Frank Richard Ahlgren III, an early investor in Bitcoin from Austin, Texas, has become the first person to face criminal charges for failing to report capital gains from cryptocurrency transactions. Ahlgren underreported capital gains exceeding $4 million from selling Bitcoin worth approximately $3.7 million between 2017 and 2019. The U.S. Department of Justice stated that all taxpayers must report gains or losses from cryptocurrency sales on their tax returns. Ahlgren, who invested in Bitcoin in 2011, sold around 640 BTC at an average price of $5,807.53 in 2017 and reinvested the profits into real estate. He was found to have inflated the cost basis on his tax return, leading to significant discrepancies. Furthermore, he failed to report over $650,000 in sales in 2018 and 2019, attempting to conceal his transactions through various methods. Ahlgren was sentenced to two years in prison, with an additional year of supervised release and a restitution payment of approximately $1.1 million to the U.S. government, establishing a legal precedent for crypto tax evasion cases.

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