Boom In Bitcoin, Stock Market Triggers Explosion In Taxable Gains

A clever little term is being bantered about on social media this tax season to describe how tax preparers might break the bad news to clients: Congratudolences.

It’s a word you might offer, according to the Urban Dictionary, to a co-worker who has accepted a job promotion that is a mixed blessing. Say something that moves her up the ranks but clearly puts her in more direct contact with a cantankerous colleague.

Congratulations on your success. Condolences for what’s ahead.

  “Congratudolences.”

“I think I’m going to use it with clients that have to pay a big tax bill because they made a lot of money,” enrolled agent Matthew Cordes said in a lighthearted tweet.

Eye-popping numbers for taxable income are being put in front of investors and others who saw financial success in 2021, often for triggering tax scenarios and tax bills that many never imagined.

Blame Bitcoin and virtual currency. Blame lots of trading in stocks. And yes, blame mutual funds that paid out some extraordinary capital gains distributions after a robust rally on Wall Street last year.

The Standard & Poor’s 500 rose nearly 26.9% in 2021. The Dow Jones Industrial Average climbed 18.73% in 2021. And your tax bill?

Big gains can mean big money at tax time.

James O’Rilley told me of one investor who made well over a million dollars buying and selling virtual currency almost daily last year.

The man — a friend of a friend who wasn’t aware of all the tax ramifications — ended up being shocked by the outcome, according to O’Rilley, a CPA and tax director for Doeren Mayhew in Troy.

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Source: Detroit Free Press