Douglas Hord- Crypto Update

There’s a lot of bad internet advice about crypto taxes. Don’t fall for it. As one of the handful of consultants in the country with an Advanced Crypto Tax Expert (ACT-E) certification--along with 38+ years of business and tax consulting--My Tax Guy In Houston is uniquely qualified to craft your ideal tax solution.

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Your hosts: Colton Cockerell & Trisha Stetzel
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Transcript

Colton Cockerell: 0:04

Hello and welcome to a another exciting episode of Bridge the Gap where we're balancing life through health, wealth, business and relationships. All right, what is going on everyone? Welcome to the show. My name is Colton Cockerell. I'm so excited right now I can't keep it in. Well first let me introduce Trisha and then we are going to go straight to questions because I am so pumped. Trisha, what is going on?

Trisha Stetzel: 0:29

Oh my gosh, Colton really gonna skip me so you can get straight to our guests today. Like I'm not feeling very good about this. Hey, everyone. Welcome to the show. Again, this month, we are focused on financial wellness. And we're going to talk about the thing that Colton is so excited about cryptocurrency and who better to talk about crypto than Douglas Hord, owner of My Tax Guy, Houston. Douglas, welcome back to the show.

Douglas Hord: 0:57

Thank you. Glad to be here.

Colton Cockerell: 0:59

Yes. And so before we jump in, Trisha, I did not forget our sponsor for this show is Results Xtreme Business Solutions. Okay. So let's go ahead and jump into questions. So let's quickly do this. Can you go ahead and just tell us for the people who have been living under a rock over the last five years? What is cryptocurrency?

Douglas Hord: 1:18

cryptocurrency is a way to transfer value that is validated by third parties where nothing physical changes hands.

Colton Cockerell: 1:28

So the blockchain is what you're

Douglas Hord: 1:30

the blockchain is the third party verification of the transaction, the digital ledger.

Colton Cockerell: 1:35

Okay. Trisha, I know you want to get some questions. And I'm trying not just to not

Trisha Stetzel: 1:40

just well, actually, you know, we were talking about before the show kind of an update on where we're at, you know, you guys are talking about the market and how big are the swings are and I happen to know that there have been some crazy things happening since you guys were talking about it. Before we jumped on, that we're really seeing some big swings, and it doesn't seem to be deterring people. Douglas, can you give us an update?

Douglas Hord: 2:05

This the whole idea of crypto and NFTs are basically day trading for millennials and Gen Z. I have seen some older people get into it. Primarily the the people who are participating in this space are male, many of them are single, and they all want to basically get rich quick.

Colton Cockerell: 2:27

Let's talk about this because you are a tax guy. I don't want to just talk about crypto, it is related to crypto. So you've been hearing a lot about the federal government. They're cracking down on crypto, and we saw it starting in 2020. With the taxes whenever they're asked, Hey, do you exchange Do you sell? Did you buy any crypto? So what are you seeing from the tax side of things when crypto is coming around? And are they able now to have more? I guess show the transactions because I know that there's no 1099 being issued back then. So can you explain kind of the I guess evolution of cracking down on the taxes

Douglas Hord: 3:00

at this point. Now there are two exchanges Coinbase and one other one that will issue 1099 B's, that's because they've been required to they're both US based companies. It's pretty easy to track when somebody is buying and trading in crypto because they you know, their banking activity, people convert this stuff to fiat so that they can actually spend it. So the IRS is notifying people that they either suspect or believe have been trading that they had they believe that they had crypto trades that are reportable that they did not report and then you have 28 days to respond, or they're going to assume you were it's still not as tightly controlled as securities futures or or other traded equities. But it's getting there. And at this point, if you don't answer the question, Did you buy trade sell, hold exchange blah. You can't even file the return. It won't go through.

Colton Cockerell: 4:03

Wow. Well, and so again, I feel there's probably a ton of fraud going on. No, I didn't write in crypto. I didn't exchange No.

Douglas Hord: 4:16

Yeah, the semantics that will be argued is impressive. Um, but yeah, this whole I'm looking to aggregate and, and, and make, you know, massive returns I end up just like oh my gosh, what's next?

Trisha Stetzel: 4:31

It's interesting to me, Douglas, as you describe the demographic right, because we happen to have someone of that specific demographic here on the podcast. As I point to Colton, for those of you who can't see my finger pointing at Colton realizing it Colton is in an industry where that might be a little iffy. Right. So Colton, do you find I know this show is not about you, but I'm just curious, do you find that people that you're hanging around with right you're own demographic are trading?

Colton Cockerell: 5:03

Yeah, actually yes, I was at dinner two weeks ago, or less than two weeks ago, I had a 25 year old male dating. You know, he's dating somebody I had a, my, I won't say who it is, but had a young 21 year old single. And then I had a married 27 year old, all sitting together the table everyone under 30 years old, all male, has Doug's pointed out every single one of them, that gave him my view on crypto, and they just, you know, they're like, like, Ah, well, you know, it's gonna go to the moon like, they don't they don't I don't think they understand find it like how the financial systems work, because we're, I'm hung hung up that and this is what Doug and I have talked about in the past, is that with crypto, again, I don't, I don't see an underlying value. If I if I buy Ford Motors, and Ford goes under, they at least have physical assets that they can sell that can generate income, right where they can maybe give me something. I mean, I know that, you know, shareholders like the last people to get paid. But still there they have physical, there's fiscal worth there. With crypto, it's just an NF Ts to it's all supply and demand. So the demand for crypto so high because you hear people like Mark Cuban, you hear people like Elon Musk go on. They talk about crypto knowing they have a pretty decent sized crypto portfolio. And so what does that do? It drives up the price. I mean, my goodness, how is how is Elon Musk saying that Bitcoin will now be used for Tesla purchases? How is that not market manipulation? And then, you know, a few weeks later, he then says, oh, nevermind, we're not we're actually not going to do this now. Well, you know, like, it's just, it's crazy. I've people are making so much money smart. Like these people who are wealthy who are they've already made a ton of money, there's making a killing. And I feel like they're, it's kinda like the Gamestop issue that happened to you know, a year ago, but in reverse. The young people aren't the ones making the money. It's the army, the rich and powerful people who are making the money. So I just don't really like crypto especially now, let me go into a question here. Doug, is what are you hearing? Because I'm hearing a lot about, you know, China, United States, they're starting to create this digital currency. Right? And, you know, I'm assuming it's so they can monitor every single transaction that we make, right? Kind of like I guess, like our credit cards. How do you think that's gonna play into Bitcoin? Because there has to be heavy regulation, right, a digital dollar for the purpose of tracking all transactions.

Douglas Hord: 7:20

The last I saw a number there were more than 140 countries looking to create blockchain verified versions of their fiat currency, US Treasury is one. My opinion in answer to your question is, if there was a blockchain verified version of the euro, or the dollar or the pound sterling. Those would be used heavily in commercial transactions. Who would never touch crypto? Because there's an actual value there. There's, as you were describing about Ford in the United States, how much is the United States dollar worth while there's some market, you know, appeal, driving the value of it, but then there's also tax collections, gross domestic product growth rates, population growth, all these other trends that you can track, and people who have completely different training than I do, would be able to come up with what that means as a future value. And then thereby it is set against other fiat currencies. I think that that's very interesting. I don't know, Colton, if you had seen But Russia has banned crypto holding and Mining. As has China.

Colton Cockerell: 8:45

I knew China. I didn't know about Russia. Yeah,

Douglas Hord: 8:47

that was very recent. And interestingly enough, Russia's moves the visa the Ukraine yesterday, cause the crypto market to take a nosedive today.

Colton Cockerell: 8:58

Yeah, so I guess we should probably date this podcast. You know, we're recording this on February 22, 2022. Yeah, no, it's been a nosedive. Yeah, so 4am. Last night, Ukraine did get, you know, there was an invasion by Russia. And so that but I mean, it wasn't I mean, the stock market too, did fall a little bit, but nothing compared to what crypto did I agree completely. Now, let me ask you this, because Trisha actually brought this up to me, and I thought it was a great question. She said, Hey, with crypto and blockchain, can someone track my transactions in the blockchain?

Douglas Hord: 9:29

Generally not know, unless there's a security breach. And we have to remember crypto.com Right before they had their massive Superbowl ad that took down their entire website. They had a $43 million crypto breach. And then there was another company the next week that had a $400 million security breach. People This, this is almost easier to steal, than by giving somebody banking information.

Colton Cockerell: 10:06

So explain that. So when you say a $400 million breach, are you saying that people are going in and they actually stole $400 million worth of crypto from? Yes. Wow, that's scary.

Douglas Hord: 10:18

But it's beyond scary. And then now that there are all these unregulated players who are trying to aggregate crypto holdings, with promises of returns that are very Bernie Madoff, like right now. You're basically giving away control of your crypto assets, for the promise of daily interest payments between seven and 20%. But then, there's no regulation, there's no security, there's no bond, there's no anything to prove that your money is being handled correctly, or it's being used to buy a Maserati. Who knows, right? Galee.

Trisha Stetzel: 10:59

Yo, can I hear I'd like to take this to a less technical place, but a more complicated place. Can I want to talk about buying a bottle of wine that you can't drink?

Colton Cockerell: 11:12

So you transition to NFT's I like it. Okay,

Douglas Hord: 11:15

NFT's are so new that there's barely any Treasury guidance on how we're supposed to deal with that. Basically, any sort of digital image can be purchased and owned. To me the most hilarious thing about it is people are posting pictures of the NFT's that they've purchased on twitter and reddit and other public forums. And then somebody just goes right Chrome, right click Save image as. Okay, thanks. It's so it's not it's

Colton Cockerell: 11:52

it's there. No IDC and that's that's exactly what I said. Is there not an ID or anything attached to the actual NFT? Because I said, I would just go ahead and just steal everyone's NFT's by just copying. Yeah, just saving to a folder.

Douglas Hord: 12:05

Yeah. Well, they're supposedly blockchain verified. However, there's zero security.

Colton Cockerell: 12:17

So let's Okay, so let's actually talk about how those actually how you trade them because this is i This is just very confusing. I could take a picture of Trisha right now with her permission, of course, and I can use say, Hey, here's a Trisha Stetzel NFT. Okay, so I can say that I bought this for 20 bucks. Alright, then Douglas, you might come along and say, Hey,

Trisha Stetzel: 12:37

wait, wait more than 20

Colton Cockerell: 12:40

a million dollars. And then Gaga says you know what, hey, you know what? Okay, why not? You know, Trisha is a good friend of mine. I'm gonna pal pay Colton. 1.1 million for it. Boom, right? Which wouldn't happen, right? It's so ridiculous. But the thing is, I don't understand that you can trade these things. The only people who in my opinion, I could be wrong, that make money and NFT's are celebrities, famous people that create NFT's because Oh, it's just like the Logan Paul Charzard card. Oh, so Logan, Paul own this NFT? Well, he can sell it for like 10 times 20 times what he bought it for because it was his NFT at one point. So how does that make any sense to trade these things?

Douglas Hord: 13:18

It doesn't. There again, it's just as you as you were describing about crypto assets. They are based entirely on demand and supply. But with NFTs, there's basically an unlimited supply. One of the things that drives crypto values is that each coin issue will state a maximum number of coins that will be issued. So they create a an appearance of scarcity. Right? But with NFT's we could just take the former president's wife who is generating a bunch of NFT's to sell for her charity. And she she knows create more than like, what's the exclusivity there?

Colton Cockerell: 14:06

Right? But again, it was a Melania Trump NFT. So again, they're gonna buy it's gonna have more value, you know, and so, I mean, I might buy an NFT if I have a friend who created something and just to help now pay five bucks for one I mean, I can I'll do that but again, I just don't I just don't see the value there's no demand there's no physical asset everything is digital, I think you get to a really scary place. And like you said a whole lot easier to to see fraud and theft because digital assets are probably more exposed versus me putting you know gold in a safe or you know something or having the SEC actually monitor all transactions that I invest in right so dangerous, man. We are coming right here on the on the dot. Trisha, I could talk we could probably go 30 minutes in this podcast once you wrap this up so we can stay within our parameters.

Trisha Stetzel: 14:55

Yeah, absolutely. Douglas. Thank you as always for coming and talking to us and I haven't seen Colton this excited in a really long time.

Douglas Hord: 15:06

Yeah, Colton, I need to get together and knock back a couple bottles of wine and just do a whole lot of giggling.

Colton Cockerell: 15:12

It's not not real bottles. Yeah. Not NFT's real. No.

Douglas Hord: 15:17

Real bottles of wine.

Trisha Stetzel: 15:20

Thank you for being on the show, Doug, Hord My Tax Guy, Houston. And by the way, if you want to get in touch with Douglas and talk more cryptocurrency all of his contact information, as well as his social connections are in the show notes. So please help yourself and connect with Douglas offline. Douglas. We look forward to having you back in a few months, so we can talk more about financial wellness on the show. Sounds great. Thank you. Thanks, Doug. Absolutely. So tune in next week for another exciting episode of Bridge the Gap where we'll be focused on financial independence for the rest of the month.

Colton Cockerell: 15:59

And we're going to be speaking to a loan officer, Mr. Trey Garcia, so it's gonna be a lot of good information.

Trisha Stetzel: 16:05

See you guys on the other side.

Colton Cockerell: 16:08

Thanks again for tuning into this week's podcast. Don't forget to subscribe and share this podcast with the most important people in your life. Colton Cockerell with Sharer McKinley Group, LLC is located at 820 South Friendswood Drive Suite 207 Friendswood, Texas 77546 phone number to 281-992-5698. Securities and investment advisory services offered through NEXT Financial Group, Inc. member FINRA/SIPC Sharer McKinley Group is not an affiliate of NEXT Financial Group, Inc.