25-Year Tax Veteran Answers the Crypto Tax Questions People Ask Too Late

Mahad Mohamed is a senior crypto tax and accounting specialist with over 25 years of experience in public accounting and tax advisory. His background includes work with Big Four firms and government tax authorities, giving him deep insight into regulatory review and enforcement.

Mahad Mohamed is the CEO of Block3 Finance, a firm dedicated exclusively to cryptocurrency taxation, accounting, and advisory. He recently joined the Bitcoin.com News Podcast to talk how cryptocurrency is taxed, primarily in Canada and the U.S., and what traders, investors, and builders need to understand to stay compliant.

Mahad advises crypto traders, investors, and builders on reporting, audits, and long-term tax structure, with deep expertise across Bitcoin, high-volume trading, DeFi, staking, NFTs, mining, and cross-border crypto activity. His work is focused on audit-ready reporting, clean records, and defensible tax positions that stand up under real regulatory scrutiny.

Block3 Finance works with clients operating across centralized exchanges and on-chain protocols, delivering accurate reporting, audit support, and tax structures aligned with current regulatory expectations. The firm places strong emphasis on clean records, defensible positions, and practical decision-making that holds up under real scrutiny.

You can book a free 30-minute consultation at calendly.com/mahadblock3finance, tailored to your unique crypto activity, to understand your exposure, reporting obligations, and next steps before issues become costly.

A major topic of discussion this episode was the misunderstanding that taxes only apply when cashing out to fiat; in reality, every crypto transaction, including selling, swapping, and spending, is a taxable event, with no minimum threshold for reporting gains. Tax authorities like the CRA, Revenue Quebec, and the IRS inquire about crypto use on tax returns, and the CRA recently sent 440,000 audit letters to inquire if recipients are crypto users. Tax agencies look closely at whether a user is an investor or a day trader, often using an eight-page questionnaire with about 30 questions to assess the user's involvement. A key distinction involves the volume of transactions; having more than 10 to 15 transactions a year, or more than 15 staking/reward transactions, can flag a user as a day trader. Automated trading is also a strong indicator of being a day trader.

If classified as a day trader, income is taxed as business income at high personal marginal tax rates, versus a capital gain. Mahad strongly recommends that day traders incorporate, as a corporation's tax rate in Canada is only 12.2% on gains up to half a million, and personal assets can be transferred to the corporation using a Section 85 Rollover. Specific crypto activities are also addressed: staking rewards and airdrops are taxable at their fair market value upon receipt, and the daily nature of these payments can increase the risk of being classified as a day trader. Winnings from prediction markets are taxable, unlike lottery winnings in Canada, because they involve crypto as the medium of prediction. Losses from hacks or exchange failures are not automatic write-offs; they require proper documentation, such as filing a police report and obtaining a federal file number, which Block3 Finance uses to defend the loss claims if audited.

Looking ahead, Mahad predicts an increase in audits, on-chain analysis, and less tolerance for errors from governments as education and awareness become more widespread. Global data sharing is also imminent, with the Common Reporting Standard on Crypto-Assets (CARF) set to begin in 2027, meaning tax authorities will have access to international wallet information. Finally, he emphasizes the importance of estate planning, urging crypto users to have an up-to-date will and proper documentation to ensure that beneficiaries and executives can access their crypto, wallets, and seed phrases, noting that "death and taxes are both guaranteed".