CAPITAL GAINS

The Internal Revenue Service classifies almost every profitable sale of property as a “taxable event.”

Under 26 U.S.C. § 61(a)(3), “gains derived from dealings in property” are included in their
definition of gross income.

• Cryptocurrency and Bitcoin are treated as “property.” Selling for USD, exchanging for another coin, or even using it to buy goods is, by IRS rules, a taxable event

• Real Estate: Selling for more than your adjusted basis produces a taxable gain unless youqualify for specific statutory exemptions (e.g., § 121 primary residence exclusion)

This is the default presumption applied to anyone the IRS considers a “taxpayer.”​

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The ROE Position​

• The Revocation of Election strategy isn’t about “hiding” income, it’s about correcting a legal classification

• Federal income tax applies to federally connected activities, not to purely private, non-federally privileged transactions

• If you have revoked the election to be treated as a taxpayer under Subtitle A, you have rebutted the presumption that your gains are part of the federally taxable category

• Private property transactions, like selling crypto on a peer-to-peer basis or selling private real estate, fall outside the scope of Subtitle A taxation once jurisdiction is properly challenged

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Even if your transaction is entirely private, third parties (title companies, crypto exchanges, brokerages) often report to the IRS via 1099 forms.

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Once the IRS computer receives that report, it assumes you owe tax unless you rebut it.
Without an ROE and proper follow-up documentation, the presumption stands, and the
burden is on you to prove otherwise.​

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ROE + Capital Gains in Practice

When you have a properly executed ROE, backed by status correction:

• You remove yourself from the statutory category of “taxpayer”

• You can respond to third-party reporting with conditional acceptance or affidavit of rebuttal demanding proof of federal jurisdiction over the transaction

• You demonstrate that the activity was private, non-federally connected, and outside the taxable class​

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Important Considerations

• ROE is a jurisdictional defense, not a statutory “exemption”

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• Certain activities with a direct federal nexus, such as selling federal mineral leasesparticipating in federally regulated securities, or contracting with the U.S. government  remain within the taxable scope​​

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• This is a paperwork battle: if the IRS pushes back, you must be ready to stand on your affidavit, case law, and jurisdictional argument

The bottom line, if you sell crypto, Bitcoin, or real estate without an ROE, the IRS will treat the gain as taxable by default.

With a properly executed ROE and supporting documentation, you can challenge that
presumption and keep private property transactions in the private domain, where they belong.