Draper, Utah/USA, July 1st, 2026 - A taxpayer under Internal Revenue Service scrutiny reduced an estimated tax exposure from roughly $1.55 million to a settlement around $148,000 after a combined effort by a crypto tax accounting firm and tax counsel.
Crypto Tax Made Easy rebuilt the client’s blockchain and exchange record history while Securus Advisors handled the taxpayer’s IRS representation. The central factual dispute concerned withdrawals reported in data the IRS obtained from the Poloniex exchange - transactions the IRS read as possible new income because the exchange data available to examiners did not show the full transaction context.
The IRS can compel exchange information through John Doe summonses, producing datasets that sometimes lack the comprehensive detail a taxpayer could supply from their own records. In this case, the IRS received data indicating transactions the taxpayer had not reported on a prior return. Because Poloniex had stopped supporting U.S. trading, the taxpayer could not retrieve full records from the exchange and initially could not demonstrate that disputed withdrawals were sourced from earlier deposits the taxpayer had made.
According to the taxpayer, the IRS asserted approximately $4.2 million in unreported income and capital gains, a base amount the taxpayer understood could translate to about $1.55 million in tax liability. The pattern at issue involved funds that had moved from a personal wallet into exchanges and later returned to a wallet under the taxpayer’s control. With only partial exchange data in the IRS files, the later withdrawals could be interpreted as fresh income rather than returns of previously deposited assets.
"The IRS has data, but the data does not always explain the full transaction history," said Matt Walrath, Founder of Crypto Tax Made Easy. "When a taxpayer cannot document wallet ownership, exchange deposits, withdrawals, and cost basis, a transfer can be misread as income."
Crypto Tax Made Easy reconstructed the chain of transactions from publicly available blockchain records to trace net flows between the taxpayer’s wallets and the exchange. Securus Advisors, represented in the matter by tax attorney Ephraim Olson and partner Michael Bergloff, presented this reconstructed evidence to IRS examiners. The firms demonstrated that the cryptocurrencies in question originated in a wallet owned by the taxpayer, were deposited into exchanges, and later flowed back to a wallet the taxpayer controlled.
That factual reconstruction underpinned the firms’ position that the disputed movements were predominantly transfers between accounts controlled by the same person rather than taxable dispositions generating new income. The case concluded with a settlement of approximately $148,000, an amount that the parties describe as about 9.5 percent of the client’s original estimated exposure. The taxpayer also reported having spent more than $80,000 on prior attorneys and accountants before engaging the firms that ultimately handled the audit resolution.
"Crypto tax defense depends on whether the records can be explained in a way an examiner can follow," said Michael Bergloff, Certified Public Accountant and Partner at Securus Advisors. "Raw exchange data may show funds moving out without showing that the same taxpayer moved funds in first."
Under U.S. tax rules, digital assets are treated as property. A transfer of assets between wallets or accounts under the same taxpayer’s control is generally not treated as a disposition and by itself does not create taxable income. Establishing that characterization can be challenging when exchange records are incomplete, restricted, or unavailable to U.S. users - circumstances highlighted by this audit.
About the firms and case outcomes
Crypto Tax Made Easy is a specialist cryptocurrency tax accounting firm composed of full-time crypto tax professionals. The firm reports having served more than 730 clients across the United States, United Kingdom, Australia, Canada, New Zealand, and Europe, reconciling in excess of 6.7 million transactions. Securus Advisors is described as a crypto-focused CPA firm that provides tax planning, advisory services, and IRS representation; it led the taxpayer’s representation before the IRS in this matter.
Contact listed: Matthew Walrath, Director, Crypto Tax Made Easy - [email protected]
Legal and outcome caveat
Past results do not guarantee future outcomes. Each tax matter depends on its unique facts, the records available, the tax years and jurisdictions involved, and the positions taken by the taxpayer and the taxing authority.