Bitcoin investor risks prison for failing to report gains
An early Bitcoin (CRYPTO:BTC) investor, Frank Richard Ahlgren III, has pleaded guilty to filing a tax return that underreported his cryptocurrency gains, resulting in a significant tax loss for the Internal Revenue Service (IRS).
According to the U.S. Department of Justice (DOJ), Ahlgren, a Texas resident, failed to accurately report the capital gains he earned from selling $3.7 million worth of Bitcoin (BTC).
Ahlgren acquired 1,366 BTC in 2015, when each was worth less than $500.
In October 2017, he sold 640 BTC for around $3.7 million and used the proceeds to buy a house in Park City, Utah.
However, he falsely inflated the cost basis of his Bitcoin holdings on his 2017 tax return, significantly reducing his reported gains.
Additionally, he did not disclose $650,000 in Bitcoin sales made in 2018 and 2019.
The DOJ emphasised that all taxpayers must report any proceeds and gains or losses from cryptocurrency sales to the IRS.
Ahlgren’s actions caused the IRS to suffer a tax loss exceeding $550,000.
The DOJ stated, "All taxpayers are required to report any sale proceeds and gains or losses from the sale of cryptocurrency."
The Justice Department further explained, "Ahlgren will be sentenced at a later date. He faces a maximum penalty of three years in prison as well as a period of supervised release, restitution, and monetary penalties."
Ahlgren's sentencing will be determined by a federal district court judge, who will consider the U.S. Sentencing Guidelines and other relevant statutory factors.
At the time of reporting, the Bitcoin (BTC) price was $60,203.79.
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