Ellsworth

Bitcoin tax evasion

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Ellsworth
, 11-08-2024 at 07:42 AM (57 Views)
I am not really a techie, but I am someone that can conceptualize.

A LHBA member, who worked for Microsoft, once asked me "How can I sell a bitcoin and have it be untraceable?"

How the heck should I know?! I gots no idea.

So I asked that question to another LHBA member who once worked at Coinstar, before working at Microsoft.

Their answer was, literally, "Place an add on CL and sell it for cash in a dark alley at night!"

Oh geesh, that could work, just like a drug deal. What could possibly go wrong?

Yesterday A thought occurred to me that statistically, bitcoin sales and real-estate purchases are likely linked events for a specific cohort of investor.

And perhaps the easiest way to break the law when transforming hidden online wealth into real world taxable and spendable wealth is the following:

Step 1, Cash in bit coin and pay tax on it.
Step 2, Use that highly taxed cash to buy a bunch of crappy investment properties that are 'properly compartmentalized' when it comes to ownership of record (i.e. a series of LLCs own the rentals).
Step 3, Pay the income tax rate on fake rent from non-existent tenants. (i.e. pay yourself rent in bitcoins at current market value of the bitcoins and perhaps higher than market value for the rental amount)

Maintenance costs are near zero, when there is no tenant, so are management costs.

There's real estate tax to pay on an appreciating asset. The bitcoin profits that funnel through the rental are taxed at earned income versus capital gains.
So it's not tax elimination on transferring bitcoin to a bank account, but it is tax minimizing with a benefit of holding real property in the process.

The "Why bother with all the headaches of real tenants!" Bitcoin method.
aka
The bitcoins aren't real, the dollars aren't real, the tax amount is simply made up, so why should the tenants be real?

"Bitcoin sales and real-estate purchases are likely linked events for a specific cohort of investor." That is no joke, it's a traceable/trackable trend over time and eventually big data will identify the general cohort and link the participating individuals.
Everything else is a napkin sketch of possible workable illegal goofery.

I have not considered every aspect of the above described, surely illegal, possibly workable wealth washing system. The nitty gritty details. Because I don't care to. I share the concept because I think it's an interesting theory.
It's always better to "render unto Caesar."

Disclaimer: I own zero bitcoins, I own one company. That company owns no other companies. That one company owns no bitcoin. No one in my family owns bitcoin.
And, this era is like the wild west, but then many eras were (Tulips versus Latin American gold).

Would such an illegal bitcoin/real estate scam work?

The answer might be, "Oh geesh, that could work. Just like a drug deal in an alley at night, what could possibly go wrong?"

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Updated 11-08-2024 at 09:08 AM by Ellsworth (No warm up, 2 edits)

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  1. Ellsworth's Avatar
    Checking the forum data, the first mention of bitcoin was in 2015. The forum existed before 2008.
    (I did not dig into the 50+ page long joke thread, or the 50 page "thread about nothing" due to length, but both contained the word. I had eyeballs on every other reference)

    The Log Home Builders Association, founded by DeWelle 'Skip' Ellsworth does not have a single posting advocating for bitcoin, as of today's date.
    Arguably up until the year 2024 the Association was following Skip's style of marketing content. Arguably perhaps around 2018 is the year the marketing started to change.

    Since 2008, the creation of bitcoin the LHBA forum has 9 total threads that contain the word bitcoin (7, if you ignore the joke thread and the 'thread about nothing).
    Not a single member advocating for bitcoin, or spreading education, or stating their personal belief / outlook.

    One member came close enough to mention his mining rig heats his house, and gave specs, but that's not advocacy.

    It has made me pause to reflect, there may be implications to that.

    Edited to add:

    There are also zero threads on precious metals.
    1 thread on "recession" started in 2022.
    25 threads that mention "Dave Ramsey."
    Until 2024 the forum had no 'general discussion' area (off the narrow log home topic), but that didn't prevent non-log home related posts/threads.
  2. Ellsworth's Avatar
    I spent part of the day considering how such a ghost rental scheme might effect the community where the ideal "cheap" homes would be located.

    The scheme would disproportionately effect the poor, because the wealthy would be removing low cost homes from the market.
    The landscaping would be switched to 'barren,' to eliminate landscape maintenance costs. That's zero curb appeal.
    The occasional broken window might end up with a permanent painted piece of plywood, instead of glass.
    For small towns it would maintain the real estate tax base, while removing the human souls.

    They would be the homes that tended to remain the 'lowest price, nearest comp,' due to lack of homeowner motivation to do any remodeling.
    Each ghost renter home would be a negative anchor of 'no real improvement.'

    Shenanigans usually cause problems, seen and unforeseen.
  3. Ellsworth's Avatar
    Likely my last afterthought on the topic:

    If you are of the cohort who has accumulated bitcoin wealth, then perhaps you might find that building a DIY butt and pass log home is an ideal way to spend time.

    It is unarguably a meaningful activity - both financially and intangibly.
    It would help maintain physical fitness.
    It is much better than a sudoku puzzle or crossword puzzle for maintaining mental agility.
    It involves working with heavy machinery and moving large logs (aka, the crap gets real, real quick).
    It's an explainable activity (way to pass time).
    It maintains purposeful socialization which is good for mental health (providers / subcontractors).
    It can help a person integrate within a local community.
    And in the end you get a lasting, artistic expression of a home that should last for generations.

    If you're bitcoin rich and feeling listless in life, consider rolling up your shirt sleeves and peeling some logs.
    It might do you good.
  4. Ellsworth's Avatar
    'Socio-economic Freedom.'

    Was perhaps my father's favorite phrase/philosophy/goal.
    It was one 'flag' of the LHBA marketing.

    The other was (rephrased / summarized in my own words) the Easy, Speedy, Process of the Butt and Pass construction style.

    E.S.P.
  5. Ellsworth's Avatar
    It's worth pointing out that yesterday was perhaps a triple Doge day.

    1) Department of Government Efficiency (DOGE).
    2) Dodge that punch, Tyson vs. Paul (DODGE).
    3) Doge coin (DOGE).

    It might be worth buying some Doge coin, or it might be worthless.

    And it could be that the value/exchange rate of some bitcoin brands will be highly pegged to political affiliation.
    Meaning that in the future there might be a poor exchange rate between a Republican/Conservative backed bitcoin brands and Democrat/Liberal backed bitcoin brands and vice versa.
    Updated 11-16-2024 at 12:46 PM by Ellsworth (No warm up, 6 edits)