The Clinton Donnelly Show
Welcome to The Clinton Donnelly Show, where Clinton shares real world strategies, time tested tactics, and expert discussions with influencers about cryptos, taxes, audits, and the regulatory framework that’s evolving around cryptos.
Stolen Crypto? How Do You Prove It to the IRS?
A wallet transaction can show that crypto moved, but it cannot show whether the transfer was theft. Clinton Donnelly of CryptoTaxAudit discusses the records that may help document a claimed loss, including an FBI IC3 report, a police report, transaction history, and forensic analysis. He also explains why the IRS may examine the claim.
FBI Internet Crime Complaint Center:
https://www.ic3.gov/
Discuss your crypto tax situation:
https://www.cryptotaxaudit.com/crypto-tax-consultation
Educational information only. This episode is not...
Crypto Tax Extensions 2027: April 15 Deadlines & Superseding Returns
Crypto taxes not ready by April 15, 2027? Filing an IRS tax extension gives you more time to prepare your return, but it does not extend the deadline to pay taxes owed.
In this episode, Clinton Donnelly of CryptoTaxAudit explains the difference between filing and payment deadlines, why cryptocurrency gain calculations and K-1 forms can delay tax preparation, and why overpaying taxes does not earn favorable IRS treatment.
Clinton also discusses superseding tax returns, how they differ from amended returns, and how they may help taxpayers correct previously filed information within the applicable filing deadline.
...
How does the IRS identify crypto investors?
How do exchange records connect crypto investors with the IRS?
Clinton Donnelly of CryptoTaxAudit discusses IRS Letters 6173, 6174 and 6174-A, exchange information, and crypto tax reporting.
He also shares his analysis of AI, Palantir, IRS case selection, notices concerning 2024 tax returns, and staffing and collections. The episode closes with bringing prior-year crypto reporting up to date.
Received an IRS letter?
Request a letter review to understand what the IRS is asking and your next steps:
https://www.cryptotaxaudit.com/audit-letter-review
Scan every page and upload them together as one...
Crypto wallets and mixers: What just changed?
FinCEN has withdrawn two proposals involving unhosted wallets and crypto mixing. Clinton Donnelly of CryptoTaxAudit discusses the proposed reporting requirements for banks and financial institutions and why he sees the withdrawals as a shift in regulatory direction.
The discussion covers KYC information, suspicious activity reports (SARs), Tornado Cash, and Clinton’s comparison with the SEC and CFTC. He also shares his interpretation of the Trump administration’s approach to reducing regulation.
FinCEN’s official announcement:
https://www.fincen.gov/news/news-releases/fincen-announces-withdrawals-proposed-digital-asset-related-rules
Learn how CryptoTaxAudit can help:
https://www.cryptotaxaudit.com/
C...
Can You Replace a Tax Return You Already Filed? | Superseding Returns
Can you replace a tax return you've already filed with the IRS instead of submitting an amended return?
In this episode of The Clinton Donnelly Show, Clinton Donnelly explains how superseding tax returns work and why filing an extension may provide taxpayers with more flexibility when their tax calculations are not yet finalised.
Clinton discusses a recommendation from National Taxpayer Advocate Erin Collins, shared at a meeting he attended in Washington, DC.
The discussion covers:
What a superseding tax return is.
How superseding returns differ from amended returns.
<...Crypto Tax Software Said $140K. The Real Gain Was $89K
Crypto tax software can produce questionable results when transaction history or cost basis is incomplete.
In this episode, Clinton Donnelly shares two real client examples involving missing crypto records.
In one case, records from an old exchange were unavailable. Trade confirmation emails and Coinbase records helped support that incoming Bitcoin represented a transfer of the client’s own assets rather than taxable income. Working
In another case, crypto tax software calculated approximately $140,000 in gains. The client believed the figure was closer to $90,000. After a professional gain calculation, the result was $89,000, with Clinton estimating ro...
$100,000 IRS Tax Bill: What Actually Happens Next?
In this focused excerpt from a longer Q&A, Clinton Donnelly speaks with Michael Raanan of Landmark Tax Group about what happens after a substantial IRS tax bill arrives.
Michael explains why the first step is to open the notice, check the deadline, and determine whether the amount is actually correct. They then discuss how the IRS evaluates a taxpayer’s ability to pay and when options such as payment plans, penalty abatements, offers in compromise, or hardship status may apply.
They also discuss why promises to settle IRS debt for “pennies on t...
What happens when a cryptocurrency exchange faces sanctions?
Clinton Donnelly of CryptoTaxAudit discusses the BitBank sanctions story, access to the U.S. dollar system, and the risks associated with holding crypto on an exchange.
The discussion covers correspondent banking, potential effects on customer deposits and withdrawals, and the distinction between exchange solvency risk and sanctions exposure. Clinton also references FTX before turning to the wider role of the U.S. dollar in international payments.
He also shares his views on BRICS, alternatives to the U.S. dollar, and Bitcoin’s possible role in international trade. These potential future developments are discussed as analysis ra...
Is Form 1099-DA Helping Crypto Taxpayers?
Form 1099-DA provides transaction information to the IRS. How useful is it for taxpayers and their preparers?
Clinton Donnelly of CryptoTaxAudit discusses customer experiences with the forms for the 2025 tax year, including document length, first-year cost-basis reporting, different exchange formats and Form 8949 boxes.
He also considers crypto income reporting estimates, questions around study methodology and a hypothetical scenario involving filing errors and audits. He closes with his views on clearer data summaries for taxpayers and preparers.
Crypto tax preparation support:
https://www.cryptotaxaudit.com/
In this episode:
00:00 Taxpayer and...
Fewer IRS Staff. Does That Mean Fewer Crypto Audits?
Could fewer IRS employees mean fewer crypto audits? Clinton Donnelly, founder and CEO of CryptoTaxAudit, discusses IRS staffing changes, automation, and what they could mean for cryptocurrency investors.
This episode covers workforce reductions, planned customer service hiring, AI-assisted systems, and audit selection. Clinton also discusses CP2000 and CP2501 notices and shares CryptoTaxAudit’s approach to tax return preparation and its reported client audit outcomes.
Client results and comparisons discussed are figures reported by CryptoTaxAudit.
Have questions about your crypto taxes or an IRS letter?
Visit CryptoTaxAudit
Get help with an IR...
14,000 IRS Employees Retained Access to Sensitive Systems
TIGTA found that more than 14,000 IRS employees on administrative leave retained access to one or more sensitive systems.
Clinton Donnelly explains what this potential security risk could mean for crypto holders, including what 1099-DA and exchange data may reveal, why private-wallet balances are not automatically visible to the IRS, and how a virtual mailbox may help protect your home address.
The report did not establish that a material breach occurred or that the retained access was misused.
Read the full article:
https://www.cryptotaxaudit.com/blog/can-tax-authorities-be-trusted-with-crypto-data
Learn more:
...
Missing Crypto Records? How to Prove Your Cost Basis to the IRS
Missing crypto transaction records can make it difficult to calculate and support your cost basis accurately. When exchange data is incomplete or no longer available, crypto tax software may calculate gains using incomplete information.
In this episode, Clinton Donnelly explains ways missing crypto records may be reconstructed using supporting evidence such as trade confirmation emails.
He also shares a client case involving Bitcoin transferred from a closed exchange to Coinbase. Although the original exchange transaction history was unavailable, email confirmations were used alongside Coinbase records to support that the incoming Bitcoin represented a transfer of...
California’s Billionaire Tax, Wealth Flight, and the Residency Trap
California’s proposed billionaire wealth tax could impose a one-time tax of up to 5% on covered wealth above $1 billion.
In this episode, Clinton Donnelly breaks down what that could mean in practice, including the potential need to liquidate investments, the additional tax consequences that can follow, and why some wealthy residents may decide to leave California altogether.
Clinton also looks at the longer-term impact of wealth leaving the state, how California determines tax residency, and why simply moving or changing your mailing address may not be enough.
The episode covers:
California’s prop...The 1099-DA Mismatch That Could Trigger an IRS Audit
Crypto exchanges may report a transaction as short-term or long-term based on when the asset was transferred onto the exchange.
That can create a reporting mismatch when crypto was bought elsewhere, moved through private wallets, and held for more than a year before being sold.
In this episode, Clinton Donnelly explains:
Why exchanges may not know your true cost basisHow wallet transfers can affect 1099-DA reportingWhy a long-term holding may appear as short-termHow the IRS compares exchange-reported proceeds with your tax returnWhat can trigger IRS correspondence or an auditLearn...
Used BitMEX, BitMart or AscendEX? Download Your Records Now
If you have traded on BitMEX, BitMart, AscendEX, or another cryptocurrency exchange that is closing operations, download your transaction history before you lose access.
Without those records, it may become much harder to prove your crypto cost basis for tax purposes. Missing transaction data can also cause crypto tax software to use older or lower cost basis figures, potentially overstating your gains and showing more tax due than is correct.
In this episode, Clinton Donnelly, EA, explains why taxpayers are responsible for maintaining their records under Internal Revenue Code Section 6001 and why affected traders should...
4 Crypto Tax Fixes Proposed to the IRS: Will They Actually Help?
The National Taxpayer Advocate has proposed four changes intended to help cryptocurrency investors correct reporting mistakes, understand the tax rules and reconstruct missing transaction records.
But do these recommendations address the real problems crypto taxpayers face?
Clinton Donnelly, EA, examines each proposal and explains why crypto tax compliance is more complicated than issuing additional guidance or recommending better software.
This episode covers:
Why the IRS has resisted creating a crypto tax corrective programmeWhat IRS Letters 6173, 6174 and 6174-A already explainWhy eligibility rules may not be the main compliance problemWhat crypto gain calculation software...The “0% Crypto Tax” CRAT Strategy the IRS Just Targeted
The IRS has officially classified certain abusive Charitable Remainder Annuity Trust arrangements as listed transactions.
CRAT strategies have been promoted to crypto investors and other owners of highly appreciated assets as a way to claim a charitable deduction, receive annuity payments, and potentially pay 0% tax.
But these arrangements can involve strict disclosure requirements, substantial penalties, high setup costs, and the risk of the IRS challenging the entire structure.
In this episode, Clinton Donnelly, EA, explains:
• How a Charitable Remainder Annuity Trust works
• How CRATs are used with appreciated crypto and othe...
Is Crypto Bridging Taxable? Wrapped Assets vs. Mint & Burn
The answer depends on what actually happens to the asset during the bridge.
In this episode, crypto tax expert Clinton Donnelly explains why different bridging methods can produce different tax outcomes.
A wrapped asset may not create an immediate taxable event if the original asset remains locked and ownership does not change. A mint-and-burn or swap-based bridge may be treated differently if the original asset is sold, exchanged, or otherwise disposed of.
🔹 How wrapped assets work
🔹 Why ownership transfer matters
🔹 When bridging may create a taxable sale or exchange
🔹 How cost basis m...
Illinois’ 0.2% Crypto Tax: Small Rate, Dangerous Precedent
Illinois passed SB 3019, introducing a 0.2% tax on digital asset transactions by Illinois residents.
At first glance, 0.2% may seem insignificant. Clinton Donnelly argues that the real issue is not the size of the tax. It is the precedent it creates.
In this episode, Clinton explains:
What the Illinois Digital Asset Tax Act doesWhy it is being described as a “privilege tax”Which exchanges and brokers may be affectedWhy small taxes can grow over timeThe Boston Tea Party comparisonWhy Illinois could push crypto investors and businesses elsewhereWhy Clinton sees the policy as anti-growth and pro-corruptionThe...
Crypto Taxes Are Changing: IRS Wash Sale Rules & 1099-DA Breakdown
The IRS is moving toward stricter crypto tax reporting through expanded 1099-DA requirements and potential application of wash sale rules to digital assets.
In this episode, we break down what is actually changing, how it affects crypto investors, and why this represents a major shift in how digital assets are tracked and taxed.
We cover:
• How wash sale rules may apply to crypto transactions
• What 1099-DA reporting means for exchanges and investors
• How IRS visibility into wallet activity is increasing
• Why compliance risk is rising even for retail traders
• What to ex...
50% Stake in AI Companies? Why This AI Wealth Fund May Never Become Law
A new AI wealth fund proposal would give the public a 50% stake in major AI companies.
In this episode, Clinton Donnelly breaks down the American AI Sovereign Wealth Fund Act and explains why this proposal may be more political talking point than future tax law.
Clinton looks at the risks of forced public ownership in AI companies, including government control, shareholder influence, corruption risk, company relocation, and higher costs being passed down to ordinary consumers.
This is not current tax law. It is a proposed bill, and most proposed bills never become law.<...
The $30,000 ADA Cardano Staking Tax Mistake
ADA Cardano staking rewards may be taxable when received if the taxpayer has dominion and control, but Paschall v. Commissioner also raises important questions about constructive receipt and Cardano validator mechanics.
In this episode, Clinton Donnelly, founder of CryptoTaxAudit and known as the Crypto Tax Fixer, breaks down Paschall v. Commissioner, T.C. Memo. 2026-46.
Paschall was staking Cardano and argued that his staking rewards should be taxed when sold for dollars, not when received. The auditor disagreed, and the case went to U.S. Tax Court.
<...
1099-DA Is Broken: CP2000 Notices Are Coming This Fall
The IRS rolled out Form 1099-DA, and Clinton Donnelly says the first version is already creating serious problems for crypto investors and tax preparers.
In this episode, Clinton explains why the 1099-DA collects the data the IRS wants, but fails to help taxpayers file correctly. The information may be there, but it is hidden, buried, and difficult to enter properly on a tax return.
He also explains why confusion around the 1099-DA could lead to a high error rate, mismatched IRS records, and a wave of CP2000 notices for crypto investors this fall.
...
1099-DA Disaster: Why Crypto Taxpayers Still Don’t Know What to Report
The IRS says tax season was a success, but crypto taxpayers may be facing a very different reality.
In this episode, Clinton Donnelly explains why the new IRS Form 1099-DA may give the IRS more crypto transaction data while still leaving taxpayers and tax preparers unsure what numbers actually belong on the tax return.
Clinton breaks down how IRS automation, CP2000 under-reporting letters, missing cost basis, crypto-to-crypto taxable trades, and confusing 1099-DA formats could create problems for taxpayers who are trying to file correctly.
He also explains why simply receiving more data does...
What I Learned at the IRS Conference About Crypto Reporting
Clinton Donnelly recently attended the CERCA IRS conference, where IRS electronic tax reporting, taxpayer communication, automation, and modernization were discussed with IRS leadership.
One major takeaway stood out: CryptoTaxAudit was the only crypto-related firm attending the conference.
That matters because the 1099-DA is becoming one of the most important reporting forms crypto taxpayers will face. In prior years, crypto gain calculation companies and other reporting firms were involved in these conversations. In 2026, they were no longer present.
In this episode, Clinton explains why the 1099-DA rollout created confusion for crypto taxpayers, why some...
Should the IRS Offer Crypto Tax Amnesty? Crypto Traders Need to Speak Up
Should the IRS offer a crypto tax amnesty program for traders who want to become compliant?
In this episode, Clinton Donnelly asks crypto traders, investors, tax professionals, and anyone affected by crypto reporting problems to share constructive feedback.
CryptoTaxAudit is preparing a proposal or recommendation for cryptocurrency tax amnesty. The goal is to gather real-world comments about what has kept people from reporting all their crypto income, what makes crypto tax reporting difficult, and what the IRS could do beyond Form 1099-DA to help taxpayers come in from the...
Kalshi & Polymarket Taxes: Can You Lose Money and Still Owe Tax?
Are you trading on Kalshi, Polymarket, or other prediction markets?
In this episode, Clinton Donnelly explains why prediction market taxes can be confusing, especially when activity may be treated differently depending on whether it looks like gambling or capital asset activity.
One of the biggest issues discussed is the 90% loss rule. In some cases, a trader could lose money overall and still have taxable income because gambling losses may be limited and treated differently from capital losses.
Clinton covers:
• Wh...
Your 1099-DA Could Make It Look Like You Made $1 Million
Your 1099-DA may make it look like you made far more money from crypto than you actually did.
In this episode, Clinton Donnelly explains why Form 1099-DA can report gross proceeds without showing your true cost basis, and why that can create serious confusion for crypto taxpayers.
The key issue is simple: proceeds are not profit.
A crypto trader could have millions of dollars in reported proceeds, but much lower actual taxable gain once cost basis is properly calculated. If the IRS receives a 1099...
Why Is My 1099-DA So High? Crypto Tax Strategy for Traders
High-frequency crypto traders may receive 1099-DA forms with large reported numbers. The real issue is whether their tax return clearly explains those numbers.
In this episode, Clinton Donnelly explains the two main strategies crypto traders may consider as 1099-DA reporting becomes more important.
One option is to trade on one centralized platform so that one exchange may be able to report cost basis, sales price, and gain or loss on one 1099 form. Clinton compares this to how traditional brokerages like Merrill Lynch and Fidelity report stock activity.
<...
COVID Penalty Refunds? Why Taxpayers May Need to Act by July 10
Some taxpayers may need to act before July 10, 2026, to preserve refund or abatement claims for certain COVID-era IRS penalties and interest.
In this episode, Clinton Donnelly explains why the Kwong ruling may matter for taxpayers who were assessed IRS penalties, fees, or interest during the COVID-era deadline period.
Clinton breaks down:
Why COVID-era IRS deadline relief mattersHow some taxpayers may have been charged penalties during the affected periodWhy Form 843 may be used to request a refund or abatementWhy certified mail and proof of delivery matterWhy relief may not happen automaticallyWhy timing matters before the...The IRS Commissioner Problem: Anthony Parent on Tax Court, 1099-DA Chaos, and AI
Is the IRS operating without a real Commissioner, and could that create problems for Tax Court cases, IRS appeals, and crypto tax enforcement?
In this episode, Clinton Donnelly speaks with Anthony Parent of IRSMedic about the IRS Commissioner problem, Tax Court authority, IRS delegation orders, and what may happen when enforcement continues without clear leadership at the top.
Anthony explains why he filed a motion to vacate in U.S. Tax Court, why he believes the absence of a Commissioner of Internal Revenue may create structural problems, and how...
Missed a 1099? Why the IRS Sends a CP2000 Notice
Miss a 1099 and the IRS may assume you underreported income.
A CP2000 notice is triggered when the IRS compares the 1099s they received with what was included on your tax return and finds a mismatch. They calculate additional tax and send you a notice to review or challenge.
Clinton Donnelly explains:
What a CP2000 notice isWhy missing 1099s trigger itWhy the IRS calculations are often wrongHow it differs from a full auditWhat to do if you receive oneThis is not an audit, but it does require a response.
What Should You Do If You Get IRS Letter 6174 for Crypto?
If you’ve received IRS Letter 6174 or 6173 related to crypto, it’s important to understand what it actually means before taking any action.
In this episode, Clinton Donnelly explains why the IRS is sending these letters to crypto traders, what information they may already have, and how these notices fit into broader IRS enforcement around digital assets.
He also breaks down:
The difference between IRS Letter 6173 and 6174Why receiving one means you are on the IRS radarHow the IRS identifies crypto activity through wallets and exchangesThe limits on amen...CP2000 Notices and Crypto Tax Mistakes Explained
If you’ve received a CP2000 notice from the IRS related to crypto, you’re not alone.
A CP2000 letter is issued when the IRS believes income was not reported correctly, often based on forms like the new 1099-DA for digital assets.
In many cases, crypto investors did report their income, but errors in how it was reported can trigger these notices.
This is a high-volume, low-cost way for the IRS to review returns and request additional payment. You typically have 60 days to respond.
The real issue is not missing income. It i...
IRS AI and Crypto Audits: How Investors Are Being Identified
The IRS is changing how it identifies crypto investors who may have underreported their income.
In this episode, Clinton Donnelly, founder of CryptoTaxAudit, explains how artificial intelligence and tools like Palantir’s SNAP platform are helping the IRS move beyond outdated audit systems and focus on higher-probability audit targets.
If you have traded crypto and your reporting is not fully accurate, this shift matters.
In this episode:
How the IRS is using AI to improve audit targetingWhy many past audits resulted in no changeHow Palantir’s SNAP platform narrows down audit candidatesWhy cryp...OpenClaw, IRS Whistleblowers, and the Truth About Reporting Crypto Traders
Can tools like OpenClaw be used to report crypto traders to the IRS and earn a reward?
In this episode, Clinton Donnelly breaks down a viral post on X claiming that someone built an OpenClaw system to scan Reddit and social media for people not paying crypto taxes, then report them to the IRS for a payout.
At first glance, it sounds serious. But the reality is very different.
Clinton explains how the IRS whistleblower program actually works, including:
Why rewards can reach up to 30%The requirement for cases involving over $200,000 in...IRS Form 4564 and Crypto Taxes: Why Reporting Feels So Confusing Right Now
What is IRS Form 4564, and why is it showing up in crypto audits?
In this episode, Clinton Donnelly explains how IRS audits begin, what Form 4564 is asking for, and how it connects to 1099-DA reporting and Form 8949.
More importantly, he breaks down why crypto tax reporting feels so confusing right now.
It’s not just taxpayers struggling.
Tax preparers are trying to interpret incomplete data, and even IRS auditors are working through how these forms apply in practice.
If your numbers don’t match or your reporting feels unclear, this epis...
Can You Use Crypto for a House Deposit? What Actually Happens
Can you use your crypto to help buy a house without selling it?
In this episode, Clinton Donnelly explains how crypto-backed loans work and why they can create a highly leveraged position.
You’ll hear:
• How borrowing against crypto changes your risk
• Why having two loans increases exposure
• What happens when the market drops
• How liquidation can trigger a tax event
• Why paying these loans off quickly matters
This is not about avoiding crypto loans. It’s...
Tax Extension Rules: Do You Still Have to Pay by April 15?
If you file a tax extension, you still need to pay your taxes by April 15.
In this episode, Clinton Donnelly explains how IRS tax extensions work, the difference between filing late and paying late, and what happens if you underpay. He breaks down failure-to-file penalties, failure-to-pay penalties, interest, and why estimating your taxes correctly matters.
You’ll learn:
• What a tax extension actually does
• Why an extension does not extend your payment deadline
• How IRS interest and penalties can build up
• Why paying an estimate by April 15 matters
For personaliz...
Why Your 1099-DA Shows Millions in Crypto Proceeds (And What It Really Means)
If your 1099-DA shows numbers that seem way higher than your actual crypto profits, you’re not alone.
This is one of the most common points of confusion for crypto investors. Many exchanges report total proceeds instead of cost basis, which can make your gains look far bigger than they really are.
In this episode, Clinton Donnelly explains why this happens, how cost basis actually works, and what the IRS expects you to report.
You’ll also learn why moving between wallets and exchanges can break tracking, and what kind of records you need...
