Transcription
Hey everyone, Aaron here. Welcome to the video! We just got an announcement that the second distribution for Celsius creditors is going to come to us. I'm going to go over the email we received, what they posted on Twitter, and then break down the actual document detailing exactly how much will be coming back to people, as well as those who may not be receiving a distribution.
I'm also talking with Laura from Crypto Tax Girl because this distribution affects everybody's taxes. So make sure to stay tuned for that as well, because whether you're doing your taxes with her and her firm, or you're doing them by yourself on TurboTax, or you have your own CPA, it's really important to understand exactly how this affects taxes, what you need to do, what the distribution amount is, and what they based that distribution amount on. All of that is really critical, regardless of how you are doing your crypto taxes.
Also, not Celsius-related, but I am putting together a Patreon. I'm surprised I haven't done this yet or any type of membership site, but I am putting that together, and it should be live when I release this video. Essentially, I'll be walking you through everything I'm looking at for 2025, the year after the Bitcoin halving, which historically has been an incredible year for Bitcoin, but mostly for altcoins. I'll include the link to that below, where you can enter your email, get on my list, and then you can join the Patreon and be part of the community for the rest of this year and all throughout 2025.
So today on Twitter, Celsius said they will soon begin a second distribution of $127 million made available from the litigation recovery account to eligible creditor classes 2, 5, 7, 8, and 9. I'll cover that in just a moment. Distributions will be made in Bitcoin or US dollars, so no ETH this time, based on eligibility, which I'll cover.
For everyone who received an email today stating they're going to get a second distribution, it is legit. However, at the very end of this document, which I will cover, it's really important to remember that there will be an increasing amount of phishing attempts. Now, what's a phishing attempt? It's people impersonating Celsius, impersonating Stretto, impersonating Venmo and Coinbase, saying, "Click here and connect your hot wallet to get your money." That's not how it will work. You will get your distribution exactly the same way that you got your first distribution. So again, your second distribution will come through the same method that you received your first distribution. Do not click any weird buttons in any emails that you most likely will receive, because unfortunately, as we all know, our information did get leaked.
So let's go ahead and go through this, just the major things here. $127 million is coming back, and this will happen in the near term. We do not have an exact date yet for what percent this is; I'll cover that in just a second.
So who's getting a second distribution? The short answer is everybody that's not in the convenience class. If your claim was above $5,000, you will be getting a second distribution. The same goes for if you had shares in Ionic Digital through Odyssey; if you got those shares, you will be getting a second distribution. Most people will be getting Bitcoin for their distribution unless you already opted to get cash or you're in one of those situations where they tried to give you Bitcoin and ETH, but there's no distribution agent that worked. So if you got cash, you are going to be getting cash again; I believe that is what they're saying.
But for everybody else that got distributions through PayPal, Venmo, and you got a code, or you received it through Coinbase, you will be getting Bitcoin. Here they say again that they converted all the cash to Bitcoin for people that they think will be getting Bitcoin, unless you are like a corporate creditor that said, "I want to get cash," or you fall into one of those smaller subcategories. You will be getting Bitcoin.
So this is how much we will be getting back. The cumulative distribution, which takes into account what you had before and what we're getting now, will equal approximately 60.4% of the value of your claim. They mentioned that some people got a little bit higher than others during their initial distribution—very minor differences. Some people got 57.65% in liquid crypto, while others got 57.87% in liquid crypto. But if you got that extra 0.23% before, you will be getting a tiny bit less in this next distribution because everybody will approximately receive that 60.4%.
You will be getting your second distribution through the same distribution agent used for the initial distribution to the extent possible. Right? Again, if you moved or it no longer works, or you used PayPal or Venmo but in the last week or two they banned you from the platform, there will be certain people with certain issues where they will have to adjust. But for most people, if you got it through PayPal or Venmo, you will get it again through PayPal or Venmo. If you got the first through Coinbase, you will get the second through Coinbase.
Here it says if a creditor can no longer receive the second distribution through the same distribution agent as their prior distribution, or they need to submit updated distribution info—like if you have new wire transfer details or a mailing address—you need to create a ticket immediately. I'll leave the link to this below.
There are still quite a lot of people who have not received their initial distribution, like their first distribution. So if you still haven't received your first distribution, the debtors will continue to attempt to make an initial distribution to such creditors in addition to the second distribution. If you're having issues still with your first distribution—which a lot of you guys are—I recommend if you have not already, create a new ticket. If it were me, I would create a ticket every week at this point and give them all the information they're asking for. I hope it goes through, which it will eventually, but I can imagine how frustrating it is to not have gotten your first, and now we're talking about the second.
The worst-case scenario is you will get your second distribution in cash if they can't figure out how to give you your first. That applies to a small amount of you, but it's important to know that they have not forgotten about that.
If you got your first distribution through PayPal or Venmo, you will receive an email communication from the debtors with a code for collecting your second distribution through a "creditor claim form." My guess is you will just input that code just like you did the first time, and then you will get your second distribution in PayPal or Venmo. It should be very similar.
If you received your first distribution through Coinbase, you'll get an email from the debtors with an update on whether a distribution was made successfully and the next steps to take if it was not delivered successfully. So, it looks like it's exactly the same method as they used for the first distributions.
For those that had a corporate account, you'll get either cash or crypto depending on what you did in the election form. That applies to, I think, a thousand-plus of you—not a ton of people, but that will apply to you if you had a corporate account.
But again, if you had a convenience class claim, even if you are a corporate creditor, you will not receive the second distribution. If you signed up through a third party or utilized iCloud private relay to log in to the Celsius app and you have not received emails or other communications from the debtors, your account may be missing necessary info. So you'll definitely want to submit a ticket if that applies to you.
Now, I forgot to mention right here that the Bitcoin price they are pricing in your distribution at is $95,323. Now, I talk to Laura in just a moment, so do not leave the video because the tax stuff is really, really important. We will go over what this means for you, your CPA, and all that stuff. But this price of $95,323 does matter because that is the price they used to distribute this additional percentage.
Those dealing with clawbacks, also known as withdrawal preference exposure, will not get a second distribution until that has been settled through whatever means.
So how much will you be getting back? It's going to be around 2.5% of your claim. The initial distribution was around 57.9%, and you'll be getting an additional 2.12%. So it's not going to be a huge amount. Right now, they are distributing $127 million, and in the last report, they had $247 million in their account. So they are holding back almost 50% of what they have because they need to keep paying their lawyers and other expenses. They also want to have enough cash in case it takes a lot of money to pursue FTX or Tether for over $2 billion. They don't want to run out of cash and then literally not be able to do their job successfully.
That is why they are withholding about 50% of their money right now. If they were to distribute everything, they would literally have to stop all the litigations they're doing against individuals like insiders of Celsius, like Mashinsky and the other executives, everything going on with Three Arrows Capital, FTX, Tether, and many other litigations. So I'm not surprised they're withholding quite a lot of money. I think withholding $120 million is quite a lot, but eventually, whatever is left will come back to us. So that's where we get that number, and again, it'll be about 2.5% of your claim.
Now let's go ahead and talk with Laura from Crypto Tax Girl. She's going to go over everything regarding this distribution, what it means for your taxes, whether you're working with her and her team—which I did this year with my taxes—or you're using your own CPA or another tax preparation software. What she has to say is very important for you to understand how to enter this information in whatever you're using or what to give your CPA.
Laura and her team are insanely busy with Celsius creditors already. A lot of you guys have already worked with her for this year, and they are almost completely booked out for next year's tax season. So if you want to work with her and you know you already want to work with her for next year, you can go to the link in the description, and you can immediately become a paid client if you want it done right and you don't want to have to do it yourself, which is what I decided to do. I think it's well worth it because this stuff is way over my pay grade; it's confusing to me. I'm not a CPA, I'm not an accountant, and I was not an economics major. I was actually a music major in college, so I outsource this stuff to people that actually know what they're doing.
Well, welcome Laura to the video! I think everyone watching has enjoyed our previous chats, and it's helped a lot of people figure out taxes when it comes to all this Celsius craziness that we've gone through. So why don't you just kick it off with what's on your mind regarding everything that's happened in the past, what's different now, and then leading into this second distribution and how that affects people's taxes?
Yeah, for sure! So where are we at? Right now, people got the email that they're going to get a second distribution. This is something new to discuss, and what does that mean for you? But I guess just as a quick reflection on what we've talked about so far, in the past, if you've seen any of the videos that you and I have done together, we've talked about mostly the Ponzi versus capital loss. There are two different losses, but these both applied to the first distribution and what this means for you.
Just as a summary of that, there was both this Ponzi and this capital loss, but the Ponzi loss could only be taken on your 2023 tax return, and it had to have been filed by October 15th. So if you were thinking you maybe wanted to do the Ponzi loss, just to clarify, you cannot do the Ponzi loss anymore; the deadline has passed for that. It's fine; you'll still be able to take the capital loss. In the end, the capital loss versus the Ponzi is the same amount of loss; the difference is just what year you're recognizing the loss in.
So in the end, it'll all be the same. It's not like because you missed this Ponzi loss, you're out of luck; you'll still be able to take your losses; they're just going to be deferred to different years. The Ponzi loss was fully taken in 2023, and the capital losses will be taken starting in 2024 and then also 2025, maybe 2026. It'll just keep going until all is said and done, and there are no more distributions.
But for anyone that's doing the capital loss route, the first year it'll impact you is 2024. So as you're filing your taxes this April, finally now, you're going to start reporting Celsius losses, maybe potentially gains, but you'll have tax implications regarding the Celsius distributions now, like in April when you file your return.
Got it. Whereas most people, unless they worked with you or another competent CPA, really didn't mention or include Celsius bankruptcy stuff on their filings for what they did in this year.
Yeah, most people, unless you did Ponzi, I mean some people incorrectly took the full amount maybe in 2022 or 2023. A lot of people I saw in 2022, when Celsius declared bankruptcy, were like, "Oh, I'm just going to take the whole thing as a loss." That was obviously wrong. Now we've realized because you're getting some stuff back.
So in 2023, some people I saw incorrectly as well, they would maybe take the portion that they got back and net that out from their total loss, but everything else they wrote off in 2023. So that's not right because it wasn't considered a total loss yet in 2023. There are still potential future distributions. You got the distribution in 2024; now we're going to potentially get a second distribution.
So you shouldn't write off the full amount yet because it hasn't been considered a total loss. If you have already reported a total loss on your tax return, you're probably going to want to amend that. But yeah, I mean this past year we helped, I think, like 750 people with their Celsius calculations, actually doing the calculations, and then on top of that, we did consultations for so many more. Probably over a thousand, even though we worked with so many clients, only maybe 15-20% of them ended up doing the Ponzi loss because, again, that one is more risky.
So even though we've done a lot of the calculations in the past, they're really not going to start putting them on their tax return until now. So if you feel like you're behind or you didn't get on our list last year, that's totally fine because you're actually kind of still ahead of the game. We haven't even opened the 2024 tax filing season yet. You still have from now until October 15th of next year to get your 2024 return filed and get all this Celsius stuff calculated, so you still have lots of time.
Good to know! We'll talk more about working with you a little bit later in the video and how that works and your insane busy schedule. But let's jump into right now. People got an email saying they're going to get 2.5% back of their claim, which I think most people are rolling their eyes and upset about that, but that's not entirely the point of our chat. It is unfortunate, though, but anyway, here we are.
So yeah, let's talk about what that means. I think a lot of people, especially if they're doing their own taxes and they're not working with you, this is all very confusing. Most people, I believe, are going to be taking losses on this, so I think making sure you write off or get the benefits of these losses as fully as you can is really, really important. Where would you like to take it, or what would you like to jump into?
Yeah, I think let's just first talk about what the second distribution is. I know you already covered it, but to summarize, the first distribution you received Bitcoin, ETH, and shares, and I have there the percentages of what you received. So you know about 30% of both Bitcoin and ETH and then like 15% of the shares, and the effective price was set as of January of 2024. That's what Bitcoin and ETH were worth at that time, and so that was a lot higher than the petition price. The petition price was set at the time that Celsius declared bankruptcy, so that was like you can see up there at the top about $20,000 for Bitcoin and about $1,000 per ETH.
That was almost double that, and now we're at a new effective price that they just set for the second distribution, and that's like double the last one. So it just keeps exponentially growing. Maybe this means next time they do a distribution that Bitcoin will be, you know, what, $200,000 per Bitcoin? I mean, it's great for the market; our crypto is going up. If you have crypto, but if it was all stuck in Celsius and you don't have any other crypto, like this is bad news for you because the amount you keep getting back is smaller and smaller.
So this is what the second distribution looks like. You're getting the 2.53%. It's only Bitcoin this time; they didn't mention anything about ETH or shares. I guess if you're outside the US or you had a business or you aren't able to use Coinbase, then you would get it in USDC, but the majority of people are going to get it in Bitcoin.
So that's what we're going to be talking about today, and basically how it works is whatever your claim was, they're going to take that dollar amount, and the claim is determined based on the petition prices. So whatever you were holding in Celsius at the time when they shut down, and then times it by these petition prices, that's your claim. I think a lot of people understand that so far.
Then they're going to take that amount and multiply it by 2.53%. That's how much USD they owe you in Bitcoin. Then they're going to convert that to Bitcoin using this new effective price of $95,000. So, I mean, it's great to get a second distribution, but in reality, most people are getting like, you know, a thousand or so dollars. It's not going to be significant, but I think it's important to know the tax implications of how this will impact your 2025 tax return, most likely, assuming this is going to come in 2025.
But if this does come in 2024, you know, it'll sneak onto the 2024 return as well, and we can talk about that. But I just wanted to walk through a few different examples of people with high cost bases, low cost bases, holding Bitcoin, not holding Bitcoin, holding alts, holding stable coins, and just so that you know everyone's situations are different. Hopefully, you'll find a different scenario that aligns most with you so that you can kind of expect the general fact pattern of how it's going to impact your tax return.
So this is person A. This is kind of like the same format I've done in the past, but instead of talking through the Ponzi versus capital, we're going to just talk through what the loss is going to be and how it's going to be distributed throughout the various years. So in this case, this person only has Bitcoin and ETH. In 2024, they received 68 Bitcoin, 10.2 ETH, and then 722 shares. Now in the second distribution, they're receiving 0.256, so a really small amount of Bitcoin relative to the three Bitcoin they were holding. They still haven't even recovered one whole Bitcoin, so it's not that impressive.
But this is what they can expect to receive based on that new percentage amount. As far as taxes go, I kind of put some hypotheticals in here. So if that Bitcoin had a high basis, I put in the basis that was double what the petition price was. The petition price was about $20,000, so I put in $40,000 there, and then the petition price for ETH was about $1,000, so I put in a $2,000 cost basis per ETH.
So if you had a high cost basis relative to the petition price, like double that, then you would have a loss because, you know, obviously, you're getting back less than what you were holding. So in 2024, you'd have a capital loss of $13,000, and that actually is mostly from a portion of your Bitcoin and a portion of your ETH being liquidated for the shares. Because the way that I do the calculation is that the amount of Bitcoin and ETH that you get back, I'm just treating those as withdrawals of whatever you were holding.
So that Bitcoin and ETH are actually going to keep your original cost basis and holding period. Also, sorry, this is like so many tax and accounting words, so hopefully you guys are still with me. But all you need to know is that really that loss is generated from the forced sale of part of your Bitcoin and ETH for the shares. So that's where that comes from.
In 2025, you're only getting Bitcoin, so there's no forced sale of anything for it. You could potentially say, "Oh, you should liquidate a portion of the ETH to your full claim and then bring that back as Bitcoin." But because you still had Bitcoin in your claim left over, I'm just going to treat that as a withdrawal of your Bitcoin and keep the original cost basis on the Bitcoin as well. So it's actually not going to be a taxable event.
Again, when you're trying to figure out what situation applies to you, if the amount of Bitcoin specifically that you were holding in Celsius is higher than the amount of Bitcoin you've withdrawn so far. So in this case, this person had three Bitcoin; they've only withdrawn six so far, and now they're getting like 0.2, so they still have, you know, they're down on their Bitcoin. Then any second distribution you receive actually isn't going to result in any gain or loss; it's a non-taxable event. It's just like a withdrawal from Celsius is how I treat it, and then you'll have no gain or loss to report on it in 2025, assuming that comes in 2025.
But people are only receiving about 75% of their claim back so far, so they still have about 25% left that they haven't recovered yet. So in this case, this person would have $102,000 of basis left in their claim, you know, based on these calculations, the way that I've done them where I treat them as withdrawals. So if, let's say, next year Celsius is like, "You know what? We're done; we're not doing any more distributions. This is the end." Then next year, you would be able to take a $102,000 capital loss on your tax return.
If they keep giving these tiny slivers of like 2% per year and this keeps going on for like another 10 years, that $102,000 is just going to kind of be suspended until this is finally done. Kind of sucks, but that's what you can anticipate as far as when you can write off that final $100,000.
Yeah, they need to officially announce that we are done with all distributions in order for you to write off or to complete this chapter essentially.
Yeah, this one's like so different from the BlockFi one, for example, that we've talked about before. It's like with BlockFi, they're giving you back 100% of your claim in cash, and yes, it was at like a very low price, but it's done. You're not going to get anything else, so you can take the full loss with the distribution on BlockFi. Celsius, because it keeps trickling out forever, that loss is just suspended because you're not able to take it until it's determined that you never are going to receive this anymore and there's no chance of recovery.
But as of right now, there still is some chance of recovery, right? And FTX, we haven't made an FTX tax video, but that'll be similar to Celsius because they're in so many litigations. Unless you're in the convenience class for FTX, it could take years before they decide that they're done.
Yeah, that one's supposed to be, again, I think it's in USD as well, but so that one will have different tax implications as well, but I guess we'll see how it ends up shaking out.
Yeah, we'll see. All right, next slide. This is the one that I tweeted about today, if you saw it. So in this example, someone has Bitcoin, ETH, and Solana. You can see the first distribution there; that's what they would have got last year. And then the second distribution is 0.4 Bitcoin, so again, not anything too impressive.
Yeah, it sucks because I know I keep interjecting here. I think a lot of people asked me, "Okay, the price of Bitcoin has gone up so much since our first distribution. Should that increase our distribution?" The problem, from my understanding, is a lot of this money coming back into the litigation estate—I forgot the exact term for it—the bank account that they're being paid out of, it's coming back in US dollars.
Oh yeah, so a lot of it is selling altcoins, selling illiquid assets, and a lot of it came back through settlements for people that had withdrawal preference exposure or clawbacks, and that was all in USD.
Yeah, we haven't recovered Bitcoin or altcoins and kept them as altcoins. If anything, they wanted to sell it for dollars when they got it, right? They're trying to decrease their downward risk exposure, but they lost all the upward, you know.
Yeah, BlockFi did the same thing. They sold everything when they went bankrupt; they sold all their crypto. Then they waited until it hit the top, and then they're like, "This is our new effective price." Right? Like that's what they did last year. It was like, "Okay, you know, $10,000. Oh, it's $40,000. Okay, this is our effective price." Then they're like, "Oh, you know, it hasn't done much. Okay, it's almost at $100,000. I think it's time for a second distribution."
Right, right. It's suspicious is all I gotta say.
Yeah, there's a lot of suspicious stuff going on. Okay, next.
Okay, so in this situation, I did the same thing where I took the cost basis of each coin and just doubled the petition price. So this is considered a high cost basis person. They had $287,000 of cost basis but only $151,000 in their claim, so a lot higher cost basis relative to claim. For them, they would recognize a $22,000 capital loss in 2024, and that would be liquidation of Solana, Bitcoin, and ETH for the stock as well.
Then in 2025, because they still have Bitcoin left in their claim, that will be treated as a withdrawal, very similar to this person A. So no gain or loss there, and then they have $164,000 of basis left in their claim. If you're a high cost basis person that was also holding a large amount of Bitcoin, then this would resonate with you.
So you'll definitely have something to report on your 2024 return; you'll have a loss there for sure. But 2025, there's like nothing so far, you know, specifically to Celsius that you would need to report.
Okay, so this is person C. I did the exact same situation, so the $620,100. So this one's just basically a duplicate of person B, but the thing I changed is if you go to the next slide, this is considered a low cost basis person. You can see here I took the petition price and did half of that. So instead of a $20,000 cost basis, I did $10,000 here, and then half of the ETH petition price and half of the Solana petition price.
So in this case, this person has a claim of $151,000, but they really only spent like $71,000 on this crypto originally. And so even though it obviously went up, you're only able to take losses up to the amount of your cost basis, which, you know, definitely kind of sucks. But how this would shake out for them is because they're liquidating a portion of their Solana, ETH, and Bitcoin for the shares in 2024, it actually is resulting in a capital gain because they're being forced to liquidate assets at a price higher than what they originally had bought it for.
So they actually have a gain, even though you're like, "I've lost so much." You actually do have a gain in 2024. In 2025, it will be treated as a withdrawal, so no gain or loss, and then I actually was going back and forth with someone today on Twitter about this. They're like, "If I have a low cost basis, you know, I was told I need to report a gain this year. Am I ever going to be able to report a loss?"
The answer is yes, eventually, if you never end up receiving the rest of your claim. In this case, this person would have a $440,000 basis left, so again, if next year this was all wrapped up and done, they finally would be able to take a loss on this, and they'd be able to take $40,000.
Before we go to the next thing, something's coming up for me, which I'm sure other people are thinking about, is selling—like forced selling of your crypto for these Ionic shares. I mean, that is still a big unknown regarding what will happen with that and when we have clarity on when they could be traded, when there could be liquidity to sell, when there's movement on that. You'll come back on the station and explain what that means because, like that, I mean, that's a whole other set of variables when that becomes something that people can sell, right?
I mean, nobody would have ever sold their Bitcoin or ETH or their Solana or anything to buy these shares. Nobody was trying to do that; you were forced to do it. And so that, you know, it's not great, but it's what the situation is. And so then now, you know, what is going to happen if these end up just like also turning into nothing? If these end up being worthless, you will eventually be able to take a loss on those equal to what you recognize as capital gain for. So if they end up turning into nothing, you still can take a loss on them. It would be called a worthless investment loss, and you'll eventually be able to take it. But again, it's so up in the air, so who knows?
Yeah, I just wanted to bring that up because I'm sure a lot of people are like, "Wait, wait, what?" Nobody's happy about that. Nobody's happy, including me.
Okay, this one I included because a lot of people had questions about this last time. It was like, "What if you had stablecoins? How does this look?" So this person had $250,000 of stablecoin; that's all they had. Then in that case, they get the Bitcoin, the ETH, and the shares, and these are all forced sales—forced sales of their USDC to buy the Bitcoin, to buy the ETH, and to buy the shares.
But because it's a stablecoin, the petition price, the effective price, today's price, it's all $1. So it is a taxable event, but it doesn't create any gain or loss. It just reduces the amount of USDC in your claim.
So it's just like they just bought crypto. They just bought Bitcoin, ETH, and shares. There's a certain amount that will establish as your cost basis for each of those. So it still would be good to do the calculations to know, like, "What is my cost basis in that Bitcoin? What is my cost basis in the ETH? And what is my cost basis in the shares?" So that if you go to sell them, and like how does that work, and what's my holding period? What day did that start on?
So it's still good to do the calculation, but you don't—there's not like a huge rush to do it because it actually doesn't really impact your 2024 return. And then here's the second distribution, but if you go to the next slide, you can see like there's no gain, there's no loss in 2024, there's no gain or loss in 2025. These are all just forced sales that create taxable events but have no gain or loss.
In this case, they have $54,923 left in their claim that they could eventually write off if they don't get anything back. But if they keep receiving distributions, they'll just keep liquidating those. It won't be any gain or loss until—so if in the end they ended up getting 100% paid back, if Celsius ends up paying back 100%, then all of this USDC eventually will be sold for the Bitcoin and the ETH that—or whatever else they end up giving back.
So anyways, it's just sitting there waiting to see what ends up happening with the rest of the claims.
Okay, and this is the last one. So this is a person—you know, this one's a little more unique—but if you did not have Bitcoin specifically, or in this person, I did also no ETH but specifically no Bitcoin, this is where you would want to look. So you know Cardano, Link, Solana—here's the distributions you would get, you know, both years. You can just kind of look at that. Nobody's getting more than like 0.1 Bitcoin in any of these situations, so there's that one.
Okay, then go to the next slide. So it's similar to the stablecoin in that you're selling the Cardano, the Link, and the Solana all for the new coins that you received in the distribution—so the ETH, Bitcoin, the shares, and then this year just the Bitcoin. So all of them are being liquidated, but because they're not stable, you know, they have a high basis relative to the petition price, and then they also have a price relative to the new effective price.
When these have the forced liquidation, there is going to be a gain or loss. So in 2024, when you received like almost like 50% of your claim in the crypto and then a portion of it in the shares, you're going to recognize a capital loss. So in this case, they had $258,000 as a capital loss, so that one's like pretty significant.
So you recognize more loss in this case if you have no Bitcoin or ETH because nothing's being returned to you; it's all being liquidated. And then in 2025, as well, every other example we've done, there's like no gain or loss, no gain or loss, no gain or loss. But in this case, there is a loss because they had no Bitcoin that you could withdraw from and create a non-taxable event.
So we had to, again, sell a portion of the Cardano, Link, and Solana for the new Bitcoin that you just received, and that's going to create, you know, a $5,500 loss on top of that. And then you have all this basis left to eventually be, you know, sold, liquidated, whatever, for a loss maybe later.
So I probably should have done like one more example where let's say we had like, you know, just to be extreme, like one Bitcoin and 100 ETH. So you were holding Bitcoin, but you had more ETH relative to your Bitcoin. And so you would have received back more than one Bitcoin already, just the way that the distribution lined up with the first distribution.
So even though you were originally holding Bitcoin, now the amount that you received back is in excess of that one Bitcoin, so you would also still have a gain or loss in 2025 for the liquidation of the ETH for the Bitcoin. But hopefully, you guys are still following. I tried to put as many examples in there. There are so many ones that I could do, though, and everyone's going to have their own unique situation. So if you're not sure which one you're in or you just want a more custom calculation or you haven't done 2024 yet, that's like the big year. Reach out; we can help you with any of that.
Yeah, just like the other videos we've done, part of me gets it, and part of my eyes roll in the back of my head. I think that most people—sorry, no, that's partly why I want you to come on because unless you are an accountant yourself, I think that applies to 99.9% of people watching or trying to do their taxes on their own.
So yeah, I know watching a video about taxes and numbers is not a very exciting thing. So I'm sure not everyone's followed all these numbers, but just hopefully you can look at them and just get a high level, like, "Okay, what can I anticipate?" and then the details will figure out. But this will kind of just point you in the direction of what you can anticipate.
Yeah, the details you obviously figure out really, really well. I think the big thing, right? If you know you have losses here, it's like figuring out exactly what they are, making sure it's done correctly, and making sure that you get to write off and you get to, you know, use all the losses for all the other income. I'm probably saying this wrong. I really, I'm not a tax person, but you know what I mean. You just want to make sure the Celsius disaster is as good as it could be, I guess.
Yeah, I mean especially for 2024. The market has been crazy the last month or so, and so if you're taking gains right now, especially like 2024 is the year where you recognize your Celsius capital loss, like the big one. This 2025 second distribution is like so small, but the 2024 one is like the big number. Like in some of those examples we were looking at, there was like over a $200,000 loss in 2024.
So if this was like a down market, that would be pretty, you know, rough news because you can only take $3,000 of capital losses per year. So if you have a $200,000 loss, but you can only take $3,000 of loss per year, it just feels like I'm never going to, you know, recover anything from the Celsius. This loss is just going to carry on over forever, and I'm never going to have gains.
But let's say you got your distribution back and you held on to it until now and then maybe decided to sell it. It's like, you know, doubled or tripled in value depending on what coin you had. So you now have gains, and you have this built-in loss. So if you have the $200,000, like that sucks; you lost $200,000 on Celsius. Like that's never going to be good news, but like the slight silver lining is, well, your next $200,000 of capital gains are tax-free.
So the timing does luckily line up. Sometimes it doesn't with things like this, but in this case, you did have the big loss in 2024, and it's also like a high market right now. So if you want to be taking any gains, you have this loss. Even if you don't even want to take the gains until next year, that's fine. You would only take $3,000 of a loss this year, and then next year you have $197,000 just built up. So again, your next $197,000 of gains are like completely tax-free.
So slight silver lining to like a really rough situation, but if you haven't taken your losses or maybe you've been intimidated about calculating or just like I talk to a lot of people, they're like, "I'm kind of like scarred by the Celsius situation. I don't want to like open that vault and like dive into the numbers." That's very stressful. Maybe now is a good time where it's like, "Okay, at least you know your crypto has somewhat recovered if you're still holding some, and the market's looking better. Maybe you have a little more disposable income. Maybe it's time to just figure this out so that you can finally take that loss on your tax return and get like a slight amount of indication in it."
Yeah, you brought up so many good points. I mean, the first, right? If you wanted to sell your crypto now and it's appreciated a lot, even the crypto you got back from Celsius, because, yeah, I mean, a lot of people, that crypto has gone up. I mean, Bitcoin has over doubled, right? You know, in terms of when that was calculated.
And also what you said too about Celsius being just so traumatic for people. You said you had like 700-plus Celsius clients this year. I mean, I'm sure you are like a full-time CPA, part-time trauma counselor, right?
Yeah, I know. I feel so bad. I like—like, me too. I hate—I mean, and you've heard all the stories too, but it's just like, oh, it's like some people, it's just like your heart—like everything they had was in Celsius.
So everything, everything, everything. So hard to hear that story over and over.
Yeah, absolutely. And having a team, having you and your team go through all the numbers, I think just having competent people like yourself and your team holding someone's hand that have gone through a very traumatic experience regarding like, "Yes, this is what happened. These are the facts, but here is what we can do to make this slightly better," rather than like, "Oh my gosh, I'm doing my taxes by myself. I'm the first one that has to see this. This is so traumatic, and I'm by myself in my room alone."
I don't know. I mean, I know everyone's different, but for myself, I mean, I feel like maybe just having professionals where you can be like, "Well, okay, so this is what happened, but like how can we make the best of this?" I don't know. I can see that being very helpful for a lot of people.
Yeah, just like a third party, like, "Okay, let's chat through the actual facts and what can we do?" Like this was the situation; what can we do?
Move some of that thinking, some of that stuff just as a professional here rather than you being doing it yourself.
Yeah, and everyone has to prioritize different things. Obviously, you know, it's not cheap to work with an accountant either. But when there's especially huge numbers involved, like the accounting fees are totally justified by the savings, in my opinion.
So yes, you're insanely busy. You were talking to me before I started recording this just about how booked you are even for next year from people that got on your waitlist, you know, paid a retainer essentially, became a paid client this year. I mean, can you explain that whole scenario? Like if people are watching this and they're like, "All right, I haven't decided to work with you guys, but I'm realizing that it would probably be a good idea."
We have really specialized in helping people with Celsius this year. As I mentioned before, this year, a lot of the clients that we worked with were people that were like on the teetering point of like they might have been a good Ponzi client; they might have been a good capital client. But we had to kind of look at the full picture to really decide and help them navigate which one they would be.
So those are the clients we prioritized taking this year were people that were like maybe going to take the Ponzi loss because that had to be done last year before October 15th. But now we had a ton of people that reached out to us, and they're like, "I already know I'm doing capital. I'm not even interested in Ponzi based on my cost basis, based on my risk level, based on my other gains that I might have had or whatever." They're like, "I know I'm doing capital," because they didn't have to do anything on their 2023 return for that.
We just automatically put them on the list for next year, so we have quite a long waiting list already to work with us this next year. We've actually started now, as soon as October 15 ended, we started working through that list, and we're working through it now. But we also have all our previous clients that are now going to come back for the next tax year that we have to obviously provide their tax returns as well.
So as much as I would love to help like every single person under the sun, we also are limited by our manpower. I could again turn around and hire like 10 more people, but I do not want to sacrifice quality. This is pretty complicated stuff, and I'm only willing to grow as quickly as I can keep that quality high and have really good people.
So all that to say, we are taking on new clients. If you get in now before the end of the year—like if you want to start like tomorrow—we actually can fit in some clients from now until the end of the year, end of December. Once January hits, that's when the new tax season hits, so we're going to be quite busy with our previous client load and then everyone on the waiting list.
If you want to work with us, we're going to have to add you to a waiting list, kind of similar to what happened last year. We'll put you on a list. As of right now, there's no guarantees that you'll be able to file by April 15th, but for most people, that actually won't matter because if you were like in those previous examples, you had a high cost basis, you're actually going to like on your 2024 return, it's going to result in a loss.
So you're not going to have all this extra income that you suddenly need to report and pay estimated taxes on; you're going to have a loss. So whether you file in April or October won't really matter. Of course, there are other things to consider, though. If you have other income that hasn't been withheld on, like let's say you just recognized a million dollars in gains or something like that, selling Bitcoin, that obviously we would want to try and get it in before April 15th.
But or at least have a calculation by then, so everyone's situation is so different. But we do have some wiggle room for those, like, you know, one-off clients. So if you want to get it done before April 15th, reach out to me, let me know, or go to CryptoTaxGirl.com/Celsius. We have something called a priority client, which is where we can just get started right away. You move to the front of the waiting list, and that is at a higher rate for those priority clients.
If you want to pay the normal $500 an hour rate and you're not in a huge rush, you can get on our waiting list. Again, go to CryptoTaxGirl.com/Celsius. That's option number two on there to get added to the waiting list. If you're considering that, I highly recommend doing it before the end of the year because once January 1 hits, we're actually going to raise our rates.
But I'm still honoring that $500 an hour previous rate that we had last year because that's what we've been telling clients all throughout this year. So if you get on our waiting list before January 1st, we'll keep you at the $500 an hour rate. After January 1st, we're still going to have to add you to the waiting list, but it'll be at $600 an hour.
So again, I'm so sorry. Sometimes I see your complaints on Reddit and Aaron's comments that you think my rates are insane. I'm sorry; I wish I could lower them, but the reality is we just can only serve so many clients.
And then finally, if you're not sure whether you are a good candidate to work with us or you just have a few questions but you don't want to commit to the full process, you can also schedule a call. Same on that blog, CryptoTaxGirl.com/call. It'll take you right to a spot where you can set up a call or just email me at hello@CryptoTaxGirl.com to reach out to me directly. I'm happy to answer any of your questions and help you navigate this because I know there's just like so many moving pieces.
As usual, always mention that you came from Aaron; I'll give you $100 off your bill.
Very cool! Well, thank you again for coming on the show and easing people's concerns about taxes. Death and taxes, right? Only two things that are for sure—unless maybe Donald Trump simplifies the tax code, but that's a different convo, so I'm not getting into that.
Let's not get into that.
All right, well, thank you for coming on, and I'll include all the links to everything you talked about below. And yeah, thanks again!
Thank you for having me! Glad we could touch base every few months about this stuff.
So that is it for the video, guys. Hope you enjoyed it. Again, if you know you want to work with her, you can use her link below to become a paid client immediately because she is booking out a lot. Also, if you want to join my email list and my Patreon and join me for 2025, which I really expect to be an amazing year for crypto, you can do so using the link below as well.
Thanks for watching, guys! Until next time, talk with you soon, and bye for now!