Crypto Taxes with LLC in Wyoming - Help

[paulromain]

Hi there guys,

I am new here, as I just discovered this forum while searching for answers online regarding Crypto Taxes and LLC. Not much info on the internet, to be honest.

I do have a French passport, I am a resident in the Philippines (territorial tax system) and I have an LLC in Wyoming that I created 2 years ago.

My work is 100% online, and I am not ETBUS. I use the LLC because it is practical to use it to get paid for my design services.

I have never been interested in Crypto and I never invest my money (just keep cash).

With the high inflation now, I opened an account with Kraken for my LLC company to buy some Bitcoin to invest a little part of my savings (not big amounts).

I thought that buying, selling and even trading crypto with a US LLC was going to be tax-free for me as a non-resident like the rest of the activities I do.

The other day I casually spoke with a CPA friend of mine from the USA that crypto is taxable.

I try to search for information only, but it is confusing and hard to understand.

Does anybody have an LLC company and ever invested in crypto? How does it work?

I already made many mistakes opening the LLC without knowing enough stuff and finding it all as it goes, but now I would like to learn a bit before doing stupid things without knowledge.

I ask in case somebody can help me before having trouble and starting investing and finding how it works later on and having a bad surprise.

Thanks a lot of guys!

Hope to learn from you and participate here in the future.

Paul.

 

[TheCryptoAnt]

Im not entirely sure for crypto, but for US stocks they are considered ETBUS cause the company is located in the US.
Kraken is located in the US.

You could try asking them if they can service you from their EU entity? Or maybe use BitStamp and ask them the same.

To me it sounds like taxes. Personal opinion tho.

 

[CyprusLawyer101]

Your concern shouldnt be US taxes but Philipino taxes on crypto.

 

[JackAlabama]

TheCryptoAnt said:
Im not entirely sure for crypto, but for US stocks they are considered ETBUS cause the company is located in the US.
Kraken is located in the US.

You could try asking them if they can service you from their EU entity? Or maybe use BitStamp and ask them the same.

To me it sounds like taxes. Personal opinion tho.
Click to expand...

one can have us clients and still not being etbus. Idk the answer to your question however, but Id bet it not to be etbus if you just have an account at kraken and buy/sell crypto.

 

[robocorp]

I'm in a similar situation... My take is as long as your business is not deeply engaged with US clients/ties, you should be fine.

Regarding ETBUS, the conditions are:

1. You have at least one "dependent agent" in the US. Dependent agents are employees or exclusive contractors that work for you.
2. This dependent agent contributes substantially to furthering your company's business in the United States (e.g., negotiating and concluding contracts), as opposed to merely administrative duties.
3. you are engaged in “considerable, continuous, and regular” business in the US

If you want to be safe you could try to find another exchange supporting business accounts that aren't based in the US.
Happy to be correct though.

 

[paulromain]

TheCryptoAnt said:
Im not entirely sure for crypto, but for US stocks they are considered ETBUS cause the company is located in the US.
Kraken is located in the US.

You could try asking them if they can service you from their EU entity? Or maybe use BitStamp and ask them the same.

To me it sounds like taxes. Personal opinion tho.
Click to expand...

Thanks for the tip.

CyprusLawyer101 said:
Your concern shouldnt be US taxes but Philipino taxes on crypto.
Click to expand...

I am concerned about the IRS and doing the things well with the USA. Countries in Asia have mostly territorial taxing, so tax from abroad the country is tax-free.

Moreover, the control and enforcement from them is like zero.

robocorp said:
I'm in a similar situation... My take is as long as your business is not deeply engaged with US clients/ties, you should be fine.

Regarding ETBUS, the conditions are:

1. You have at least one "dependent agent" in the US. Dependent agents are employees or exclusive contractors that work for you.
2. This dependent agent contributes substantially to furthering your company's business in the United States (e.g., negotiating and concluding contracts), as opposed to merely administrative duties.
3. you are engaged in “considerable, continuous, and regular” business in the US

If you want to be safe you could try to find another exchange supporting business accounts that aren't based in the US.
Happy to be correct though.
Click to expand...

For taxes related to business, 100% sure, I knew that rule. Read much about it.

My concern is to crypto as it is considered “property” or something like that. Do not trust me a lot regarding this because I am not sure at all.

 

[TheCryptoAnt]

JackAlabama said:
one can have us clients and still not being etbus. Idk the answer to your question however, but Id bet it not to be etbus if you just have an account at kraken and buy/sell crypto.
Click to expand...

word but buying stocks and receiving dividends is not having client in the US.
No idea really in the crypto side.

OP you can call the IRS and ask them directly too

paulromain said:
Moreover, the control and enforcement from them is like zero.
Click to expand...

very much this

 

[JackAlabama]

TheCryptoAnt said:
word but buying stocks and receiving dividends is not having client in the US.
No idea really in the crypto side.

OP you can call the IRS and ask them directly too



very much this
Click to expand...

https://www.offshorecorptalk.com/threads/wyoming-llc-holding-bonds-and-stocks-taxable.40367/Here some good info about us stocks etc.

 

[Cryptohodler]

paulromain said:
Hi there guys,

I am new here, as I just discovered this forum while searching for answers online regarding Crypto Taxes and LLC. Not much info on the internet, to be honest.

I do have a French passport, I am a resident in the Philippines (territorial tax system) and I have an LLC in Wyoming that I created 2 years ago.

My work is 100% online, and I am not ETBUS. I use the LLC because it is practical to use it to get paid for my design services.

I have never been interested in Crypto and I never invest my money (just keep cash).

With the high inflation now, I opened an account with Kraken for my LLC company to buy some Bitcoin to invest a little part of my savings (not big amounts).

I thought that buying, selling and even trading crypto with a US LLC was going to be tax-free for me as a non-resident like the rest of the activities I do.

The other day I casually spoke with a CPA friend of mine from the USA that crypto is taxable.

I try to search for information only, but it is confusing and hard to understand.

Does anybody have an LLC company and ever invested in crypto? How does it work?

I already made many mistakes opening the LLC without knowing enough stuff and finding it all as it goes, but now I would like to learn a bit before doing stupid things without knowledge.

I ask in case somebody can help me before having trouble and starting investing and finding how it works later on and having a bad surprise.

Thanks a lot of guys!

Hope to learn from you and participate here in the future.

Paul.
Click to expand...

The IRS treats crypto as personal property and any gains you make on selling crypto in the US are treated as capital gains.Since you are a non resident alien for IRS and your llc is pass through to you the capital gains are treated as foreign sourced income in your hands which are tax exempted in your hands in the US. But you are liable to pay tax on it in your country of tax residency which may be where you currently reside depending on whether your visa there makes you tax resident or not.So don't worry about IRS taxes just keep filling form 5472 before april
Please share which bank you use to send money to kraken to buy crypto.I am interested.

 

[JackAlabama]

Cryptohodler said:
The IRS treats crypto as personal property and any gains you make on selling crypto in the US are treated as capital gains.Since you are a non resident alien for IRS and your llc is pass through to you the capital gains are treated as foreign sourced income in your hands which are tax exempted in your hands in the US. But you are liable to pay tax on it in your country of tax residency which may be where you currently reside depending on whether your visa there makes you tax resident or not.So don't worry about IRS taxes just keep filling form 5472 before april
Please share which bank you use to send money to kraken to buy crypto.I am interested.
Click to expand...

Also interesting is how to open at Kraken since they demand a long a** list of compliance requirements like real place of operation etc. 😉

 

[Cryptohodler]

JackAlabama said:
Also interesting is how to open at Kraken since they demand a long a** list of compliance requirements like real place of operation etc. 😉
Click to expand...

True, OP should be kind enough to share how he set all this up.lot of members would be interested

Mercury EMI is an option but I don't want to lose my account with them by using it to buy crypto.They are known to close accounts arbitrarily these days

Last edited: Feb 22, 2023

 

[robocorp]

I'm using Mercury to fund a pro Kraken account via Plaid. I sent Mercury's customer service a message prior to trying and they confirmed having no issues with it. No problems so far, but I'm also not sending 5 digits worth of money.

I also jumped through a few hoops with Kraken to get the account setup, they asked me for tons of paperwork, including a few invoices proving I do have clients, and bank receipts showing wires matching the amount and client of the invoice supplied. Pain in the a*s but worth it in the end.

 

[paulromain]

Cryptohodler said:
The IRS treats crypto as personal property and any gains you make on selling crypto in the US are treated as capital gains.Since you are a non resident alien for IRS and your llc is pass through to you the capital gains are treated as foreign sourced income in your hands which are tax exempted in your hands in the US. But you are liable to pay tax on it in your country of tax residency which may be where you currently reside depending on whether your visa there makes you tax resident or not.So don't worry about IRS taxes just keep filling form 5472 before april
Please share which bank you use to send money to kraken to buy crypto.I am interested.
Click to expand...

I am not paying taxes anywhere.

Are they going to check I pay taxes?

Income generated abroad is tax-free in my case, so my only concern is IRS.

In Indonesia and other asian countries, they can't control anything but as I said, it is tax-free anyway that is why many of us do.

Cryptohodler said:
True, OP should be kind enough to share how he set all this up.lot of members would be interested

Mercury EMI is an option but I don't want to lose my account with them by using it to buy crypto.They are known to close accounts arbitrarily these days
Click to expand...

I just opened normally the account. They asked few information, 1 invoice and 1 bank statement, I think. Pretty easy for me.

Regarding Mercury I never heard of anybody who got their account close. I guess that in this case, they will reimburse you back the money right? They can't just steal it ....

Last edited: Feb 22, 2023

 

[Cryptohodler]

paulromain said:
am not paying taxes anywhere.

Are they going to check I pay taxes?
Click to expand...

No IRS is not concerned about that.Your tax burden has shifted from the US to Phillipines. And if they don't charge you tax on off shore income then you are fine.Just know that if you transfer crypto from your llc to personal wallet it's a reportable transaction in form 5472.
If you are using Mercury to send funds to kraken then which method are you using ? Plaid ? Or Swift or ACH ? Which works best ?

 

[paulromain]

Cryptohodler said:
No IRS is not concerned about that.Your tax burden has shifted from the US to Phillipines. And if they don't charge you tax on off shore income then you are fine.Just know that if you transfer crypto from your llc to personal wallet it's a reportable transaction in form 5472.
If you are using Mercury to send funds to kraken then which method are you using ? Plaid ? Or Swift or ACH ? Which works best ?
Click to expand...

Answering your question, I transfer via Swift because it is free and superfast. ACH might also work I think, but slower. I have never used Plaid.

I will need to speak with another CPA because I still do not have it clear 100%, and I am not interested in paying taxes to the USA on crypto gains.

In my case, I am only concerned about not having trouble with the IRS and my US bank. Regarding my country of residence, I do not care at all. I also travel and spend periods of time in Indonesia, Malaysia etc.

I still need to decide what to do because as far as I know, it can be a pain in the a*s if you do many movements.

Furthermore, I guess there are software programs to calculate the money you make or lose. But still, have to report annually for crypto gains, right? So, I will need to hire an accountant to do any forms, maybe apart from 5472 and 1120. I'm not sure ...

I'd like to trade some altcoins and speculate a bit, but seems complicated in terms of paperwork, so I guess I will just buy a bit of Bitcoin in the end and that's it.

 

[TheCryptoAnt]

paulromain said:
I'd like to trade some altcoins and speculate a bit, but seems complicated in terms of paperwork, so I guess I will just buy a bit of Bitcoin in the end and that's it.
Click to expand...

If you end up going this route, check IBKR.
Its cheaper than other solutions and you dont have to go through turbo compliance attacks by crypto exchanges

 

[paulromain]

TheCryptoAnt said:
If you end up going this route, check IBKR.
Its cheaper than other solutions and you dont have to go through turbo compliance attacks by crypto exchanges
Click to expand...

Thanks for the advice, but I think I prefer to use an Exchange and being able to withdraw them for safety.

I will need to investigate though because I am scared that if trading a lot I need to present many forms and complicate it all.

I have 0 experience yet with crypto trading and little with LLCs.

Cheers.

 

[Cryptohodler]

TheCryptoAnt said:
If you end up going this route, check IBKR.
Its cheaper than other solutions and you dont have to go through turbo compliance attacks by crypto exchanges
Click to expand...

IBKR's crypto trading I think is provided by paxos trust which is under SEC scanner for BUSD. I'd wait for that to clear up.it might affect paxos' solvency in near term.

paulromain said:
Thanks for the advice, but I think I prefer to use an Exchange and being able to withdraw them for safety.
Click to expand...

I think IBKR allows withdrawal to personal wallet.but check their site again

 

[TheCryptoAnt]

Cryptohodler said:
I think IBKR allows withdrawal to personal wallet.but check their site again
Click to expand...

they dont, its hold by Paxos.

Cryptohodler said:
IBKR's crypto trading I think is provided by paxos trust which is under SEC scanner for BUSD. I'd wait for that to clear up.it might affect paxos' solvency in near term.
Click to expand...

its provided by them yeah. the issue they have with the SEC is not related to solvency tho.
The SEC says stables are securities and as a result has ordered Paxos to stop minting them.

You can still redeem them through them np.