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2017 was a challenging year for Puerto Rico. First came the destruction and devastation from Hurricane Irma and Maria. Then came disorganized relief efforts, and allegations back and forth as to whether Puerto Rico or the US were to blame. Even today, only 60 percent of Puerto Rico has access to reliable electricity. And the Tax Reform bill that just passed the Congress imposed new tariffs on US companies that hold Puerto Rican subsidiaries.
Still, some see in Puerto Rico a budding crypto tax paradise. Some tax advisers are telling their clients to pick up and move to Puerto Rico. As the theory goes, after establishing residency they can sell their cryptocurrency holdings 100 percent tax-free. Sounds great! Where does one sign up?
If true, this could be a boon to the Puerto Rican economy, not to mention to those individuals sitting on mountains of appreciated cryptocurrency assets. But does this Puerto Rico tax scheme actually work? Like everything in the world of cryptocurrency taxes, great caution is in order.
The IRS is just getting around to developing a strategy to identify, assess and collect the billions of dollars in taxes from cryptocurrencies that some believe are going unreported. The notion that US and Puerto Rico tax authorities will allow millions (if not billions) in cryptocurrency sales to escape taxation entirely is pretty optimistic, to say the least.
Will the US tax crypto sales after a move to Puerto Rico?
Generally speaking, the IRS does not require a US taxpayer to include income from “sources within Puerto Rico” if they have resided in Puerto Rico for an entire taxable year. That