Deferred Sales Trust Breaks Open A Clear Path To Sell Ethereum
Is there a way to defer capital gains tax on the sale of Ethereum, Bitcoin or cryptocurrency? The answer is yes. Hi, I’m Brett Swarts. Welcome to another episode of the capital gains tax solutions podcast where we believe most high net worth individuals and those who help them they struggle with clarifying their capital gains tax deferral options. Not having a clear plan is the enemy and using a proven tax deferral show such as the Deferred Sales Trust is the best way for you to sell highly appreciated assets including cryptocurrency, including Bitcoin, Ethereum, including high-end primary homes, investment, real estate or businesses. You can defer the tax you can grow your wealth, and you can escape feeling trapped forever from selling due to the high capital gains tax, which is somewhere between 30 and 50% of your gain depending on what state you live in. Depending on the depreciation recapture. Each episode, I’m typically joined by some of the best in real estate finance wealth in business. Today, we’re just covering it’s just me, Brett Swarts. Herewith capital gains tax, which is covering a deal story that just closed Deferred Sales Trust breaks open a clear path to sell Ethereum.
I’m just going to share with you this story and then answer a few questions that came up from it and so that you can have the wisdom and hopefully unlock a clear plan for you a friend or family member or a client who’s looking to sell. This story starts about seven years ago, and it’s for a client of mine named Peter and his wife, and they purchased their first Ethereum. Peter has been in the tech industry for a long time. He’s in Silicon Valley, and he’s working there, and for a company, he’s learning about cryptocurrency, and he’s starting to become an expert in it and understanding the future opportunity for Ethereum. But who would have anticipated that the value would have increased by 1000s of percent in just a few years? Peter saw a great opportunity to sell in 2017, after a massive amount, a massive amount of crypto. However, he couldn’t find a clear legal plan to defer the large capital gains tax. So he found himself feeling trapped by the consequences of selling, and so but he did help. So in the marketplace, went up very high, and you can kind of follow up, follow this, I’ll get into some numbers here in a second, and then it crashed. But Peter held on to his belief that the fundamental value of Ethereum and the potential business opportunities are brought to end-users during the users, even when it was crashing.
Basically, the value of Ethereum fell from about $1,400 to below $90, and that was a tough pill to swallow, because he had bought it at such a low price and seen such a rapid appreciation, and didn’t have a clear plan knew he was a good time to sell but didn’t get out in time, and he said that was a really tough pill to swallow. Now, fortunately, he held on-again, to his belief in the future of it and conviction, he had a certainty of conviction for the future of Ethereum, and everything returned in 2021, and much more than even just the 1400 number. In fact, in early 2021, he met with one of my strategic alliances. Her name is Jessica Lanning, and she’s with Lanning financial out of San Francisco Bay Area, and she’s a financial advisor, and she told him about the Deferred Sales Trust and introduced and Jessica works with me, and so introduced us together, and so of May of 2021 Ethereum reached an all-time high, check this out. $4,362. Pretty staggering to think about, and so again, he says, I knew it was a good time to sell at least a big portion of his coin. But since he didn’t want to miss it, because he didn’t want to miss the opportunity again, and it’s been like a really long three years between the time he waited to sell. So now, it didn’t come so easy, because between the time he knew who he found the solution and the time it took to set up the accounts and get everything in order.
The value actually dropped from 4001 72 in May to about $1,800 in July. Ouch, and he talked about reliving the past of like the pain of having a high not having a planet crashing and then having high having a plan then it crashing, and he says that was a really stressful few months, and in fact, he had resigned from his corporate job and partly because he had the chance to live off the income that the trust provided and then cashflow part of things and be able to diversify his wealth. But he ran out of time again, and so that was frustrating. But he did what he always had done before and he believed in the future of Ethereum and the underlining conviction of the business purpose for it. So he set a target exit price, and this is one of the strategies I help my clients do because it can be an emotional roller coaster and selling business. is a real estate, or Etherium, or stock of these highs and these lows, and so set out a vision and an exit plan, have a target price or target number can really help to ease the emotions and help to execute on it.
So his target price was 3000. But again, it was around $1,800. At the time that he said it for 3000 bucks, I think it’s 3000. I’m going to sell a large, large percentage of this, and so on August 7 2021, Ethereum surpassed the 3000 mark, and this is the quote for me says this was the moment my family and I have been looking forward to for a long time, I wanted to put a significant amount of money into the Deferred Sales Trust. So the help of capital gains tax solutions, and Brett Swarts, I was able to transfer Ethereum into the DST and also some bitcoin as well, and I want you to consider the following scenario, and it’s actually really funny because I’m driving from Sacramento to the Bay Area on a random Saturday for some training and some training and insurance, and he calls he texts me in the mornings, like, “Hey, Brett, Ethereum past 3000 overnight, and I’m ready to make some transfers, can we make this happen?” Over the next hour, we work together with the two-factor identification codes, and with placing the trades online, and was it was a bit stressful because there were some downswings and Ethereum prices as I was trying to get these orders to fill us.
However, within two hours, I was able to liquidate my crypto above my target price, and from there, we’re able to fund the Trust Bank account, and so I felt like it was out of a movie and I’m talking to Peter, we’re laughing. I’m like, Peter, what are the odds that you’re in, and he happened to be in the Bay Area, and I was kind of the berry driving on a random Saturday, and that we had come together over this period of like six months, seven months, and our stories collide for this pretty stressful moment of a theorem hitting that target price after head drops are so low. So it was an honour and a pleasure to be a part of his story and his opportunity to escape feeling trapped by capital gains tax. So he’s able to achieve that, and just to kind of give you guys a little bit more on to the capital gains tax sort of the things. In California, just one place, for example, the capital gains tax was expected to be about 28% or so of the sale, and it’s just a hypothetical scenario. Let’s imagine someone had a million dollars of gain and a million dollars of the coin, and that the state of California is gonna take about 13.3%. Federal is gonna be about 20, and there’s a Medicare tax of about 3.8%. So tax liability combined around 20% equals about $280,000, and so that is the value for every million of gain, and millions of net proceeds going into a Deferred Sales Trust for cryptocurrency, it’s about a $280,000 difference, which can be tax-deferred can be put into real estate and put into stocks, bonds, mutual funds, and the cash flow can come out.
Typically the trust is paying out somewhere around 8%. Net of recurring fees, and so that is on the full, million versus about 720,000. So you can kind of do the math there, and at the end of the day, what this provided for Peter and his family is the chance to transform their time and their energy and not have to work as much and to retire a bit early. To get some peace of mind to diversify their large, large amount of wealth here, and we like to say in order for them to enjoy living more of their best life, you’re at Capital Gains Tax Solutions, we are passionate about helping people achieve their best life with their time, their energy, the stress with their wealth, the ability to start a new company, new business people to give back to others, and that is all using the amazing Deferred Sales Trust, and so that that’s the story here, and so if you want to learn more about this and if you have, you’re curious about how this might be a fit for you can go to capital CapitalGainsTaxSolutions.com, you can apply for a no-cost consultation with me or one of my team members where we can assess your scenario and to see if the Deferred Sales Trust can be a good fit or not just a general rule of thumb, million-dollar net proceeds and million-dollar gain is what we found to make financial sense with the ROI and that is that’s what they get any highly appreciated asset.
You can also subscribe to our YouTube Channel where we have we have updates and deal stories and podcast interviews with others as well. We have a Free Mastermind in fact you’re doing every Friday for it’s a focus on cryptocurrency we call it you know cryptocurrency Capital Gains Tax Solutions Mastermind. It’s totally free. Everyone’s invited and we’re all sitting down discussing the Deferred Sales Trust discussing cryptocurrency discussing deal close stories and, and strategy of basically how to take crypto and sell it and diversify it into real estate or securities all tax-deferred and again, that’s every Friday 10 am Pacific Standard Time. If you want more information about that you can register and sign up at CapitalGainsTaxSolutions.com. I so appreciate everyone out there listening and watching. Please rate review, subscribe, and we’ll talk again soon.
Closed Deal Story
Selling Bitcoin, Ethereum Capital Gains Tax-Deferred Using the Deferred Sales Trust
I believe that is where we’re at with cryptocurrency’s current marketplace. We closed the first Bitcoin and Ethereum case for $5 million and helped the client defer around $1.5M in capital gains tax. Now we’re getting a wave of individuals who are finding us. You might be finding us right now.
One of the biggest challenges with folks who are selling cryptocurrency is they want to be able to diversify, they want to be able to time the real estate market and or even the crypto market, they want to be able to have some liquidity, some cash flow, and so part of this vision is taking helping our clients who are in cryptocurrency, buy an investment, real estate, all tax-deferred, using the Deferred Sales Trust, also invest with Jake Mellor as the financial advisor to in a diversified investment grade security or start a business. Whatever the outcome that you want to do. Why is it that you’re investing with any type of asset? What if you could sell high, diversify, and buy back in whenever you’d like to? This is what we’ve already done and we’re doing, we’ve already proven it.
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Want to learn more? Check Out The Blogs Below!
- Can a Deferred Sales Trust Be Used for Mergers and Acquisitions?
- How to Defer Capital Gains Tax When Selling Your Cryptocurrencies
- Need An Exit Strategy? The Deferred Sales Trust Might Be the Answer