Silk Road founder Ross Ulbricht has received millions of dollars in donations since his January 21 presidential pardon. However, a showering of digital assets and artwork means the millionaire is also racking up a substantial tax bill.
Ulbricht could be facing two types of tax bills. By April 15 next year, he will owe federal taxes for the 2025 calendar year. This includes gift income.
The US Internal Revenue Service (IRS) defines gifts, as “any transfer to an individual where full consideration is not received in return.” In other words, Ulbricht’s gifts of BTC, memecoins, and artwork qualify as gift income.
Ulbricht could also owe back taxes. Back taxes are any type of tax that Ulbricht might not have fully paid by the original due date, typically owed from a previous tax year. Back taxes can occur from failing to file, underreporting, or underpaying.
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Taxes on gifts while a prisoner
Ulbricht entered prison in 2013 and didn’t leave until January 21, 2025, when Donald Trump pardoned him.
Although prisoners typically don’t earn substantial income, incarceration is not an exemption from tax filing obligations and doesn’t halt the accumulation of tax debts.
Ulbricht’s income, if any, from labor at his prison is probably insubstantial. Pay rates for commissary jobs, janitorial, UNICOR, or maintenance roles typically pay far less than $10 per hour and often well below minimum wages.
However, if Ulbricht received gifts while in prison, he has an obligation to report gift tax on those receipts once he has knowledge of their receipt.
As an inmate, Ulbricht didn’t have internet access. If he received gifts while in prison without his knowledge, such as BTC deposits, Ulbricht would likely have the ability to file amended tax returns this year with the IRS to update his gift income for prior years.
Once Ulbricht amends any prior years of tax filings, he would have to pay back taxes immediately.
In prior years, Ulbricht received gifts of various digital assets. He may consult with a tax expert regarding his filing and payment obligations.
A fumbled Ross Ulbricht memecoin
However, his gifts in 2025 are substantial and might dwarf his receipts from prior years. Already this year, he received over $30 million worth of BTC, physical artwork, cash, and a variety of digital assets, including an attempted $12 million ROSS memecoin donation.
Unfortunately, Ulbricht or someone controlling his wallet’s keys fumbled the ROSS sale and lost almost all of the gift to other traders on a Solana blockchain exchange.
Although the loss was unfortunate, subsequent trades of capital received as a gift might not reduce the initial tax obligation from the gift itself.
If someone receives a $1 million gift and subsequently loses it all trading, that person will still owe gift taxes on that $1 million by April 15.