Legal Opinions for Crypto Tax Issues

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.

Yes, we are happy to represent a client in the case of an audit. We would have a separate engagement for any audit work.

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.

No. We may recommend that you make a disclosure of the position you are taking when you file your return, but that depends 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.