NFL star Odell Beckham Jr (OBJ)'s decision to take his $750,000 salary in Bitcoin appears to have cost him dearly due to the market crash after he signed the deal. Due to the vagaries of cryptocurrency tax laws and current prices, some estimate that OBJ earned 61% less than if he had taken his salary in fiat.
The loss has highlighted the tax complications of receiving a salary or income in crypto, as crypto investors have to pay taxes on the amount it was worth when it was received, not the value it was worth when they file their tax return.
On November 12 of last year, OBJ signed a one-year deal with the Los Angeles Rams worth $750,000. in a promotion post on twitter partnered with CashApp, OBJ announced that he would receive 100% of his $750,000 annual salary in Bitcoin (BTC).
It's a NEW ERA and to start off I am pleased to announce that I will receive my new salary in bitcoin thanks to @CashApp. TO ALL MY FANS, no matter where you are: THANK YOU! I am also returning a total of $1 million in BTC rn. Leave your $cashtag w. #OBJBTC & follow, continue @CashApp NOW pic.twitter.com/ds1IgZ1zup
โOdell Beckham Jr. (@obj) November 22, 2021
At that time, Bitcoin had been breaking new all-time highs and just two days before OBJ signed the deal with the Rams, it reached its highest price of $69,044. Unfortunately for OBJ, Bitcoin is now down 46% from that high, currently worth $36,972.
According to Darren Rovell, sports business analyst and senior executive producer at The Action Network, OBJ's decision to take his entire salary in Bitcoin may not have been the brightest of ideas.
Rovell stated that OBJ's full salary is now worth only $413,000 compared to the original $750,000.
After federal and state taxes are factored in, at a cumulative rate of 50.3%, Odell will have only earned $35,000 in the last two and a half months, which is equal to just one Bitcoin. This is a far cry from the $90,000 he would have received had he taken his salary in fiat.
bitcoin enthusiast Joe Pompilano (brother of influencer Anthony) argued that there were some major discrepancies between Rovells' opinion and the actual fact, including that he was paid weekly rather than annually.
I know this fits your narrative, but it's just not true.
1. The deal was announced on November 22, not November 12.
2. NFL players are paid weekly, not 100% up front.
3. Cash App paid you 7 figures in marketing money; that's more than his entire contract with the Rams.
โ Joe Pompliano (@JoePompliano) January 23, 2022
However, Rovell said that the weekly payments were irrelevant to the tax treatment: โThe full payment has been completed. It doesn't matter when you got paid."
tax problems
This is not the first time crypto assets have caused major tax discrepancies, and as cryptocurrency adoption continues to grow internationally, it certainly won't be the last. During the โcrypto winterโ there were many stories of users facing huge tax bills due to the price of the assets when they received them, and not the minimum price they fell to at tax time.
Although the rules vary, it is common for tax organizations to require that the value of crypto assets be declared at the time they are received. This leaves investors exposed to a huge tax bill if the value of their crypto assets drops between the time of purchase and the eventual filing of their tax return.
in 2019 Adrian Forza, Director of Australia crypto tax, told local publication Micky the story of an Australian crypto investor who was forced to pay almost five times the value of his coins in taxes.
โIt was a disasterโฆ It was a really unfair outcome because you basically received cryptocurrency and the value dropped significantly and now you have to pay taxes on the money you don't have.โ
Related: TaxBit will offer free crypto tax forms with a new network
Forza went on to say that the biggest problem with cryptocurrency taxes was not necessarily due to the laws themselves, as most of the problems stemmed from a lack of understanding of tax laws among crypto enthusiasts themselves:
"The demographic is 25-40 year old men and a lot of them probably haven't invested in stocks or even seen an accountant before," he said.
That can also be the case with blockchain. play to win games as Axie Infinity. In a famous story a 22 years in the Philippines He bought two houses with the winnings he earned from playing the game.
Hopefully, you talked to a tax agent because now both Philippine and international regulators they come for those profits, warning Axie Infinity's 2 million active players that any in-game transfers of crypto assets are legally classified as taxable events.
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