before filing. Lost crypto to a scam this year? Start the paper trail now, not in April.

The IRS told my client he owed $10 million in crypto taxes. By the time the audit closed, the IRS was sending HIM a six-figure refund. Same client. Same transactions. Same IRS. You know what changed? We stopped accepting their numbers. Here's what a long crypto audit taught us: 1. IRS crypto calculations can be badly wrong. The exam relied on third-party software to calculate his gains. When we pulled the data apart line by line, the errors added up fast: transfers between his own wallets treated as sales, missing cost basis, duplicated transactions. We showed the IRS exactly where the numbers broke. 2. Many examiners aren't crypto experts. They lean on a small group of IRS subject-matter specialists, and those specialists are stretched thin. If you show up with clean, documented calculations, you may be the one who knows the facts best. 3. A lot of crypto tax law is still unsettled. Wrapping tokens. Liquidity pools. Cross-chain bridges. There's no clear guidance on many of these. That leaves room for well-supported positions, if you're prepared to defend them. 4. Being ready to go to Tax Court changes the conversation. Crypto is new territory for the courts. In our experience, when a tax attorney is genuinely prepared to litigate, exams tend to get more reasonable. 5. Penalties are worth challenging. When the law itself is unclear, penalty arguments against crypto traders are often weaker than they look. In our experience, they're frequently reduced or removed. The big lesson: An IRS audit number is a starting point, not a final bill. You can submit your own calculations. You can challenge theirs. If you've received an IRS notice about crypto, don't just pay it. Get someone to check the math. (Every case is different, and past results don't guarantee future outcomes.)

The scariest IRS crypto letter is the one that doesn't ask you to do anything. Everyone asks: "Do I need to respond?" It depends on the number in the corner. Letter 6173 is the serious one. It asks for a response by a deadline. Ignore it and your case can be sent for an exam. Letter 6174 is a soft reminder. It explains the rules and suggests you check your returns. No reply required. Letter 6174-A is a step up. It says the IRS has information that you may have had crypto transactions you didn't report correctly. Still no reply required. You know why the "no reply" letters are the dangerous ones? Because people toss them in a drawer. These letters aren't random. They come from data the IRS already has, like exchange records. A 6174 or 6174-A is the IRS telling you it's looking. Typical case: someone forgets an old account on a second exchange, gets a 6174-A, and does nothing. Later it's an exam, with penalties and interest on top. What I'd do with any of these letters: • Check which letter number it is • Pull every exchange and wallet for the years it mentions • Compare that to what you actually filed • Amend if something's missing, before the IRS asks Fixing it yourself usually costs less than fixing it after an exam starts. That's why I helped write Section 502 of H.R. 10357, a low-penalty path for honest mistakes. It cleared Ways and Means but isn't law yet. Until it passes, treat the letter as your warning shot. Don't waste it.

Year-end move most crypto holders miss: Don't sell your winners to give to charity. Donate the coins. Held over a year and you itemize? You can generally deduct full market value and skip capital gains on the growth. Over $5k? Get a qualified appraisal or risk the deduction.

The IRS's coming "cheaper" voluntary disclosure program is still aimed at people with possible criminal exposure. What about the guy who just forgot to report a 2021 swap? Honest mistakes need their own on-ramp. That's the point of Section 502 in the crypto tax bill I helped push, and it's not law yet. Get your records ready either way.

If you got your crypto taxes wrong, you may soon be able to fix them with a 0% penalty. I helped write the bill. Here's what it actually says. With 1099-DAs, your exchange now reports your crypto sales straight to the IRS. If your past returns don't match, that's a problem. I've been working on this for a long time, so here's the story. Over the last year I met with more than 60 congressional offices and with the House Ways and Means Committee. I kept making the same case: Most crypto holders who got their taxes wrong aren't criminals. They used bad software. They had no cost basis. They didn't know a swap counted as a sale. Right now they have no clear, affordable way to come forward. That's what this bill fixes. On Sept 16, Ways and Means voted 38–5 to advance H.R. 10357, the Digital Asset Tax Certainty Act. Section 502 creates a Digital Asset Voluntary Disclosure Program. Here's what it does in plain English: → Treasury has 12 months after the law passes to open the program → You then have 24 months to file amended returns and pay the tax plus interest (installment plans are allowed) → If you certify, under penalty of perjury, that your mistakes weren't willful: 0% penalty on the first $25K of tax owed per year, and 5% above that, if you file in the first 12 months → Wait longer and the rates go up → If you can't certify, it's a 25%/40% penalty, but what you disclose can't be used to refer you for criminal prosecution If you're already under audit, you'd need a waiver to get in. Why this matters now: 1099-DAs give the IRS a map. People who fix their returns before the IRS finds the gap will be in a much better spot than people who wait for a letter. It's not law yet. It still needs a vote on the House floor, the Senate, and the President's signature. So two things: 1. Start getting your records in order now. The 0% window rewards people who are ready on day one. 2. Tell your representative to keep Section 502 in the bill. If this passes, would you use it?

Kraken's parent wants to run CFTC-regulated perps on Hyperliquid. The tax angle nobody's noticing: if those count as Section 1256 contracts, gains get 60% long-term / 40% short-term treatment, no matter how long you held. Big if. Would you move your perp trading for it?

The IRS just told a room full of tax pros it wants to make confessing your tax sins cheaper. Crypto included. Here's what was said, and what it doesn't fix. At the UCLA tax controversy conference, IRS Criminal Investigation Chief Jarod Koopman said a revised voluntary disclosure program is coming before December. The goals: resolve cases within 120 days of a complete submission, substantially lower penalties, and the option to pay through installment plans or an offer in compromise. That's real progress. Today the process can drag on for a year or more. But read the fine print. The IRS voluntary disclosure program is built for willful noncompliance. People whose conduct could expose them to criminal prosecution. Most crypto investors I talk to aren't that. A typical case: someone traded on three exchanges in 2021, used a couple of DeFi apps, lost track of transfers, and filed with whatever their software spit out. That's a mess. It's not a crime. There's also no separate track for digital assets, and no penalty numbers yet. So the honest-mistake crowd is still stuck choosing between: • Amending and hoping • Doing nothing and waiting for a letter • Walking into a program designed for people facing criminal exposure That gap is exactly why I helped write Section 502 of the Digital Asset Tax Certainty Act, and why I've met with 60+ congressional offices and the Ways and Means Committee. It creates a path for people who made unintentional crypto reporting errors to come forward and fix them. It cleared Ways and Means in September. Faster IRS disclosure is good news. It's just the right tool for a different problem. If your past crypto returns have gaps, step one is the same either way: rebuild your transaction history and know your number before the IRS does.

I spent a year in 60+ congressional offices pushing for this. If you got your crypto taxes wrong, Section 502 of H.R. 10357 could let you fix them with as little as a 0% penalty. It's not law yet. Get your records ready now.

Not reporting your crypto losses is rugging yourself. Losses can: • Offset gains • Deduct up to $3k/yr against income • Carry forward forever Free money left on the table.

The IRS isn't guessing anymore. 1099-DAs mean they already know what you sold on Coinbase, Kraken & more. If your return doesn't match, expect a letter. Reconcile now, not after the notice.