Legal Opinions for Crypto Tax Issues
We understand the unique challenges that come with crypto tax issues, and we are committed to providing our clients with the expertise and guidance they need to comply with tax regulations and avoid penalties.
Legal Tax Opinion Letters
Our firm is expert in defensible legal arguments and opinion letters for digital assets. The Tax Opinion Letters prepared by our tax and legal professionals consider current tax code, legal arguments, and pertinent authorities of digital asset tax issues for analysis to present an even-handed assessment for different types of digital asset activities.
Blockchain Validator, Staking, Liquidity Staking
Proof of Stake (PoS) networks operate based on the concept of staking to validate crypto transactions and maintain the public blockchain transaction ledger.
Liquidity Pool (LP)
An LP is often collection of funds locked in a smart contract. Users, add an equal value of two tokens to create a market. These pools are used to facilitate trading by providing this liquidity on decentralized exchanges (DEXs).
Mining Crypto
(Digital Assets)
Proof of Work (PoW) networks use computer resources to validate crypto transactions and maintain the public blockchain transaction ledger.
Wrapping,Bridging,
and Routing
The process of packaging a Digital Asset for use on a different network, or decentralized application. This unlocks numerous use cases by allowing blockchain networks to exchange data and move assets between them.
Crypto Airdrops
An airdrop is a strategy used by blockchain projects to distribute free tokens or NFT’s to users, to help create market demand/participation. This incentive is usually for free, in return for a service, or for general promotion.
Digital Asset Loan Collateralization
The borrower locks a certain amount of their cryptocurrency in a smart contract or with a lending platform as collateral. In exchange, they will receive a cryptocurrency, often in the form of a stablecoin.
Have a situation not listed above?
Contact Olson and Partners Law to determine if you would benefit from a Legal Opinion.
FAQs
A legal tax opinion is a form of written legal advice to a client. It is often used to give a level of professional certainty to transactions with unclear tax outcomes.
In the digital asset space, a legal tax opinion could be helpful in any transaction where there is not clarity from the Internal Revenue Code and regulations about the tax outcome of a transaction. We find that this happens often with digital asset transactions, as they are unique types of transactions that do not have many analogies in the non-digital world.
You would not provide the legal opinion to the IRS or file it with your return. Instead you would keep it for yourself to be able to prove that you received legal advice about the tax outcome of a certain transaction. In that sense, having a legal opinion would not increase your chance of being audited. On the other hand, any time you take a tax position that reduces your current tax (including simple things like deductions) you likely increase your chance of being audited. Similarly, for some of the legal opinions we write, given the uncertainty of the position we recommend that clients disclose the position on their tax return. This is decided individually for each client.
A legal tax opinion is written legal advice. One of the questions that the IRS or tax court often wants to know is whether the taxpayer relied on professional or legal advice in deciding to take a certain position. The legal opinion would be evidence of that advice.
A legal tax opinion is written legal advice. One of the questions that the IRS or tax court often wants to know is whether the taxpayer relied on professional or legal advice in deciding to take a certain position. The legal opinion would be evidence of that advice.
Yes, any tax lawyer is technically capable of writing a legal tax opinion. You will want to make sure your lawyer understands the intricacies of digital asset transactions before writing an opinion. We are a hybrid law firm that works with experts in the digital asset space to ensure that our opinions match the reality of the situation.
No. The legal advice you receive is just for you. If you have friends who have participated in the same or similar transactions, they will likely be good candidates for their own opinion, but the opinion is only advice to a single client.
The legal opinion should remain valid as long as the facts of the transaction do not change.
Legal tax opinions that we write in the digital asset space often cost between $10,000-$25,000.
We are usually able to write an opinion within one week of receiving all the information from you.
Keep it for yourself. It is proof that you received legal advice about the position. In an audit it may be useful to provide it to the IRS, but that will depend on the circumstances.
Yes, we are happy to help you file your taxes. We are happy to either work with your CPA or give you a referral to a CPA that can file for you.
Yes, we work with a sister company, Moontax to reconcile your transactions to reflect the position you are taking.
The tool reviews public transactions in your wallet and identifies transactions for which we have written opinions in the past. We still need to verify with you, and you still need to become a client of the law firm prior to receiving any legal advice, but we can help you know if you have participated in transactions for which we have written legal opinions in the past.
About
The Olson & Partners Law team was born from unlikely circumstances. Deep rooted in crypto, tax, and law we all came together to strengthen the future of Web3 and Blockchain. While mass adoption of digital assets seems assured, there remains several massive stop gaps. The creation of bad laws by uninformed policy makers could be the ugliest of them all.
We recognize the space as being full of creatives, innovators, and builders who deserve more than a tax compliance solution.We at Olson & Partners Law strive to influence fair legislation.
We are able to do this legally and defensibly because of our thorough understanding of current tax laws, and blockchain technologies.
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