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Watch Out Crypto Exchanges and Hodlers! JONATHAN KALINSKI Quoted in Tax Notes Article

At a recent Stafford webinar on NFTs, Jonathan Kalinski of Hochman Salkin Toscher Perez PC advised practitioners to be cautious in their positions. Just because there is no law on a new cryptoasset question doesn’t mean that the IRS can’t argue that “you should have known better” down the road. Crypto audits are ramping up, but we are still in early stages.

“The place you want to be is to be safe and to be cautious when you’re reporting,” said Kalinski. A purchase of a cryptoasset using another cryptoasset is taxable as barter. Taxpayers have to keep records; the blockchain won’t do it for them. On audit, the taxpayer can’t shrug his shoulders and say it was on the blockchain. “Relying on the exchange is going to get you into trouble,” he said. “Recordkeeping is of the utmost importance.”  Kalinski foresaw use of cryptocurrency for charitable contributions, which would be contributions of property at FMV. Some crypto assets and NFTs can be valued based on comparable assets. But taxpayers shouldn’t be aggressive because values can be verified eventually. “Old-world rules are not always a perfect fit for new-world technology, but taxpayers should use best practices,” he said.  

Jonathan Kalinski is a principal at Hochman Salkin Toscher Perez, P.C. and specializes in both civil and criminal tax controversies as well as sensitive tax matters including disclosures of previously undeclared interests in foreign financial accounts and assets and provides tax advice to taxpayers and their advisors throughout the world.  He handles both Federal and state tax matters involving individuals, corporations, partnerships, limited liability companies, and trusts and estates. Mr. Kalinski has considerable experience handling complex civil tax examinations, administrative appeals, and tax collection matters.  Recently, he has focused on the taxation of cannabis and cryptocurrency.  Prior to joining the firm, he served as a trial attorney with the IRS Office of Chief Counsel litigating Tax Court cases and advising Revenue Agents and Revenue Officers on a variety of complex tax matters.  Jonathan Kalinski also previously served as an Attorney-Adviser to the Honorable Juan F. Vasquez of the United States Tax Court.

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