If you’ve had some big crypto gains this year, you’ve probably got one thing on your mind: “What the freak do I do about the taxes?”
Regrettably, a lot of the advice out there is just “so-so.” I’ll break down five common strategies, and then then five more that really make a difference—the ones that actually move the needle.
Five Strategies That Are Just Okay
1. If You Don’t Have to Sell… Don’t 
This is the classic “just hold it and get capital gains” strategy––if you call it strategy! Remember, if you don’t have a holding period of at least 12 months for any token you purchase, you are paying ordinary income tax rates.
That means you pay taxes on the sale of your crypto at the same rate you do on your paycheck. So, the point is, hold it 12 months and get a maximum capital gains rate of 20%. The problem is you may want and need to take some gains. This is not a strategy, but a white-knuckle “hold on and hope I don’t lose my gains” commitment. Not good.
2. Harvest Your Tax Losses
Another cooked-up strategy by Wall Street writers and pundits when they can’t think of anything else. And the truth is, they can’t suggest anything else or they’ll get fired by their broker dealer for giving actual helpful advice.
Now, it’s true, if you have losses from the sale of real estate, stock, or a business, there’s a good chance it’ll offset the gain of selling your crypto. However, I shutter thinking I have to ‘lose’ money somewhere else to save taxes––and we call that an actual strategy? Most of my clients are trying to make money, not lose it.
3. Give It to Charity 
Okay…if you actually tithe, give to charity, or even donate to a school on a regular basis, this idea isn’t half bad, but is it really going to make a huge difference? Most people aren’t wanting to give away the crypto gains they just banked.
However, it’s important to know the strategy is to give the crypto you own to charity before you sell it to simply donate it. For example, are you giving $20,000 to your church this year? Don’t sell your crypto and give cash—you’ll have to pay tax on it. Instead, donate the crypto that’s worth $20,000 to your church and avoid paying the tax.
The result is you don’t pay tax on the gain, AND you get a tax deduction to use against other income. Plus, you’ll probably have a better chance of going to heaven.
4. Invest in an Opportunity Zone 
That’s right, take the capital gain and invest in a designated “Opportunity Zone.” That’s a real estate deal if you were wondering. It’s not a bad idea, but the problem is the One Big Beautiful Bill (OBBB) doesn’t make it “beautiful” until January 1, 2027.
If you employ the strategy after 1/1/27, you defer the gain for five years, AND if you hold the new real estate deal for 10 years, you never pay tax on the sale of the project…ever.
But, until 2027, you only get one year of tax deferral and that just doesn’t cut it. Almost a three-star option, but not yet.
5. Buy It in a Roth IRA 
Now, this one, I LOVE…however, if you didn’t “buy” your crypto in your Roth to begin with, you can’t magically move it into your Roth now and cook up a tax-free deal.
However, it is absolutely critical that you take ANY proceeds from the sale of your crypto and never make the same mistake twice. You can max out a Roth 401k, a Roth IRA, or even an HSA and never pay tax on your crypto gains again.
So, when you jump back into the market on the dip, do it in a Roth IRA. You can open one at Directed IRA at any age with a limit of $7,000 if you’re under age 50, or $8,000 if you’re 50 or older. You won’t offset gains you’ve already harvested, but you can set yourself to never pay tax on those gains again.
Now Let's Get To The Good Stuff
These next five are the strategies that really save you significant money, but also take a little creativity, an open mind, and some work.
1. Using Expenses in another Business against Your Crypto Gains 
Unlike the second strategy above, we aren’t looking for offsetting “losses,” per se, but purchasing equipment or assets in another operational business that make sense, and then using bonus depreciation on those acquisitions to offset the income from the crypto gains. However, it’s only going to be available to business owners, so I give it four out five stars.
This strategy generally comes together in practically three steps. First, the gains from the crypto are taken and the proceeds are contributed to the sister business. Second, before year-end, the operational business uses those funds to purchase equipment that is productive and useful for that business. And, finally, the business puts that equipment into service and takes 100% bonus depreciation under the new OBBB and pushes those losses to the bottom line through a pass-thru entity. It’s not aggressive from a tax standpoint and can make sense for a business owner wanting to go to the next level while also investing in crypto.
2. The Self-Rental Strategy 
Similar to the previous strategy, this is a strategy for business owners. However, this one can actually be easier to implement, be more practical, and even make more sense for a business owner—instead of buying equipment, they buy real estate.
Essentially, this strategy is for business owners who are paying rent to a third party (i.e. warehouse, office, or commercial space) and use their crypto gain as a down payment on a building for their business to rent back to themselves. The rent becomes a tax deduction, and that income flows back, while the building itself is bonus depreciated through cost segregation. The bonus depreciation is carved out to offset the crypto gain. There’s no requirement to be a “real estate professional,” and no remodeling hours needed—just own the building 100% and use it for your business. The result: a powerful strategy that builds equity, reduces tax, and turns rent into long-term wealth.
3. The Short-Term Rental Loophole 
I love this strategy because I love real estate anyway, and the short-term rental investment and loophole is fantastic! Crypto investors don’t want to be a one-trick pony when it comes to investing either and need to diversify their portfolio.
The strategy involves taking the profit from the crypto and buying a short-term rental, completing a cost segregation study and relying on bonus depreciation to offset the crypto gain. The trick is “material participation.” The taxpayer has to put in 100 hours of work on the rental before year-end (and more than anyone else), but the beauty is you don’t have to be a real estate professional, typically required with long-term rentals. The theme: real estate investors should own crypto, and crypto investors should own real estate.
4. The Intangible Drilling Cost Deduction
Another place to invest a $200,000 crypto gain is in an IDC—intangible drilling cost—oil and gas strategy. With this option, you are again investing your proceeds into a quality investment that grows in value, creates cash flow, and also generates pass-thru depreciation losses.
The write-off is based on depreciation through a partnership/LLC/syndication with the oil and gas operator that flows through as an ordinary loss on a K-1. This loss can offset the gains on your crypto, but also provide an incredible investment in another powerful industry.
5. The Charitable Remainder Unitrust Strategy
The Charitable Remainder Unitrust, or CRUT, is a powerful tool that’s been used for decades in real estate, business sales, and crypto gains over the past ten years. For those with at least $500,000 in unsold crypto, the trust is set up to receive and sell the crypto on your behalf tax-free.
Donating the crypto to the CRUT means zero tax on the gain and a 10% IRS tax deduction. The crypto is then sold tax-free inside the trust, and the full amount is invested. Based on age, the trust pays out a set percentage every year for life, while the remaining funds go to a charity of choice. All trading within the trust moving forward is also tax-free—and it’s a machine that’s completely asset-protected from any type of lawsuit.
These final five strategies have two things in common: they make sense financially AND they can save a ton in taxes. Bottomline, when you have a coordinated tax plan, you don’t have to be rich to get wealthy.
Where To Start
If any of these strategies felt complex—they are. But we’re here to help, and we’ve owned bitcoin ourselves for over 10 years and have been helping clients with crypto tax planning the entire time!
Please visit www.kkoslawyers.com to book a Comprehensive Tax Consultation. It’s an affordable and specifically designed consultation with a real tax lawyer on Zoom to build out your ‘plan’ for savings. And no matter what…get your Roth IRA started so you don’t get into this problem again with at least some of your money moving forward. Tax-free growth is the key. Set up your Crypto Roth at www.directedira.com. That’s where mine is and yours should be too!
