November 30, 2020

Volume X, Number 335

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A Crypto-Tax Indictment Goes Viral

As reported in several recent entries on this blog, IRS has been engaged in ongoing efforts to enforce the taxation of cryptocurrency transactions.. These actions have run the gamut from educating investors,  miners and others on their crypto-related tax reporting responsibilities, to threatening those who may not have reported (or improperly reported) their cryptocurrency transactions activities to outright enforcement activities. A currently developing story reports on the latest high profile target of government enforcement action, John David McAfee, the founder of the McAfee antivirus software company, a former presidential contender and the subject of several other intriguing backstories.

A recently unsealed indictment revealed that McAfee has been charged with tax evasion and willful failure to file tax returns although he had significant income from a number of sources including cryptocurrencies. The October 5, 2020 public announcement follows McAfee’s arrest in Spain where he is pending extradition to the U.S.

According to the June 15, 2020 indictment, McAfee earned millions from promoting cryptocurrencies, various consulting engagements, speaking engagements, and selling the rights to his life story for a documentary.  Between 2014 and 2018, the U.S. government alleges that McAfee failed to file tax returns and report his considerable income from various sources.  The indictment further alleges that McAfee failed to report his tax liability and instead directed all of his income to be paid in bank accounts and cryptocurrency exchange accounts in the names of nominees.  McAfee also allegedly concealed assets, including real property, a yacht, and vehicles in the names of others.

If convicted, McAfee faces a maximum sentence of five years in prison on each count of tax evasion and a maximum sentence of one year in prison on each count of willful failure to file a tax return.  McAfee may also face a period of supervised release, restitution, and monetary penalties.

© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume X, Number 300
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John T. Woodruff Houston Polsinelli, Business Transactions, International Tax, Tax,Tax Planning
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For each engagement, John Woodruff’s goal is to provide strategic, practical, and efficient recommendations for our clients’ complex tax matters. John counsels clients on all aspects of international tax, transfer pricing, and tax issues related to cross-border mergers, acquisitions, and restructurings. He regularly partners with clients on issues related to the U.S. foreign tax credit, subpart F, U.S. trade or business/permanent establishment determinations, treaty-based positions, transfer pricing strategies, and strategic tax-related planning for international investments and financings...

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Virginia Y. Duong, Polsinelli PC, Income Tax Controversies Lawyer, Audit Planning Attorney
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Virginia Duong seeks legal solutions to difficult tax problems by combining a thorough understanding of the tax laws with an ability to apply them in innovative ways. She demonstrates an understanding of the tax law, and pairs this knowledge with an appreciation of the business goals of both domestic and international clients in order to offer potential solutions. Virginia's practice focuses on the resolution of both federal and state income tax controversies with the IRS as well as state taxing authorities. She advises clients throughout all administrative phases of a...

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