Case Study
IRS Letter 6174-A 10 Years of Incomplete Crypto Records Reconstructed and Notice Resolved
The Problem
Client received an IRS Letter 6174-A after a decade of active crypto trading with incomplete accounting across multiple exchanges, wallets, and DeFi protocols. Prior software platforms had generated reports the client could not substantiate. A prior CPA had filed returns using those reports without reconstructing the underlying records. The IRS had third-party data the client's existing records could not reconcile, and several prior year filings contained incorrect cost basis and misclassified income.
What We Did
Reconstructed the complete digital asset transaction history across all exchanges, wallets, and on-chain activity spanning 10 years. Identified the specific errors in prior year filings including cost basis miscalculations, misclassified staking and DeFi income, and unreported disposals and filed corrected returns with audit-ready supporting documentation. Drafted and submitted the response to the IRS Letter 6174-A. Once the notice was resolved, implemented a forward-looking compliance system with ongoing portfolio accounting to prevent future exposure.
The Outcome
IRS Letter 6174-A resolved with a documented, substantiated response. All prior year filings corrected with defensible cost basis records and properly classified income. Client transitioned from a decade of unresolved exposure to a clean compliance position with an ongoing accounting system producing accurate, IRS-aligned reporting year over year.
