Draper, Utah/USA, July 1st, 2026
Crypto Tax Made Easy reconstructed an anonymous client’s blockchain and exchange records during an IRS audit, and Securus Advisors represented the client before the IRS, supporting the position that disputed Poloniex withdrawals were transfers between the taxpayer’s own wallets rather than new taxable income.
Crypto Tax Made Easy, a cryptocurrency tax accounting firm, has reported the resolution of an Internal Revenue Service (IRS) audit in which an anonymous client’s estimated tax exposure of approximately $1.55 million was reduced to a settlement of about $148,000, including penalties and interest.
The IRS can obtain cryptocurrency exchange data on individual users through John Doe summonses, but that data may not reflect a taxpayer’s full transaction history. In this case, the IRS received data indicating unreported transactions on a prior return. Because the Poloniex exchange had stopped supporting U.S. trading, the client could not obtain their own records from the exchange and could not initially prove that withdrawals to a personal wallet originated from funds the client had earlier deposited.
According to the client, the IRS assessed approximately $4.2 million in unreported income and capital gains, an amount the client understood could have produced roughly $1.55 million in tax liability. The disputed funds had moved from the client’s personal wallet into crypto exchanges and later back into a wallet the client controlled. With only partial exchange data available, the withdrawals could be read as new income rather than self-transfers.
“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 transaction history from blockchain records to trace the client’s net flows between personal wallets and the exchange. Securus Advisors, through tax attorney Ephraim Olson and partner Michael Bergloff , represented the client before the IRS and presented the evidence that the cryptocurrency originated in a wallet owned by the taxpayer, that the taxpayer had deposited those funds into crypto exchanges, and that the later withdrawals returned the funds to a wallet the taxpayer controlled.
This supported the position that the disputed activity consisted largely of transfers between accounts the client already owned rather than new taxable income. The matter was settled for approximately $148,000, about 9.5 percent of the original estimated exposure. According to the client, more than $80,000 had already been spent on prior attorneys and accountants before the firms were engaged.
“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.”
The IRS treats digital assets as property for U.S. tax purposes. A transfer of assets between wallets or accounts that the same taxpayer owns or controls is generally not a disposition and does not by itself create taxable income. Establishing that character can become difficult when exchange records are incomplete, restricted, or unavailable to U.S. users, which is the circumstance at the center of this audit.
Past results do not guarantee future outcomes. Each tax matter depends on its facts, records, tax years, jurisdictions, and the positions taken by the taxpayer and the taxing authority.
About Crypto Tax Made Easy
Crypto Tax Made Easy is a cryptocurrency tax accounting firm of full-time crypto tax specialists. The firm has served more than 730 clients across the United States, United Kingdom, Australia, Canada, New Zealand, and Europe, reconciling more than 6.7 million transactions. More information is available at https://cryptotaxmadeeasy.com/ .
About Securus Advisors
Securus Advisors , which represented the client before the IRS in the matter described, is a crypto CPA firm supporting clients with tax planning, advisory, and IRS representation. More information is available at https://securusadvisors.com/ .
Contact
Director
Matthew Walrath
Crypto Tax Made Easy
matt@cryptotaxmadeeasy.com
This article is not intended as financial advice. Educational purposes only.
