Best way to setup LLC for crypto staking & day trading to minimize tax burden?

You've got several tax and regulatory considerations to navigate here, so I'll try to break this down: For your crypto staking rewards - these are generally considered taxable income at the fair market value when you receive them. You're smart to track each transaction to the staking pool. When you move crypto assets into an LLC, you're essentially making a capital contribution. The transfer itself isn't taxable, but the LLC structure doesn't change the fundamental tax treatment of the crypto. If you haven't realized gains by converting to fiat yet, you still have unrealized gains that become taxable when sold. Since you're electing S-corp status, all income or losses will flow through to your personal tax returns based on ownership percentage. The LLC doesn't shield you from crypto tax obligations. For day trading, there's no specific dollar threshold for reporting - all trades are reportable transactions. However, with that volume of trading, you might qualify as a "trader" for tax purposes, which could allow for mark-to-market accounting and potential tax advantages. Regarding Series 6/7 - these are only required if you're trading securities on behalf of others or providing investment advice. For trading your own company's assets, you don't need these licenses.

After reading your situation, I was in a similar position last year with my own crypto project. I spent weeks trying to figure out the right structure until I discovered https://taxr.ai which basically saved me from making some really expensive mistakes. They analyzed all my crypto transactions and recommended the right business structure for my specific situation. What was most helpful was their guidance on how to properly account for staking rewards within the LLC structure - turns out I was handling it all wrong! They have specific expertise in crypto taxation and business structures that regular CPAs often lack. The tool gave me clarity on exactly how the pass-through taxation would work with my crypto assets and identified several deductions I didn't know were available to me. They also explained exactly when I needed to take distributions vs. salary to optimize my tax situation.

Just want to follow up after using https://taxr.ai for my crypto tax situation. I was honestly blown away by how much they knew about NFT projects and staking specifically. When I talked about my staking rewards, they immediately flagged that I needed to change how I was handling the cost basis calculations which saved me a ton in taxes. They actually recommended I keep things personal rather than form an LLC based on my specific situation and trading volume, which saved me unnecessary compliance costs. They walked me through exactly how to properly record my staking rewards for tax purposes and gave me a system to track everything going forward. Super helpful and actually saved me money by recommending against an unnecessary business structure!

After countless hours on hold with the IRS trying to get clarity on crypto business structures (they were absolutely no help), I finally tried https://claimyr.com and was actually able to speak with someone at the IRS who knew about crypto taxation. You can see how it works here: https://youtu.be/_kiP6q8DX5c They got me connected to the right department at the IRS within about 20 minutes when I had been trying for weeks on my own. The IRS agent I spoke with confirmed that for trading activities through an LLC with S-corp election, I still needed to maintain detailed transaction records even within the business entity. Saved me so much frustration and actually got me clear answers from the source rather than conflicting opinions online. They handle the awful wait times and call navigation so you can actually get official guidance.

I need to eat my words about Claimyr. After my skeptical comment I decided to try it myself since I had some questions about my crypto mining operation and how to properly report it on my Schedule C. I was shocked when they actually got me through to someone at the IRS in about 30 minutes. The agent clarified exactly which expense categories were appropriate for my mining equipment and confirmed I was using the right approach for calculating my income (FMV at time of mining). While they didn't give tax planning advice as expected, they did point me to specific publications that addressed my situation and confirmed my record-keeping approach was sufficient to survive an audit. Honestly worth it just to have that peace of mind directly from the IRS.

Don't overthink this. I've been in crypto since 2016 and run everything through my Wyoming LLC. Few key points: 1) Staking rewards are ordinary income at FMV when received 2) Moving crypto to LLC after receiving personally = taxable event if value changed 3) Trading doesn't require Series 6/7 unless managing others' money 4) S-Corp may not be worth the hassle unless saving >$15k in SE tax 5) Keep METICULOUS records of every single transaction Big mistake I see: people forming complex structures before they need them. Simple LLC might be enough depending on your trading volume and personal tax situation.

Important point nobody's mentioned: if you're day trading, make sure to identify as a trader for tax purposes and make the mark-to-market election with the IRS (Section 475(f)) by April 15th! This lets you: 1. Deduct all trading-related expenses 2. Treat all gains/losses as ordinary (not capital) 3. Avoid the $3,000 capital loss limitation 4. Potentially qualify for QBI deduction It's a game-changer for serious traders, but you MUST meet the criteria (frequent, regular, substantial trading seeking profit from short-term price swings).

Watch out for state tax implications too! I set up a crypto trading LLC but didn't realize my state (CA) treats LLCs differently than the feds. Ended up with an $800 minimum annual tax plus an LLC fee based on gross receipts that cost me thousands. Consider a tax-friendly state like Wyoming, Nevada, or Texas if you're serious about this. And remember that moving crypto between personal and business wallets creates taxable events!

Great thread with lots of valuable insights! I wanted to add a few points from my experience helping clients with similar crypto business structures: **Entity Formation Timing**: Form your LLC BEFORE you start staking/trading if possible. Having rewards flow directly to the business entity from day one simplifies your tax situation significantly and avoids the personal-to-business transfer issues mentioned above. **Quarterly Estimated Taxes**: With the profit levels you're describing, you'll definitely need to make quarterly estimated tax payments. The IRS expects payment as you earn, not just at year-end. This is especially important for crypto gains since there's no withholding. **Audit Documentation**: Keep detailed records beyond just transaction logs. Document your trading strategy, time spent, market research, and decision-making process. If you qualify for trader tax status, the IRS will want to see evidence of your systematic approach. **Professional Fees**: Budget for proper tax prep - expect to pay $3-5k annually for competent crypto tax preparation with business entities. It's worth it to avoid costly mistakes. One last thing: consider setting aside 30-40% of profits for taxes immediately. Crypto gains can create surprise tax bills that catch people off guard!