The Hidden Cost of Not Tracking Your Digital Assets

An advisor came to Perry Woodin and said his client had 50 crypto wallets. When they looked closer, they found 150. With dozens of digital assets across them that the client didn't even know existed. Perry Woodin is the co-founder of Node40, a digital asset data company that has been reconciling crypto portfolios since 2015, before almost anyone cared about financial reporting in this space. In this episode, he and Paul break down why this is the first year crypto holders are actually required to report accurately, what the IRS letter looks like when something doesn't match, and how having detailed records opens up strategies most investors don't even know are available. **In this episode:** - **\[00:00]** What digital assets actually are from Bitcoin to tokenized real estate - **\[00:43]** Who Node40 works with: high net worth individuals, crypto-native companies, and public companies - **\[01:56]** Why 2025 is the first year everyone was required to accurately report crypto activity - **\[02:30]** The 1099-DA explained and why 90% of them will have a mismatch - **\[03:36]** What the IRS CP2000 letter means and what happens if you don't respond - **\[04:24]** The individual investor pain point: wallets they forgot, assets they didn't know existed - **\[05:41]** The 50-wallet client who actually had 150 and what was hiding in the other 100 - **\[06:27]** Why the burden shifts from individual to company to public company and what changes at each level - **\[07:29]** Penalties explained: late filing, under-reporting, multi-state exposure, and public company risk - **\[07:55]** When should you stop doing this yourself? The line between manageable and flirting with disaster - **\[08:24]** If you've only used one exchange like Coinbase, you're probably fine here's when that changes - **\[09:17]** What Node40 actually does: data collection, cost basis assignment, full asset lifecycle tracking - **\[10:20]** How gifting crypto through a will or trust works — and why cost basis matters at time of passing - **\[11:17]** Can you go back to 2010 or 2015 and reconstruct your entire crypto history? The answer might surprise you - **\[12:09]** How CPAs and registered investment advisors use Node40 data for tax strategy not just compliance - **\[13:06]** Tax lot strategy: how to choose which crypto assets to sell, gift, or borrow against to minimize tax - **\[14:05]** Why borrowing against your lowest-basis asset beats selling and how to think about it like your portfolio - **\[15:22]** Why Node40 never touches or holds your assets — they're purely a data company - **\[15:50]** Advanced use case: covered calls, puts, and straddles on digital assets why accurate records make this possible - **\[16:39]** The Node40 origin story: started as a staking company in 2015, pivoted to analytics in 2020 - **\[17:37]** Why most competitors just give you a number — and why Node40 shows you exactly how they got there - **\[20:04]** What onboarding actually looks like: from two-hour self-serve to complex enterprise build-outs - **\[21:32]** How automating business rules closes books faster and eliminates costly manual errors - **\[24:30]** The right time to reach out and why waiting until tax season makes everything more expensive