NFL star’s massive tax bill highlights problems with BTC salaries

Odell Beckham Jr., NFL star, decided to pay his $750,000 salary in Bitcoin. This is likely due to the market crash that occurred after he signed the contract. Some estimate that OBJ made 61% less owing to the current price and cryptocurrency tax laws than if he had taken his salary in fiat.

This loss highlights the tax problems that crypto investors face when receiving a salary or yield in cryptocurrency. They have to pay taxes on the amount they received when they receive it, and not on what it is worth when they file their tax returns.

OBJ signed a $750,000 one-year deal with the Los Angeles Rams on November 12, 2013. In a promotional tweet, OBJ shared that he would receive 100% of his $750,000 yearly salary via CashApp.

It’s a NEW ERA and to celebrate it, I’m excited to announce that my new salary will be in bitcoin thanks to @CashApp. TO ALL MY FANS OUT THERE, irrespective of where you are: THANK YOU! I am giving back $1M in BTC, rn also. Drop your $cashtag w. #OBJBTC & follow @CashApp NOW pic.twitter.com/ds1IgZ1zup
— Odell Beckham Jr. (@obj), November 22, 2021

Bitcoin was at its highest ever price of $69,044. Unfortunately, Bitcoin has fallen 46% since that peak, and is currently worth $36,972.

According to Darren Rovell (senior executive producer at The Action Network), OBJ may not have had the best idea of taking his entire salary in Bitcoin.

Rovell said that OBJ’s total salary now amounts to $413,000, compared with the $750,000 originally.

After taking into account both Federal and State taxes, Odell will have only earned $35,000 in the last two and a quarter months. This equates to one Bitcoin. This is far from the $90,000. Odell would have earned if he had taken his salary in fiat.

Joe Pompilano, a Bitcoin enthusiast and brother to Anthony, argued that there were major discrepancies in Rovells’ actual take and actuality. He was also paid weekly instead of annually.

This is true, I’m sure. 1. The deal was not announced on Nov 12th, but Nov 22nd. 2. NFL players are paid weekly and not upfront 100%. 3. Cash App paid him seven-figures in advertising money — more than his entire Rams contract.
— Joe Pompliano (@JoePompliano) January 23, 2022

Rovell, however, stated that the weekly payments were not relevant to tax treatment. “The aggregate payment is complete.” It doesn’t really matter when he was paid.

Tax troubles

It’s not the first time crypto assets have led to major tax discrepancies. And as crypto adoption grows internationally, it’s likely that this won’t be the only occasion. Many users faced large tax bills during “crypto winter” due to the high price of crypto assets at the time they were received, not the tax-time low.

While rules may vary, taxation agencies often require that crypto assets are valued at the time they are received. Investors could face a large tax bill if their crypto assets lose value between purchase and filing of their tax return.

Adrian Forza, Director of Crypto Tax Australia, shared the story of an Australian crypto-investor who had to pay almost five times the amount of his coins in taxes in 2019.

“It was a disaster… It wasn’t fair because he basically received cryptocurrency, and its value has fallen significantly. Now he must pay tax on the money he doesn’t have.”

Similar: TaxBit will offer tax forms in crypto with a new network

Forza stated that the main problem with cryptocurrency taxation was not due to the laws, but rather the inability of crypto enthusiasts to understand the tax laws.

He said, “The demographic is between 25 and 40-year-old men and many of them likely haven’t ever invested in shares or seen an accountant before.”

This may be true for blockchain-based games like Axie Infinity. One famous story is that a 22-year old Filipino man bought two houses using the money he made from the game.

He should have spoken to a tax agent, as both the Philippine and international regulators are now looking for these profits. They are warning AxieInfinity’s 2 million players that any in-game transfers of crypto assets will be legally considered taxable events.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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