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A bitcoin investor has pleaded guilty to underreporting his cryptocurrency gains, including $3.7 million from BTC sales, resulting in a tax loss to the Internal Revenue Service (IRS) of over $550,000. The Department of Justice emphasized that taxpayers must accurately report crypto transactions to the IRS. The bitcoin investor now faces up to three years in prison, along with fines, restitution, and supervised release.
Bitcoin Investor Pleads Guilty to Tax Fraud on Cryptocurrency Gains
The U.S. Department of Justice (DOJ) announced on Thursday that an early bitcoin investor has pleaded guilty to “filing tax return that falsely reported his cryptocurrency gains.” Frank Richard Ahlgren III, a Texas resident, admitted to underreporting the capital gains he earned from selling $3.7 million worth of BTC.
According to court documents, Ahlgren bought 1,366 BTC in 2015, valued at no more than $500 each. In October 2017, he sold 640 BTC for approximately $3.7 million and used the proceeds to purchase a home in Park City, Utah. However, Ahlgren’s 2017 tax return falsely inflated the cost basis of his bitcoin, which allowed him to underreport his capital gains. Additionally, he failed to report $650,000 in bitcoin sales made in 2018 and 2019. The DOJ stressed:
All taxpayers are required to report any sale proceeds and gains or losses from the sale of cryptocurrency.
The Justice Department noted:
In total, Ahlgren caused a tax loss to the IRS of more than $550,000.
“Ahlgren will be sentenced at a later date. He faces a maximum penalty of three years in prison as well as a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors,” the DOJ explained.