An Austin, Texas, man pleaded guilty today to filing a tax return that falsely underreported the capital gains he earned from selling $3.7 million in bitcoin. 

According to court documents and statements made in court, between 2017 and 2019, Frank Richard Ahlgren III filed false tax returns that underreported or did not report the sale of $4 million worth of bitcoin in which he had substantial gains. All taxpayers are required to report any sale proceeds and gains or losses from the sale of cryptocurrency, such as bitcoin, on their IRS tax return. 

Ahlgren was an early investor in bitcoins. In 2015, Ahlgren purchased approximately 1,366 bitcoins. That year, bitcoins were valued at no more than $500 each. In October 2017, Ahlgren sold approximately 640 bitcoins for approximately $5,807.53 per bitcoin for a total of $3.7 million. Ahlgren had purchased most of the bitcoins he sold in 2017 in 2015. He used the entirety of the proceeds from the sale of bitcoins to purchase a house in Park City, Utah. Ahlgren then filed a false tax return with the IRS for 2017 that substantially inflated the cost basis of the bitcoins, and therefore underreported his capital gain from his bitcoin sale.

In addition, in 2018 and 2019, Ahlgren sold more than $650,000 worth of bitcoins and did not report those sales on either years’ tax returns. 

In total, Ahlgren caused a tax loss to the IRS of more than $550,000.

Ahlgren will be sentenced at a later date. He faces a maximum penalty of three years in prison as well as a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Jaime Esparza for the Western District of Texas made the announcement.

IRS Criminal Investigation and the Texas Office of Attorney General are investigating the case.

Assistant Chief Michael C. Boteler and Trial Attorney Mary Frances Richardson of the Justice Department’s Tax Division and Assistant U.S. Attorney William R. Harris for the Western District of Texas are prosecuting the case.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

This crime news article "Early Bitcoin Investor Pleads Guilty to Filing Tax Return that Falsely Reported His Cryptocurrency Gains" was originally found on https://www.justice.gov/usao/pressreleases