#31 | Cryptocurrency Volatility and Inflation feat. Douglas Borthwick & Mitch Kramer

Practical Tax with Steve Moskowitz

Douglas C. Borthwick, Chief Business Officer INX.co discusses the confidence in currency, crypto or cash and Finance specialist Mitch Kramer compares the cycles of inflation and the tax and investment opportunities they represent. Episode Transcript Intro: Welcome to the Practical Tax podcast, with tax attorney Steve Moskowitz. The Practical Tax podcast is brought to you by Moskowitz, LLP, a tax law firm. Disclaimer: The information contained in this podcast is based upon information available as of date of recording and will not be updated for changes in law regulation. Any information is not to be considered tax advice or legal advice and does not form an attorney/client relationship. Further, this podcast may be construed as attorney advertising. You should see professional consultation for your individual tax and legal situation. Chip Franklin: Welcome to Practical Tax I'm Chip Franklin. That's Steve Moskowitz. Steve, how are you my friend? Steve Moskowitz: Doing great Chip. How you doing? Chip Franklin: I'm doing well. Steve Moskowitz: We're talking about taxes and all kinds of things. So of course it's a happy time. Chip Franklin: Yeah. You know what it is interesting, is that it's really amazing to me how few people understand taxes. I think I read that there's like three times the number of pages in the tax code that are in the Bible. I mean, it just goes on and on and on. And I mean, you guys must spend a lot of time just keeping up to date? Steve Moskowitz: It changes. Congress changes the law, but then the courts interpret what the Congress said. So when Congress says, "You can deduct X?" Well, what's included in X? And then the next court goes ahead and makes a decision that adds on to that. Then the next court makes a decision, that's an opposition to that. And what a lot of people don't realize a lot of times, let's say you come to me, you come into my office, say, "Steve, I want to deduct X." And I say, "Well, Chip, there's a hundred cases on X of equal rank, equal power. And 70 of them say, you can deduct it. And 30 of them say that you can't." What do you do? Because, on a tax return, you deduct it or you don't deduct it. So if we choose to deduct it and the IRS chooses to audit it, the initial lawyer say, "Hey, IRS, doesn't recognize that, disallowed." But when you take the case up higher, usually what'll happen is the appeals officer will offer you something called hazards of litigation. So let's assume what you did, that you deducted 100,000 and 70 cases say that's a good deduction and 30 cases say, can't deduct it. Normally the settlement officer say, "Okay, I'll offer you the 70% and you can see it on the 30%." And then your choice is, do you want to go for all of it in tax court? Or do you want to say, "Hey, 70 is pretty good and let's end it here." [inaudible 00:02:26] hazards of litigation. See that's why with an audit, an auditor is more like a light switch. Yes or no. The switch is either on or it's off. Once you go above the audit level, it's more of, there's a dimmer switch and it's well, are we maximum brightness or are we off? But usually we're somewhere in between. Chip Franklin: Life is a dimmer switch, that's for sure. One of the things, about three or four years ago, you and I were talking about cryptocurrency. And it's funny, because I have friends that dismiss it out of hand, they go, "Ah, I don't have any confidence in that." And well you trust money. Actually my great grandmother, before she passed, had some Confederate currency and I have to laugh, because it's just paper. And you ask yourself about cryptocurrency and where that's headed and this blockchain technology, all this. What it means, is that I think most people just don't know what it is. And obviously you have to know what it, is because it's subject to all the same tax regulations that money is. So joining us right now is Douglas Borthwick.