Taxes, Crypto and PPLI

Taxes, Cryptocurrency and Private Placement Life Insurance

Taxes, Crypto and PPLI

Cryptocurrency is a trending topic and many wealthy individuals find it as a solution for investment gains. We will discuss in this article if Cryptocurrency can be used in conjunction with PPLI for tax savings and to obtain other financial benefits.

We, at EWP Financial, customize solutions using mainly Expanded Worldwide Planning, (EWP) and Private Placement Life Insurance (“PPLI”) to meet the complex needs of our clients. 

PPLI is a versatile type of insurance policy used by super wealthy individuals, sometimes termed a unit-linked policy. The premium can be paid in cash or with a portfolio of bankable assets, but it is also possible to pay with non-traditional asset classes such as art, precious metals or cryptocurrency.

It’s worth noting that even where cryptocurrencies are considered bankable assets, the acceptance and valuation may be subject to certain conditions and requirements. Banks and lenders may have specific criteria, such as the type of cryptocurrency accepted, the liquidity and stability of the market, and the value of the cryptocurrency relative to the loan amount. EWP Financial can advise if you can use cryptocurrency as a bankable asset depending on your particular situation.

What is the role of PPLI?

It’s called Private Placement because each contract is issued under its own private placement memorandum – the policyholder’s assets are segregated from other policyholder’s assets under the same insurance carrier.

Whilst the legal ownership of the assets passes to the insurance carrier, the policyholder retains at all time full rights to request a partial or full surrender of the policy, and change the beneficiaries.  

Why is it difficult to place crypto assets into custody? And why is structuring these assets into a PPLI an effective solution for this?

Cryptocurrencies are not financial assets but an asset class on its own. They also lack physical substance. Therefore, they meet the definition of an intangible asset and would be recorded at acquisition cost (i.e. price paid or consideration given).

Cryptocurrencies are designed to work as a decentralized medium of exchange, independent of a financial institution or any other central authority, so the custody is not with a traditional arrangement of a banking institution but held by a token or key with the key holder having secure access via private passwords or biometric authentication systems.

The difficulty for a cryptocurrency (and other digital assets) is that after the keyholder’s lifetime, if the assets have not been the subject of an inventory with regular updates, then it is very difficult for the executor to identify the deceased’s entire exposure to these digital assets.

Digital assets can be entrusted to professional trustees inter vivos, so that the problem linked to the devolution of the keyholder’s credential is solved. However, many trustees have difficulty custodising such assets due to the associated risks, directly or indirectly that they represent.

By using a PPLI policy to structure the digital assets and appoint the trustee as policyholder, these risks can be mitigated. In addition, the trust can also be the beneficiary of the policy to ensure estate planning over many generations.

What are the tax benefits of holding crypto within a PPLI?

Once the assets are placed within the PPLI, such assets enjoy growth free from income and capital gains tax (as long as there is no partial or full surrender), thus the policy benefits from the gross roll-up effect.

This is especially relevant for cryptocurrencies which are subject to high returns (and lows!). Unstructured cryptocurrencies could be subject to tax on an arising basis in countries like Australia, France, India, Singapore and USA.

“Once your assets are placed into a properly designed EWP Asset Structure, they are shielded from taxation, while simultaneously achieving maximum privacy and asset protection.”  – Michael Malloy CLU TEP RFC

 

by Michael Malloy, CLU TEP RFC.
CEO, Founder @EWP Financial

~ Your best source for PPLI and EWP
Michael Malloy CLU TEP RFC

 

 

 

 

 

 

 

 

EWP Financial and Partner Companies

About EWP Financial and Its Team

EWP Financial and its partner sites

In this blog post, we will talk about Michael Malloy, EWP Financial, its predecessor companies, its main team, Private Placement Life Insurance (PPLI), and Expanded Worldwide Planning (EWP). Let’s get started.

About Michael Malloy:

Michael Malloy, the founding partner of EWP Financial, began his career over 40 years ago as a risk management consultant. He has published the Life Insurance Law Newsletter and written two books on Private Placement Life Insurance (PPLI): “The PPLI Papers” and “The Wit and Wisdom of Professor PPLI.” He manages several companies and websites, including Malloy Insurance Services, Advanced Financial Solutions Inc., Michael Malloy Solutions, and EWP Financial.

“We take intentional care of wealthy families all over the world.” – Michael Malloy

Michael Malloy is a Charter Life Underwriter (CLU), Trust and Estate Practitioner (TEP), and Registered Financial Consultant (RFC).

About EWP Financial and its Predecessor Companies Working Together

Some of these names will be familiar to you: Malloy Insurance Services, Advanced Financial Solutions Inc., Expanded Worldwide Planning, Michael Malloy Solutions, and EWP Financial.

EWP Financial (ewp-financial.com), Michael Malloy Solutions (michaelmalloy.solutions), and Expanded Worldwide Planning (expandedworldwideplanning.com) have been on the internet for several years.

These companies serve as parent companies to oversee various operations under the supervision of Michael Malloy.

Malloy Insurance Services (MIS) was founded in 1985 and provides commercial and personal insurance. MIS specializes in the placement of difficult and complex insurance risks.

For example, MIS has had a liability policy in place for over 30 years for a non-profit corporation. This organization has established over 100 branches in 64 sovereign nations throughout the world.

The roots of Advanced Financial Solutions Inc., based in New York, reach back over 30 years. Its mission addresses the current paradox of striving to achieve full compliance in tax transparency while also providing clients with both privacy and tax savings.

AFS is the original corporate entity that promotes Private Placement Life Insurance (PPLI), which provides wealthy families with the maximum amount of privacy, asset protection, and tax efficiency.

Michael Malloy Solutions provides a clear, unified voice for all our entities to educate wealthy families and professional advisors on how to enhance privacy and gain the maximum amount of asset protection and tax efficiency while staying compliant with tax authorities worldwide.

EWP Financial is our latest development, a specialized company that offers services in Private Placement Life Insurance (PPLI) and Expanded Worldwide Planning (EWP). PPLI is a type of life insurance designed for high net worth individuals, providing customized investment solutions and tax-efficient planning. EWP is a unique approach to financial planning that takes into account the complexities of cross-border investment and taxation, helping clients achieve their global wealth management goals. With a team of experienced professionals and a commitment to personalized service, EWP Financial is dedicated to helping clients achieve their financial objectives with confidence and peace of mind. There are offices in New York, the British Virgin Islands, and California, ready to answer your questions.

About Our Team

Our Regional Representatives are highly experienced and knowledgeable in the financial industry, and they have a deep understanding of the local market and cultural nuances of their respective regions. They are committed to providing our clients with tailored financial solutions that meet their unique needs and requirements.

Here, you can get a glimpse of the main team members who work together to provide you with the best financial solutions to help you achieve your goals.

Please Contac Us for any questions you may have.

Thank you.

 

by Michael Malloy, CLU TEP RFC.
CEO, Founder @EWP Financial

~ Your best source for PPLI and EWP
Michael Malloy CLU TEP RFC

 

Video 5 – EWP: The Deep Internal Design – Did You Know This About PPLI & EWP?

EWP: The Deep Internal Design

PPLI Is a Cornerstone of Stability

Did you know this about PPLI & EWP? - 5

In this Episode we explain the elements that comprise a successful EWP Asset Structure. We also reveal why an EWP Asset Structure always outperforms a taxable investment. Our conservative and straightforward approach to asset structuring gives you the maximum amount of tax efficiency, asset protection, and privacy. This is why an EWP Asset Structure has the reputation as the best asset structure available today for wealthy families worldwide.

by Michael Malloy, CLU TEP RFC.
CEO, Founder @EWP Financial

~ Your best source for PPLI and EWP
Michael Malloy CLU TEP RFC

 

 

 

 

 

 

 

 

 

 

PPLI & EWP Basics – EWP and PPLI: A Unity of Assets and Life Insurance – Video 4

Did You Know This About PPLI & EWP? – Episode 4 – Life Insurance: The Magic Ingredient

Private Placement Life Insurance (PPLI) In Action

#EWP and #PPLI: A Unity of Assets and Life Insurance

A PPLI asset structure is arguably the most efficient structure available today for wealthy families who wish a conservative and efficient structure to integrate tax-free investment growth, wealth transfer, and asset protection.

READ FULL BLOG POST WITH DETAILS

 

by Michael Malloy, CLU TEP RFC.
CEO, Founder @EWP Financial

~ Your best source for PPLI and EWP
Michael Malloy CLU TEP RFC

 

 

 

 

 

 

 

 

 

 

Did You Know This About PPLI and EWP? – The Frozen Cash Value Policy Design – Episode 1

Fundamentals of PPLI and EWP

New Video Series by Michael Malloy CLU TEP RFC

Did You Know This About Private Placement Life Insurance and Expanded Worldwide Planning?

Contest 1

The Frozen Cash Value Policy Design

Welcome. Being a winner is like standing tall on top of a mountain, like the woman here. We invite you to be a winner in our new series entitled: Did you know this about PPLI and EWP? What do you have to do? You win by submitting the best answer to this question:

For U.S. taxpayers, what section of the tax code pertains to the frozen cash value policy design, and how does the language of this code section sanction this design?

What will you win? Alas, not a villa on Italy’s Amalfi coast, but you will receive a PPLI/EWP Token which can be redeemed for one of our unique NFT images.

Please submit your answers to info@ewp-financial.com. Best of luck on answering our questions. Thank you for listening.

by Michael Malloy, CLU TEP RFC.
CEO, Founder @EWP Financial

Michael Malloy-CLU-TEP

 

 

 

 

 

 

 

 

 

An EWP Asset Structure – PPLI and Crypto – Video 3

Cryptocurrency, Private Placement Life Insurance and Expanded Worldwide Planning

Episode 3

Over the years the most sophisticated clients of EWP Financial have asked three important questions:

Is it legal?

Can they steal my money?

Will I be audited?

This video answers these three important questions. It is our hope that the answers to these questions will give you the assurance you need to place your own holdings into this simple, straightforward, and very powerful asset structure, an EWP Asset Structure.

by Michael Malloy, CLU TEP RFC.
CEO, Founder @EWP Financial

Michael Malloy-CLU-TEP

 

 

 

 

 

 

 

 

CRYPTO – PPLI and EWP – Episode 2 – The EWP Stories Video Series

The Expanded Worldwide Planning Video Series

Cryptocurrency, Private Placement Life Insurance and Expanded Worldwide Planning

Video 2

INTRO

Welcome. In our first video of our series on crypto currencies we introduced you to our firm EWP Financial. In this video we continue with this topic, but first an important point: if you are new to asset structuring, you are probably thinking, well, EWP Financial seems like a good firm with plenty of experience, but what is EWP Financial going to do for my crypto currency? Why should I put my crypto into this type of asset structure?

by Michael Malloy, CLU TEP RFC.

CEO, Founder @EWP Financial

Michael Malloy-CLU-TEP

 

 

 

 

 

 

CRYPTO-PPLI and EWP – Episode 1 – The EWP Stories Video Series

Cryptocurrency, Private Placement Life Insurance and Expanded Worldwide Planning

Crypto, PPLI and EWP

The EWP Stories Video Series

Video 1

Celebrating a happy ending and a new great  beginning we want to introduce you to a fresh Video Series

Welcome. The blockchain concept has given birth to crypto currencies. This is a relatively new phenomena in our lives. Yet taxes have been with us since early dynastic Egypt and probably before. Recently passed tax legislation in the U.S. is a cause of concern for all those who hold crypto currencies. Similar laws are being passed by governments throughout the world. For this recent U.S. tax legislation, we include below excerpts from Robert W. Wood’s excellent article in the Cointelegraph.

What most of you don’t know is that there is a simple and straightforward solution to these new taxes that has existed since the 1980s. The beauty of this solution is that it is asset neutral, meaning even though crypto currencies are a new asset class, this solution wholeheartedly welcomes crypto currencies. For this solution, crypto currencies are handled the same as any common asset class like stocks, bonds, and real estate.

What is this simple and straightforward solution to the grave tax problem that is facing crypto currencies: Private Placement Life Insurance, or PPLI for short. But not just any PPLI policy. The solution is a PPLI policy that is structured to embody the six principles of Expanded Worldwide Planning, or EWP for short. Our firm, EWP Financial, was an early adopter of this powerful yet conservation asset structure.

This series of videos will give you the basic principles of a properly designed EWP asset structure. An EWP asset structure is the perfect solution to the recently introduced tax legislation in the United States that threatens to wipe out a good portion of your gains in crypto currencies. An EWP asset structure is equally effective if you are a tax payer in a country outside the U.S. In this video, Part One, we introduce you to EWP Financial and our unique approach to asset structuring.

Things to know (and fear) about new IRS crypto tax reporting

By Robert W. Wood

The new law redefines “cash” to include “any digital representation of value” including cryptocurrency, but in an anonymous system, is this going to work?

The Infrastructure Investment and Jobs Act (H.R. 3684) put crypto in the crosshairs, where Congress and the Internal Revenue Service (IRS) hope to scoop up enormous tax dollars. This reporting regime is projected to rake in an astounding $28 billion over the next ten years. No other provision in this massive recently enacted federal law is supposed to produce tax dollars that are even close. If you don’t think that means the IRS is coming for your crypto in a very big way and that Congress is trying hard to facilitate it, think again.

The crypto community was outraged when the measure was first proposed and tried to push back hard. That effort resulted in some narrowing, but the provisions were enacted anyway. Some people are still talking about a repeal effort, but that could prove to be a hard sell when $28 billion is on the line that the Biden administration may need. As enacted, Form 1099 and other reporting rules don’t take effect until December 31, 2023. Even so, since Form 1099 reports are done in January for the prior year. That means 2023 will be a big tax year.

And with 2022 right around the corner and 2021 tax returns due soon thereafter, it’s a good time to get your tax affairs in order. Key new questions are whether you are a broker, and who is. And how will these sweeping onerous reporting rules be applied? With potential civil and even criminal penalties, you can bet that most exchanges, and others who might be in doubt about whether they are brokers subject to the new law, may resolve any doubts in favor of reporting. Surprisingly, exactly what constitutes being engaged in a trade or business may be open questions too.

Over $10,000 crypto reporting

The broker reporting on Form 1099-B pales in comparison to the new cash-like reporting form requirements with their staggering criminal liability. In 2014, the IRS announced that it would treat crypto as property, not as money. The reverberations of that rule to your taxes are huge. That’s the reason just about every successive transfer or trade of crypto (even for other crypto) triggers more taxes. Yet ironically, Congress and the IRS are now taking a page from cash reporting.

For decades, transactions of more than $10,000 in cash have generated a requirement for any business to file an IRS Form 8300 within 15 days, to report the cash transaction to the IRS. Buy a car with more than $10,000 of cash, and the car dealer has to report you. If you go to the bank and take out your own $10,001 in cash, the bank is required to report you to the IRS. Pay a consultant with more than $10,000 in cash, and your consultant must report you to the IRS.

Of course, the IRS being interested in crypto is nothing new. Everyone is already required to report crypto gains to the IRS. There’s even a “do you crypto” question on every IRS Form 1040 or individual income tax return now. It’s often compared to the “do you have a foreign bank account” question that appears on Schedule B, and that has led to many criminal convictions for the IRS, and big civil penalties.

The new requirements are sweeping. And although there is a grace period until Dec. 31, 2023, many changes will be needed to make them suitable and applicable. The new law mandates that a recipient of more than $10,000 in crypto who is in business must collect, verify and report a sender’s personally identifiable information within 15 days. If you don’t, you can face fines and even criminal liability.

Saying that you are an investor and not in business might seem to be attractive if you have strong arguments on that point. However, there is an enormous body of tax law on that topic, with some discernible standards, and the stakes are big. Will any of this be easy in what is often an anonymous peer-to-peer system? Probably not, but there will likely be fear about the new rules, and some degree of filing to be safe rather than sorry.

Robert W. Wood is a tax lawyer representing clients worldwide from the office of Wood LLP in San Francisco, where he is a managing partner. He is the author of numerous tax books and frequently writes about taxes for Forbes, Tax Notes and other publications.

This article is for general information purposes and is not intended to be and should not be taken as legal advice.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Conclusion

In our next video, Part Two, we continue with our theme of financial architecture. You will also be introduced to the regional representatives of EWP Financial, and how they serve the world’s wealthiest families. This knowledge is essential to all those who wish to keep their profits from crypto currencies, and not give back their earnings in the form of unwanted taxes.

If you found this video useful please give us a like, and click on the subscribe button below. We look forward to connecting with you in Part Two. Thank you very much for joining us.

To learn how the wealthiest families in the world conduct their financial affairs, please call +1 530 692 1007, or email us at info@expandedworldwideplanning.com.

At your convenience, we can arrange a call to discuss how our unique blueprint can vastly enhance your asset structure.

Disclaimer

The opinions expressed in this video are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual on any financial structure, investment, or insurance product.

by Michael Malloy, CLU TEP RFC.

CEO, Founder @EWP Financial

Michael Malloy-CLU-TEP

 

 

 

 

 

Private Placement Life Insurance and the Tax Code

 Webber Revealed: The Real Opinion

What is commonly considered an aggressive tax strategy is when you take a section of the tax code and bend it in favor of a tax benefit. Our approach with Private Placement Life Insurance (PPLI) is to use the tax code sections that are pertinent to our structure as a guide to make the asset structure fully compliant with the code. No element of the tax code is bent or stretched to obtain a favorable result.

We use the tax code as a road map to be followed, and not something to be diverted or obfuscated in any way. Is it not preferable to rely on the tax code rather than an opinion letter from a law firm? This opinion letter is just their interpretation of the tax code. Why rely on opinion when you can base your asset structure on the language of the tax code itself?

Those who call our firm’s PPLI structures aggressive do not fully understand the tax code, although they present themselves as experts who do. What you find in their articles is the same misunderstandings regurgitated time and time again, until, in the end, they are believed to be truths.

These misunderstandings are also repeated time and time again at the usual PPLI conferences that are held throughout each year, which entrenches these misconceptions and half truths about the true nature of the tax advantages of PPLI. In our next few articles, we will discuss the topic in detail, and give you the tax code sections, so you can prove our points for yourself.

Read Full Article

Download PDF

 

by Michael Malloy, CLU TEP RFC.

CEO, Founder @EWP Financial

Michael Malloy-CLU-TEP