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The Coming Bitcoin Cash Tax Fiasco



The IRS taxes income from whatever source derived, and income includes any net ascension to wealth. On August 1st Bitcoin forked, and I magically had Bitcoin cash. There are a few tax problems, and I haven’t seen any solid guidance on this issue.

  • Record scratch: I’m a lawyer, but not your lawyer. I’m explaining my own thinking on Bitcoin Cash and not giving any advice. And there are a lot of Internet experts out there saying that no one has to even pay taxes on Bitcoin cash, because it was free money. PLEASE hire an actual accountant.

On the day of the fork, what was Bitcoin Cash (BCH) worth? As Bitcoin cash was volatile, there’s no way to determine the exact amount. I’ve logged mine at $300 to be safe, as the IRS would love to make an example out of someone to crush Bitcoin, and that someone ain’t gonna be me.

But even a $300 estimate has problems. I didn’t have access to my Bitcoin cash on August 1st, as my hardware wallet didn’t immediately support it. Does that change the analysis as to the date of my net ascension to wealth?

Even honest taxpayers are going to have some complicated conversations with their accountants.

And how does Coinbase’s decision to wait until December 19, 2017 to give people their BCH apply to taxable losses and gains? Coinbase gave people access to their Bitcoin Cash at a cost basis of around $1,889.

Will Coinbase holders be forced to pay income taxes on $1,880 per BCH basis?

This math has real implications.

Let’s say someone had 100 bitcoins on July 31st. On August 1st that person would have realized a net ascension of wealth of between $30,000 and $40,000 (depending on how you price the BCH). Will this be taxed at ordinary income tax rates?

If that same person had his Bitcoin in Coinbase, then she would have a net ascension of wealth in the amount of $188,000. At ordinary income tax rates, that’s a tax bill as high as $73,000.

And how does one calculate the long-term and short-term capital gains tax rates for Bitcoin cash? In the U.S., the top short-term capital gains tax rate is 39%, and the top long-term capital gains rate is 20%.

The Bitcoin cash fork occurred on August 1, 2017 and my BCH are priced at $300 per coin.

If I sell my BCH on August 2, 2018 for (say) $1,200, is my rate the long-term capital gains tax rate on the $800 gain?

What about the BCH Coinbase handed over on December 17, 2017. Must investors wait until December 18, 2018 to sell their BCH in order to take advantage of the long-term capital gains rate?

These are complicated questions, and the IRS has yet to offer any guidance.

One tax accountant suggests that Coinbase users will be taxed as follows:

4. What should I use as the date of the BCH?

The date you had control. This will often be the date of the fork, 1st August 2017. For instance if you held your coins in your own local wallet, e.g. Bitcoin core or Ledger, then you were in control of the BCH private keys on that date. If you held your BTC in an online exchange, it would be more likely the date they were available to you. With Coinbase, for instance, that will not be until 1st January 2018.

Although I can’t vouch for that website, their analysis is consistent with my research and understanding of tax law.

Anyhow, these are complicated issues and the IRS would love to destroy some people.

Please hire a competent tax professional and pay your taxes on cryptocurrency.

Read now: Exodus Wallet Review.



Is “Kung Flu” the latest Media Hoax?



Several White House reporters confronted Trump regarding his decision to call the coronavirus (or COVID-19) the China Virus.  One reporter asked him about a White House administration official who is alleged to have called the coronavirus Kung Flu.

When the reporter was asked the name of the official, the reporter said she didn’t know.

The original claim regarding Kung Flu comes from CBS reporter Weijia Jiang. On March 17th, she Tweeted:

This morning a White House official referred to #Coronavirus as the “Kung-Flu” to my face. Makes me wonder what they’re calling it behind my back.

Ms. Jiang has not identified the official.

One reason could be because this official does not even exist.

Under American defamation law, you can lie all you like.

You can’t lie about a person by name.

If no White House official called the coronavirus Kung Flu, or if there is some important context missing, then Jiang could be sued.

You can watch the Kung Flu exchange in this video here:

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The Stafford Act Text Message Announcing an Emergency Quarantine is a Hoax



By now you or someone you know has received a hoax text announcing martial law. With some minor variations, the texts all read the same:

  • In 48 to 72 hours the president will evoke what is called the Stafford act. Just got off the phone with some of my military friends in DC who just got out of a two hour briefing. The president will order a two week mandatory quarantine for the nation. Stock up on whatever you guys need to make sure you have a two week supply of everything. Please forward.


The National Security Council issued a rare public statement warning the public that the Stafford act text was a hoax.

How can you tell the Stafford Act Text is a Hoax?

Even if you refuse to accept the NSC’s word on the matter, the text message has some telltale signs of a hoax.

First, the text promises secret insider knowledge. “Just got off the phone with some of my military friends in DC who just got out of a two hour briefing.” This is a vague enough proclamation that it sounds plausible.

Second, no specifics of these friends are given. Who are these friends? Why did they call this specific person?

Third, the hoaxers ask you to spread the message. Why would anyone acting in good faith want to incite a panic?

If an emergency quarantine were able to be declared, the plan would be Top Secret. No one’s friends would just get out of a briefing and start alerting people. THEY WOULD GO TO PRISON FOR LEAKING CLASSIFIED INFORMATION.

If such an emergency plan were in the works and higher command wanted the story to get out, they’d leak it to a credible outlet. Not share chain-letter style text messages.

There’s also tradecraft involved in sharing classified information.

None of the telltale signs (and no I won’t share how to leak classified secrets here) were present in that alert.

UPDATE: Other outlets are now reporting that the Stafford Act text is a foreign disinformation campaign:

The Trump administration is alleging that a foreign disinformation campaign is underway aimed at spreading fear in the country amid the coronavirus pandemic, three U.S. officials said Monday. On Sunday, federal officials began confronting what they said was a deliberate effort by a foreign entity to sow fears of a nationwide quarantine amid the virus outbreak.

Agencies took coordinated action Sunday evening to deny that any such plans were put in place, as they tried to calm a nation already on edge by disruptions to daily life caused by the virus.



Read More about Mike Cernovich here.

Who is Mike Cernovich?

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How Trump Drafted Google into the War Against Coronavirus



Elvis Presley served in the Army after he was drafted, and in American history it was common for celebrities to serve their country during times of national crisis. Noblesse oblige, or the duty the noble and rich owed to society, arouse perhaps out of morality or maybe simple self-preservation. If you’re getting while the getting is good, giving something back goes a long way to avoid class resentment.

Those thoughts were perhaps on Trump’s mind (or more likely his instinct) when he announced that Google was taking massive action to help America fight the coronavirus.

Google at first pushed back at the suggestion that it, a nearly trillion dollar mega-corporation, actually doing something to help the users it profits from.

Why should Google help save lives? Why should Google do anything other than operate as an amoral, blood-sucking corporation that violates user privacy and exploits children?

The media bros were quick to rush to save Google. Poor Google! They were being bullied by the ORANGE MAN BAD.

Google’s media errand boys like Jake Tapper and others were quick to publish stories attacking Trump for suggesting that Google actually do something.

Some like your humble correspondent Mike Cernovich saw right away was Trump was doing.

Trump was drafting Google into the war against coronavirus.

Google, whatever its motivations, answered the draft.

Public pressure must intensify.

The corporations make billions of dollars a day by spying on users.

The least they can do is use that data to find out where coronavirus hot spots are, share that information with the CDC, and get information shared with the sick.

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