On September 15, the U.S. Department of Justice (DOJ) recently announced a case in which an early Bitcoin investor admitted to "submitting a tax return that falsely reported his cryptocurrency gains." Texas resident Frank Richard Ahlgren III admitted to underreporting the capital gains he made from the sale of $3.7 million worth of Bitcoin.
According to court documents, Ahlgren purchased 1,366 bitcoins in 2015, each worth no more than $500. In October 2017, he sold 640 bitcoins for a total of approximately $3.7 million and used the proceeds to buy a house in Park City, Utah. However, Ahlgren's 2017 tax return incorrectly overstated his cost basis for purchasing bitcoins, thereby underreporting capital gains.
In addition, he failed to report $650,000 in Bitcoin sales in 2018 and 2019. The Justice Department noted: "In total, Ahlgren caused the IRS to lose more than $550,000 in tax revenue." Ahlgren will be sentenced at a later date. He faces up to three years in prison, as well as a period of supervised release, restitution and a fine.
