Bitcoin In-kind Tax Deferral Transfer with Blake Templeton
Blake Templeton is a seasoned Real Estate and Cryptocurrency Hedge Fund manager who is passionate about helping investors invest confidently in alternative asset classes like Blockchain Technology, Cryptocurrency, and specific sectors of Real Estate. Blake serves as the CEO of Boron Capital’s family of investment funds, whose teams have created triple-digit returns and consistently outpaced Bitcoin.
Mr. Templeton is the President and CEO of Boron Capital and is responsible for the strategic direction of the company, capital markets activities, and the overall performance of Boron Capital’s Funds’ underlying investments. Blake also serves as the external voice for the company. He is an experienced and knowledgeable economic speaker and addresses small and large audiences of executives and business professionals nationwide. His passion is to awaken awareness concerning our current economy and emphasize the need for individual investment dollars to be invested into tangible assets, not paper investments (Stocks, mutual funds, etc.).
Episode Highlights Here:
Brett:
It’s totally exciting. So we can geek out about that for a long time. I love that we’re going to geek out on Bitcoin in-kind tax file transfer. So part of what we do here in capital gains tax, which is exit cryptocurrency using the Deferred Sales Trust, we’ve done it for Bitcoin and Ethereum so far, but I was talking with Blake on the last episode, which is about a month ago, check it out on YouTube, iTunes, when it comes out, look up like Templeton and Capital Gains Tax Solutions. But we started talking after the show he brought it up and I was like, you got to come on and talk about that. So Blake, first of all, what is Bitcoin in-kind tax deferral transfer? What does that look like? Can you kind of walk us through the implications of what this means?
Blake:
Yeah, so first of all, one of the most common questions we get is, potentially as an investor, can I contribute my appreciated virtual currency? Can I put that into a pool or a hedge fund tax-deferred? So, I maybe bought Bitcoin in 2017 with maybe 2000 a coin. It’s 42,000 coins maybe I’ve got seven figures, eight figures in cryptocurrency, and didn’t even know it. How do I like to put that into something that’s less volatile? So they’re the IRS in 2014 essentially stabilize their definition of how Bitcoin was going to be looked at and looked at more as security specifically a property therefore, generally, it’s obviously tied to capital gains and losses with a tax treatment. They’ve essentially allowed an in-kind transfer, which means you’re not selling it, but you’re essentially positioning it into another vehicle. Without a sell, it’s not tax, it’s not you can defer that tax. So all your growth has to be deferred. Then that gets to be put into the hedge fund. Then that now gets to be dispersed between the other cryptocurrencies that we swing trade back and forth, that where you can obviously outpace the price of Bitcoin tax-free on that transfer.
Brett:
Okay, so that’s a lot that makes sure I can unpack some of this. Okay, so if I’m hearing you let’s say I bought Ethereum. Or I bought Bitcoin, and I bought it for a price that was like 100,000. It turns into 5 million. Are you saying that you can exit or transfer, like kind of transfer that 5 million worth value worth of BTC into a fund? All may remain tax-deferred? Is that correct on step one?
Blake:
Yeah, correct. It’s important to remember, that it’s an income versus a like kind of transfer. So it’s not a 1031 because we’re not actually selling anything. So that Bitcoin comes directly into the fund. Because you’re buying shares into the fund, and we then take that and disperse it between the other coins. So yes, you’re 100% correct. Tax-deferred coming into another vehicle.
Brett:
Okay, so get 5 million in-kind you’re not selling anything, you’re just transferring over the phone, but then once it’s in the fund, you said you’re dispersing it, so are you selling it at that point?
Blake:
No. So those funds then come into the hedge fund into the conglomerate. Then everything that’s done, the hedge fund is being dispersed between the strategy of the hedge fund. So John, who transferred his money in everything in his transfer in his tax-deferred, everything has happened now inside, so we have some short-term trading. So he may have some short-term capital gains that are happening. So we’re talking like triple-digit numbers here. So there are large returns in the fund. But we’re paying short term capital gains because we’ve got some things, some trades that are happening, but everything as his money’s coming in, that’s what we’re focusing on, is, we want to make sure he doesn’t have any consequences on the front side. That’s what we can do with an in-kind transfer.
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