#582: Austin Woodward on Building Tax Infrastructure in Bitcoin
6/15/2021 · 44 min · transcript via mlx
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Key topics
— Taxbit raised $100 million Series A from Tiger Global and Paradigm to scale its cryptocurrency tax software and accounting platform across retail, enterprise, and government markets.
— The IRS has selected Taxbit as an official cryptocurrency tax software provider to audit taxpayer accuracy and compliance with tax filings.
— Tax loss harvesting allows investors to sell positions at a loss, offset capital gains, accumulate losses over time, and repurchase correlated assets to legally minimize tax liability without wash-sale restrictions in crypto (yet).
— Taxbit is democratizing tax optimization strategies previously available only to the ultra-wealthy by integrating native tax-loss harvesting tools directly into exchange and wallet platforms.
— El Salvador's Bitcoin legal tender adoption does not change U.S. tax treatment of Bitcoin (still classified as property, not currency), but signals growing institutional and government adoption globally.
— Regulatory compliance and the closing of the cryptocurrency tax gap are essential for mainstream adoption; the IRS is issuing 1099s and conducting subpoenas to enforce reporting obligations.
Market & price signals
— None discussed.
Actionable insights
— Retail crypto investors can use Taxbit's tax optimization module to identify cost-basis lots with losses, sell them to reduce taxable gains or carry forward losses indefinitely—a strategy historically reserved for wealthy individuals that can save middle-income users tens to hundreds of dollars annually.
— Investors should consider tax-loss harvesting in crypto without wash-sale restrictions by selling losing positions and immediately repurchasing highly correlated assets (wrapped Bitcoin, other Bitcoin-backed securities) to maintain exposure while harvesting losses until potential future rule changes.
— Anyone holding crypto should expect increasing IRS enforcement through 1099 reporting and exchange subpoenas; voluntary tax reporting compliance is declining, making accurate record-keeping and timely filings essential to avoid robotic audits.
Episode sponsorships
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