Austin Man Sentenced to Two Years for Lying About $3.7M Bitcoin Sales
An Austin man has been sentenced to two years in prison for filing a tax return that falsely underreported the capital gains he made from selling $3.7 million in bitcoins. Frank Richard Ahlgren III was found to have underreported or not reported the sale of $4 million worth of bitcoins between 2017 and 2019, according to court documents.
This case sheds light on the federal government’s regulation of cryptocurrency, as all taxpayers are required to report any sale proceeds, gains, or losses from cryptocurrency transactions on their tax returns.
Ahlgren, an early Bitcoin investor who purchased bitcoins as early as 2011, sold approximately 640 bitcoins in October 2017 for a total of $3.7 million, using the proceeds to buy a house in Park City, Utah. He then lied on his tax returns by inflating the cost basis of the bitcoins to conceal his true capital gain.
In addition to his prison sentence, Ahlgren was ordered to serve one year of supervised release and pay over $1 million in restitution to the United States. This case marks the first criminal tax evasion prosecution centered solely on cryptocurrency, highlighting the importance of paying taxes on cryptocurrency transactions.
“Ahlgren will serve time because he believed his cryptocurrency transactions were untraceable. This case demonstrates that no one is above the law,” said Acting Special Agent in Charge Lucy Tan of IRS Criminal Investigation. “As the prices for cryptocurrency are high, so is the temptation to not pay taxes on its sale. Avoid the temptation and avoid federal prison.”
