Spidell's Tax Season Tribune

Bitcoin bather sentenced

Kathryn Zdan, EA

Editorial Director

Last year, we covered the case of the Harmon brothers,¹ whose darknet crypto mixing business was shut down for money laundering. The IRS had seized various assets, including a cryptocurrency storage device that the IRS was not able to crack the password for.

However, one of the brothers was able to recover $4.9 million in bitcoin (now worth over $20 million) from that cryptocurrency account because he knew the password, which allowed him to transfer the cryptocurrency from the seized account to his own wallet. Naturally, one of the first things he did (after further laundering the recovered bitcoins) was visit a nightclub, fill a bathtub with cash, and take a bunch of selfies.

Update: He was sentenced to four years for stealing over 712 bitcoins that were the proceeds of the darknet bitcoin mixer and subject to forfeiture in the then-pending criminal case against his brother.²

Mix master

Crypto mixing, or crypto tumbling, mixes potentially identifiable or "tainted" cryptocurrency funds with others to hide the fund’s original source.³ Funds from multiple sources are pooled together for a random period of time, and then they are redistributed at random times, making it difficult to trace the cryptocurrency’s source.

Mixing helps protect and maintain the privacy of using cryptocurrency. But due to its involvement in illegal activities, and because mixing services have been known to steal coins during the mixing process, many have suggested that mixing services be criminalized.

You deserve a break today

Kathryn Zdan, EA

Editorial Director

Last year, a McDonald’s franchisee in Louisville got busted for violating federal labor laws after the Labor Department discovered that two ten-year-old children were employed, who sometimes worked as late as 2 a.m. and who were not paid.¹

After digging deeper, it turned out the two ten-year-olds had come to work with their parent, who was one of the night managers. However, management had not approved the children to be in the employee parts of the restaurant where the deep fryers, grills, and ovens are.

Not-so-happy meal

A child operating the deep fryer may explain another McD’s mishap. A McDonald’s in Florida was sued for serving excessively hot food, but this time instead of coffee, it was a 200-degree chicken McNugget.² The McNugget was part of a happy meal order that landed in the lap of a four-year-old, who dropped the McNugget onto her bare leg, where it left a second-degree burn. The family was awarded $800,000.

The infamous “hot coffee case” involved 79-year-old Stella May Liebeck, who spilled an entire cup of McDonald’s coffee into her lap, resulting in third-degree burns. To cover medical expenses and lost wages for her daughter (who cared for her during her initial three-week recovery from the skin grafting process), Liebeck sought to settle for $20,000. McDonald’s refused, and offered $800. When Liebeck sued, a jury awarded her $200,000 in compensatory damages and $2.7 million in punitive damages. A judge reduced these amounts to $160,000 and $480,000, respectively, and both parties appealed, settling out of court for an undisclosed amount.

Bad tax joke(s) of the week

Your tax jokes are better than ours, so please keep them coming! Here are a few that you submitted this week.

My friend bought a 12-inch ruler and asked me if he could deduct it for tax purposes. I told him not any longer.

My friend asked if I could help him get a tax deduction by delivering a bunch of old magazines to the local Goodwill. I told him that I couldn’t because of back issues.

Every year my friend asks if he can deduct the cost of his jogging shoes for tax purposes. It’s a running joke.

Reply to this e-mail to send us your favorites and we’ll include them in a future Tribune issue.

A few fun facts about this week’s writers:

Kathryn Zdan, EA, spends her non-Spidell hours on photography and watching horror films (and then sleeping with the light on). She also enjoys hiking, biking, and watching foreign films.

Austin Lewis loves music and the outdoors, and if he’s not going to a concert you can probably find him on a hike somewhere. Recently, he traveled to Peru, where he spent seven days on the Salkantay Trek to Machu Picchu.

Never miss an issue

Did a friend forward this to you? To get on the Tax Season Tribune mailing list, visit caltax.com/spidells-tax-season-tribune/ and submit your e-mail address. Past issues of the Tax Season Tribune can be accessed through the Tribune Archives.