Bitcoin In-kind Tax Deferral Transfer with Blake Templeton

Blake Templeton is a seasoned Real Estate and Cryptocurrency Hedge Fund manager who is passionate about helping investors invest confidently in alternative asset classes like Blockchain Technology, Cryptocurrency, and specific sectors of Real Estate. Blake serves as the CEO of Boron Capital’s family of investment funds, whose teams have created triple-digit returns and consistently outpaced Bitcoin.

Mr. Templeton is the President and CEO of Boron Capital and is responsible for the strategic direction of the company, capital markets activities, and the overall performance of Boron Capital’s Funds’ underlying investments. Blake also serves as the external voice for the company. He is an experienced and knowledgeable economic speaker and addresses small and large audiences of executives and business professionals nationwide. His passion is to awaken awareness concerning our current economy and emphasize the need for individual investment dollars to be invested into tangible assets, not paper investments (Stocks, mutual funds, etc.).

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Bitcoin In-kind Tax Deferral Transfer with Blake Templeton

Brett:

I’m excited about our repeat guest. He is the CEO and Founder of Boron Capital, an official member of the Forbes Business Council. Boron Capital runs hedge funds in cryptocurrency, self-storage, and mobile home communities. He’s got an extreme global economic equality that requires a traditional wealth strategy to win. So I’m so excited to have Blake Templeton back on the show with me. Blake, how are you doing brother?

Blake:

Fantastic. Good to see your face again.

Brett:

Absolutely. For our listeners getting to know you for the first time. Give them quickly your story and then we’re diving into all things. This is gonna be a fun one everybody, Bitcoin in-kind tax deferral transfer. It is going to be exciting. So Blake, take it away. Tell us your story.

Blake:

So, 15 and a half years in real estate. In cryptocurrency, started back in ‘06, that painted my name, no one on my own business someway somehow went into real estate did really, really well in real estate than 365 plus transactions. We focus on self-storage, mobile home parks wanted to dive into the digital world of cryptocurrency and cryptocurrency raw grew legs in 2019, with multiple specific things happening, a high real transfer where you could literally put Bitcoin on a custom debit card and go to the restaurant and swipe it and actually make a transaction to multiple other things like large companies, like square and PayPal investing into Bitcoin. Then large publicly traded companies actually put Bitcoin on their balance sheet and so many other things. So at this point, now we’re in 2022. This is like light-years, this is like decades in the crypto world that’s taking place. There are now massive businesses on the back-end blockchains. So I would just quickly say it’s like if Apple, the iPhone if Apple had an iPhone, they had a platform called the App Store. Bitcoin has a platform called the Blockchain with business apps on it. These are what create massive massive dollars moving with purchases and adoption. So, that’s what creates cryptocurrency. The value is that what’s happening behind the scenes, is not necessarily what’s happening on the news. Exciting stuff.

Brett:

It’s totally exciting. So we can geek out about that for a long time. I love that we’re going to geek out on Bitcoin in-kind tax file transfer. So part of what we do here in capital gains tax, which is exit cryptocurrency using the Deferred Sales Trust, we’ve done it for Bitcoin and Ethereum so far, but I was talking with Blake on the last episode, which is about a month ago, check it out on YouTube, iTunes, when it comes out, look up like Templeton and Capital Gains Tax Solutions. But we started talking after the show he brought it up and I was like, you got to come on and talk about that. So Blake, first of all, what is Bitcoin in-kind tax deferral transfer? What does that look like? Can you kind of walk us through the implications of what this means?

Blake:

Yeah, so first of all, one of the most common questions we get is, potentially as an investor, can I contribute my appreciated virtual currency? Can I put that into a pool or a hedge fund tax-deferred? So, I maybe bought Bitcoin in 2017 with maybe 2000 a coin. It’s 42,000 coins maybe I’ve got seven figures, eight figures in cryptocurrency, and didn’t even know it. How do I like to put that into something that’s less volatile? So they’re the IRS in 2014 essentially stabilize their definition of how Bitcoin was going to be looked at and looked at more as security specifically a property therefore, generally, it’s obviously tied to capital gains and losses with a tax treatment. They’ve essentially allowed an in-kind transfer, which means you’re not selling it, but you’re essentially positioning it into another vehicle. Without a sell, it’s not tax, it’s not you can defer that tax. So all your growth has to be deferred. Then that gets to be put into the hedge fund. Then that now gets to be dispersed between the other cryptocurrencies that we swing trade back and forth, that where you can obviously outpace the price of Bitcoin tax-free on that transfer.

Brett:

Okay, so that’s a lot that makes sure I can unpack some of this. Okay, so if I’m hearing you let’s say I bought Ethereum. Or I bought Bitcoin, and I bought it for a price that was like 100,000. It turns into 5 million. Are you saying that you can exit or transfer, like kind of transfer that 5 million worth value worth of BTC into a fund? All may remain tax-deferred? Is that correct on step one?

Blake:

Yeah, correct. It’s important to remember, that it’s an income versus a like kind of transfer. So it’s not a 1031 because we’re not actually selling anything. So that Bitcoin comes directly into the fund. Because you’re buying shares into the fund, and we then take that and disperse it between the other coins. So yes, you’re 100% correct. Tax-deferred coming into another vehicle.

Brett:

Okay, so get 5 million in-kind you’re not selling anything, you’re just transferring over the phone, but then once it’s in the fund, you said you’re dispersing it, so are you selling it at that point?

Blake:

No. So those funds then come into the hedge fund into the conglomerate. Then everything that’s done, the hedge fund is being dispersed between the strategy of the hedge fund. So John, who transferred his money in everything in his transfer in his tax-deferred, everything has happened now inside, so we have some short-term trading. So he may have some short-term capital gains that are happening. So we’re talking like triple-digit numbers here. So there are large returns in the fund. But we’re paying short term capital gains because we’ve got some things, some trades that are happening, but everything as his money’s coming in, that’s what we’re focusing on, is, we want to make sure he doesn’t have any consequences on the front side. That’s what we can do with an in-kind transfer.

Brett:

Okay, so breaking it again. So 5 million transfers in and then it’s in there. The returns are based upon these other investments that are part of the hedge fund or because you have shares in the hedge fund so that the hedge fund might have other cryptocurrencies or other assets. So you’re sharing in the overall appreciation of the fun because you bought shares in the fund? Am I following that correctly?

Blake:

You got it. Yes, sir.

Brett:

Okay. So you’re not necessarily exiting the Bitcoin, It’s just a part of the overall fun. It’s like you’re diversified like you’re putting into like a big IRA, that shared with a bunch of people.

Blake:

Very similar. So, you’re diversified, with a strategy the fund holds a portion of Bitcoin at all times. It’s ranged from 30% to 65%. Then typically, we hold five or six other coins. So Ethereum, Luna, those a Cardano, harmony, and then we’re looking at the short term narratives that and it’s not speculation and what we’re looking at behind the scenes that what’s happening on either their blockchain or in their actual strategy, we’re seeing the money the velocity happening. So we actually are making moves, knowing what’s happening, and buying low and selling high. It’s kind of looked at as you may even call it digital real estate and that side of it if for all my real estate people, and so this is how one can get into larger plays, especially when volatility. In volatility, bitcoins, and volatility and it’s not doing well in a hedge fund. The diversification allows you to do well, volatility is really good in fun like this because it gives us something to work with to make gains.

Brett:

So let’s pause here. So what point is the 5 million capital gains tax because I bought it for basically 100,000? It’s worth 5 million. Let’s just say how about a million 8, a million 9 in tax? At what point am I actually getting capital gains tax on that?

Blake:

Good question. So those funds come in, let’s just say we’re holding 2 million of the 5 million in Bitcoin. Then 3 million is then a diversified into the other coins. If this tomb, if bitcoin goes sky-high, nothing changes because it states there are no tax ramifications until this is sold on these five coins or so forth. This 3 million that’s here. The only taxes we’re paying here are on the short-term capital gains. So this is 3 million, let’s just say we take this and at the end of the year, this is now 5 million. So now we have 2 million, that’s short-term capital gains. So whatever your rate is, on your short-term capital gains, you’d be paying that on that specific piece.

Brett:

Okay, I think I follow that. But however, I came in with 5 million. So how do my 5 billion a BTC? How do three of them get over to Cardano, Luna, and ETH, in Harmony without being taxed? That’s the part I think I missed.

Blake:

Yeah, so in an in-kind transfer, it’s transferring into a pool or in a hedge fund. How the IRS sees that is it’s in-kind transfer, meaning it’s not looked at as different security because inside the fund, whereas if you’re going to go do it yourself on your own and go into, say, Cardano, or Harmony, you’re going to have to sell yourself, it’s a tax basis on how you came in versus you doing it yourself if you did it yourself, tax on it.

Brett:

If it works, it sounds really cool. Do you know what I mean? Like, it sounds amazing. How many of these have you guys done? Has it been tested by the IRS? Like those are. Because I honestly get approached with a lot of stuff and I’m like, Wow, that sounds amazing. Like I had one, actually today and the guy’s like, you don’t need a third-party trustee. You can do everything yourself. Like, he only cost $50,000 to set up and this is like a $100 million NFT sale we’re working on. I’m like, that sounds amazing. I’m like if it’s better than everything we do, and it’s totally legit, then I’m gonna redo Deferred Sales Trust. I said, here’s the question. I want to know, I can hear him start to laugh on the other side, start to smile on the other side of the phone. I said, how many of these has he done? He said, he started to smile. He’s like, 22. I’m like, look, you’re about to sell $100 million worth of NFTs. I can imagine he’s even got one audit on those like the Deferred Sales Trust, thousands, billions under management for 25 years. Over a dozen no change IRS audits. So even if what you’re saying is awesome, and maybe it’s completely amazing. It’s gonna be hard for me to take a chance on something like this and even call me at 23 years when you’ve been doing that for a while. So I’m curious, what’s the track record for what you’re talking about?

Blake:

Yeah, so we’ve done multiple of these over the last two years. We’ve obviously, again, as I said in 2019 went really when cryptocurrency really legs. So two years is really the only time one could have done it. Specifically, January 2018 is when IRS really processed this in a serious way. IRC 721(a) says there’s no gain recognized on a transfer of property in exchange for a partnership interest. I’m speaking of virtual cryptocurrency into a hedge fund. So that is their specific.

Brett:

Say it again.

Blake:

IRC 721(a)

Brett:

I imagine you have it because you’re smart. By the way, for people who don’t know, Blake has done multiple millions of property and he runs us some really, really ultra-high net worth individuals. I imagine you have a top CPA or tax attorney that’s helping you put this together, I mean, Blake’s just trying to he’s not just looking at these things online himself and putting them together like to let people know that.

Blake:

Yeah. I guess the most important thing is if anyone has an interest in that, then we can go deeper into the specifics, and then obviously we can speak with your CPA and your attorneys and make sure everyone sees the alignment of the IRS Code. Most importantly though, is on a high level. That’s what, Brett, I love about your show is that your mindset is that we don’t want to become what’s called the natural condition of man or we fall asleep and become a machine. We don’t want to put our heads in the sand while everything else is happening around us. We don’t want to gain bad rules that maybe were good rules in the 1990s, and the stock market boom. Then you just never changed your rules and on things that don’t serve you. So I really appreciate your openness and, where you see a bigger play in helping everyone steward their wealth. Obviously, we’re both Christians. So this mindset of like stewardship wisdom, seeing it from what I would call God’s perspective, looking down on it, seeing through all the camouflage, there’s so much volatility and camouflage and soap opera going on. So big pictures if you have cryptocurrency, and you’re interested in that, then that would be an interesting thing for you to process and see if it’s a good fit for you.

Brett:

Absolutely. But we can learn more about Blake Templeton at boroncap.com. Let’s shift a little bit. Let’s chat a little bit about just the current state of values for cryptocurrency. What are you seeing right now? Bitcoin hit almost a high of about 69,000. They can drop to about 35 and ETH, as well as is been typical correlates a lot with BTC. So what are you seeing, what’s kind of your feelings on the current temperature of the Crypto market?

Blake:

We’re obviously very bullish. There are some things right now that are creating volatility, in China, the largest developer of those 300 billion in debt is not able to pay their debt service. There’s right now a massive developer every single day right now filing bankruptcy in China. So obviously, you get your ghost cities, your ghost towns of my massive high rises and so when the conglomerates with a 300 billion filed they’re not gonna be able to make their massive payment of over a billion we saw a spike or a dip in the stock market and crypto and everything because it shifts the whole world when you’ve got those things happening. We’ve got that then you’ve got obviously with the Ukraine and Russia. Everything has an interesting loop of some sort. So one thing I will say just on newsworthiness cryptocurrency the culture of those who hold cryptocurrency $52 million was donated through cryptocurrency when the US banks couldn’t get money in when the US government didn’t send money to Ukraine, 52 million came through cryptocurrency holders into the Ukraine governments to supply aid to the Ukraine citizens so I think that speaks to the culture of the individuals

Brett:

That’s amazing. That’s not to be overlooked right 52 million and probably raised with what in a couple of weeks here if that right, one week $52 million and it’s instantaneous right where they can get it together and I wonder who organized that and but whoever did that God bless you right you get to get to that aid and that’s a that’s incredible Wow. I know that stat I mean, part it part of just my head’s been in the sand a little bit with what’s been going on. It’s so busy, but this is really amazing. So what else, that billionaire went out and you’re looking at things that are hurting but overall

Blake:

Here’s kind of a big picture I think it’s really important is that there are massive influencers that are completely turning a 180 and being maybe called converted into a cryptocurrency optimist. There are multiple who have in the past you’ve got Mark Cuban yet Ray Dalio. Matter of fact, Ray Dalio largest he owns the largest hedge fund, obviously in the world in 2017. He said, so Bitcoins, a bubble. It’s not an effective store hold of wealth. It’s volatile. Then in 2021, he says, personally, I’d rather hold Bitcoin than a bond. Now for Ray Dalio, that is a massive statement because 40% of his entire portfolio strategy was Bonds. So you’ve got people like that, but the brand new news, the cutting edge, hot off the presses, Ken Griffin, CEO of Citadel, who, you know runs 235 billion in a conglomerate, an investment firm. Hitler’s a massive crypto detractor completely, he’s completely transformed. He was previously the guy dismissing cryptocurrency calling it the G hottest call against the US dollar. Last week, he says that cryptocurrency has been the greatest story in finance history over the last 15 years. He says, the Crypto market today is over 2 trillion. I’ll have to tell you that my call was wrong. I made a big mistake. You’ll see Citadel investing into cryptocurrency in some way this year, so massive to another 35 billion under management, and comes out and says, we’ve got to be in cryptocurrency, I was completely against it, this is actually where I’ve got to be. You’ll see more and more of this, with the US dollar continuing to be at almost 15% inflation if we’re looking at the real numbers. I mean, that means your dollars just dying. I mean, it doesn’t buy what it used to buy. So when you get these big companies, they’ve got to put their money somewhere where it’s going to help stockholder wealth.

Brett:

You know, it’s really interesting, I live in California, we’ve seen that kind of the destruction of California, like fiscally, over the last 30 years and my dad talks about we built build real estate growing up my mom, dad in the Bay Area, and how much easier it was to do business and how much more like accessible things were getting done. And then you see the cost of labor and the cost of regulation, and then the cost of, of lumber and all these things, and just the housing crisis, and it’s like, they haven’t figured it out, and they’re just getting worse and they just double down on this stuff. There’s no accountability. So the part of the cryptocurrency part where I love is the ability to in real-time, the blockchain to see every single transaction, It’s there in the transparency of it all and the instantaneous of it all, and the accessibility of it all in the protection of it all. My wife and I are considering moving to Florida, and part of it is just because like California is just a train wreck. Like, I mean, we love California part of it, but physically, I feel like in all the businesses that are just fleeing they’re going to figure out ways to get certainty of business, the climate of regulation, good job growth of all of these things.at some point, it seems like it’s going to catch up with them being physically irresponsible but they’re not held accountable, because they can just keep printing the money. So on the other side, in cryptocurrency, we don’t have to invest in their dollar so talk about that, Blake.

Blake:

So I look at cryptocurrency like Bitcoins, specifically as a life raft out of the US dollar. So the US system desires for you and me to stay in the system. But they understand that the monetary, the physical money won’t last because they can’t, but that’s not even what they’re printing, they’re printing digital money. So, they’re creating digital wallets, and China has a digital wallet for their digital currency. So everyone’s going digital, we will have a digital currency, they’ve already made their plan to get rid of coins, and then they’re going to go into the dollar bill and the $5 bill. So you’ve already probably seen at restaurants where it says, we have a coin shortage please have exact change. Okay, there’s not a coin shortage. Are you kidding me? I mean, this is silly. So they’re moving it into a system, a digital system, and why do you want it to be in a digital system because now they can track everything. So they can have your, your tickets, you can they can have your medical, they can have your, your actual ethnicity, and they and then they can actually these are the things that are on the horizon that just process, do your own due diligence, but they can actually then get rid of the IRS, and they can actually tax you through this digital system. So when your money comes in, they can just pull that money out. So that gives them too much power, they already have too much power because they can just print which dilutes your dollar. So moving into Bitcoin, putting money into a store hold of wealth is its creature sovereignty, it creates your freedom, you actually are owned right now we’re a slave to the US dollar. You can’t even vote to say, Hey, you can’t print that anymore. Matter of fact, 25% of the Fortune 500, the S&P 500, and 25% of them are what we call zombie companies that cave and pay their debt service. The US government is just paying for them. So this is where the economy is you and I don’t want to actually be tied to it. We can be of it or be in it but not have it. Then we would want to have our wealth, not in the US Dollar worse, where it’s actually going down in value. So that’s a massive benefit for cryptocurrency.

Brett:

It’s also a vote for commercial real estate and investment, real estate and housing for people hard assets that produce cash flow, and then they get the depreciation to offset the taxes, Because the other concepts here that we’re really focused on 2022, it’s no longer about cash flow. It’s about tax flow.it’s just as important or more important than ever, to realize how your tax is flowing, what you’re paying, where you’re living, what business you’re in and what entity you’re in. Like, it’s always been about both, of course, but I feel like cash flow is is like the thing that people it’s everyone’s for cash flow, and I’m for cash flow. It’s so important to know where and how your funds are flowing. Because otherwise, you could be on the wrong wrong side of the Rich Dad Poor Dad bucket. You could just be paying a lot of taxes. Any last thoughts on that before we wrap up the show,

Blake:

I think just a bottom line. I mean, I love that mindset. The thing is, you have to actually call a timeout, cut the emotions, and just actually be aware of, as you mentioned, where taxes are for your property taxes, or your tax-deferred tax bracket is and start processing the future. So we typically live in the past. But we gotta be future-present where we actually make our decisions based on the future. Those so much rapid growth in the printing of money, where you didn’t see the cons, the consequences. Well, now we’re tasting the consequences. So now they’re going to continue printing money because that’s the only bullet in the gun, they don’t have any other things that to help the economy. So you and I have to be good stewards and have our investments in the place that’s actually going to be most profitable for us.

Brett:

Makes perfect sense. Blake, I want to thank you for being on the show. If our listeners want to reach out to you and connect to you, where can they find you?

Blake:

The absolute best way, I’m gonna give you guys a private number. The best way is just to text. This number, you can’t call it just a text. So specifically for you guys, that texting and put your cell phone, you’re going to text the word INVEST to the phone number 877-771-0615. So you can text the word INVEST to 877-771-0615, and I’ll respond personally.

Brett:

Excellent, Blake and I put that up on the screen here in just about three seconds. So text the word, INVEST to 877-771-0615. That will get you with Blake. That’s our custom fancy number. That’s pretty cool. You never had a custom fancy number before. So make sure you get with Blake there. Thank you for coming to the show. We’ll have you on again real soon.