4 ms·

This might help: http://www.bitcointax.info/ http://www.bitcointax.info/

by ph0rque 13y ago

Codhisattva 13y ago
Wow. That's an exhaustive discussion. +1
- nwatson 13y ago
  Not exhaustive enough. From the link: "Miners of Bitcoin face a host of unique tax issues that are outside the scope of this discussion." If I were mining I'd want to know the tax and legal implications, and there are no good sources out there from what I understand. The most burning questions: (1) for a miner based in the U.S., does the BTC miner realize a short-term gain the moment a bitcoin is awarded? or can they defer all gains until perhaps a year+ after mining and realize the whole sale as a long-term gain? (2) If short-term gains are due upon mining award, and the value at the time of award is US$1000/BTC, and the tax due on short-term gain would be US$300, and then BTC crashes to be worth $10/BTC before the miner sells the coin and never recovers, is the miner left holding the bag on the $300 short-term tax bill? (Similar things happened to stock option exercisers in the dot-com bust, people who held their exercised stock.) (3) Does tax treatment differ for solo- and pool-mining? I can see pool-mining being treated as offering a service to the pool, and any awards are immediately taxable as revenue, whereas in solo-mining perhaps one could argue the award isn't realized until one actually sells the BTC.
  - tokenizer 13y ago
    I am not an expert, and am definitely bias, but I think (1) is that all gains are deferred until market. If you're paying a 15% tax on bitcoins mined, then it would stand to reason they would tax you at market, aka, when you exchange that bitcoin for USD. This is me thinking in terms as bitcoin being a commodity however. If this isn't the case, I'd imagine they could structure it like the structure it like reserves and resources, (http://goo.gl/MkDFNX http://goo.gl/MkDFNX). I'm a webmaster for hundreds of mining companies in Canada, and any of them who choose to trade on the TSX or TSX.V need to post this information. I don't know what the tax situation on that is however.
  - gamblor956 13y ago
    1) It depends on whether the mining reward is treated as compensation. It probably should be considered compensation, in which case it is taxable ordinary income when received. However, on a subsequent sale, it should be taxable gain only to the extent that the sales price exceeds the value already taxed as ordinary income. 2) If the value of BC crashes between the time earned and the time the tax is paid....then yes, you're SOL and still owe taxes on the value of the BC when received. However, usually there is a corresponding deduction to help alleviate that. 3) Pool mining almost certainly is taxed differently, since it is more akin to investment income than to compensation income.
logfromblammo 13y ago
Wow. I had no idea that complying with the tax laws would be so much more difficult than just ignoring them and concealing your Bitcoin activities from anyone beholden to the authorities. If there is anyone in Congress with even a quarter of a brain, they might want to take a look at how to keep Bitcoin users in the system. Otherwise, as more people read that guide, say "WTF?!", and decide to pay it all as much heed as "use tax" on interstate retail transactions, they will be forced to lean more heavily on debasement of the currency they can control.
- jrochkind1 13y ago
  Hint: Complying with tax laws is much more difficult than just ignoring them and concealing your activities from anyone beholden to the authorities without bitcoin too. That's not unique to bitcoin, I'm surprised you were surprised. Ask any small business owner around tax time whether filing your taxes is more 'difficult' than simply... not filing your taxes. At least unless-until you get caught and prosecuted, then you might re-evaluate which path involved more 'difficulty', depending on how difficult you find fines, hearings, trials, jail, etc.
  - logfromblammo 13y ago
    Your hint is simply not true. Traditional banking rules require attachment of identities to accounts, and automatically trigger reporting to the tax authority for any significant movement of cash. Any account can be frozen and seized with an official-looking piece of paper. The system has tax compliance built into it. Bitcoin has no such requirements. It is actually possible to be secretly, anonymously wealthy. Your accounts cannot be seized or frozen unless you give up your private keys. It is true that people evade taxes in other ways. These often involve foreign accounts in countries that do not strictly comply with tax-reporting demands. Assuming the tax authority cares, it would also have to present evidence, which is somewhat harder to get out of the Bitcoin system. And it is also true that for most people with dollar income, taxes are as simple as filing 1040EZ. There is no need to calculate basis or holding period or do a million lookups of tax code minutiae. If you make $50000 a year, compliance is easy and the risk is low. If you buy something with 10BTC, you have to hire an accountant to strictly comply with the law.

This might help: http://www.bitcointax.info/ http://www.bitcointax.info/

by ph0rque 13y ago

This might help: http://www.bitcointax.info/ http://www.bitcointax.info/

Codhisattva 13y ago

Wow. That's an exhaustive discussion. +1

nwatson 13y ago
Not exhaustive enough. From the link: "Miners of Bitcoin face a host of unique tax issues that are outside the scope of this discussion." If I were mining I'd want to know the tax and legal implications, and there are no good sources out there from what I understand. The most burning questions: (1) for a miner based in the U.S., does the BTC miner realize a short-term gain the moment a bitcoin is awarded? or can they defer all gains until perhaps a year+ after mining and realize the whole sale as a long-term gain? (2) If short-term gains are due upon mining award, and the value at the time of award is US$1000/BTC, and the tax due on short-term gain would be US$300, and then BTC crashes to be worth $10/BTC before the miner sells the coin and never recovers, is the miner left holding the bag on the $300 short-term tax bill? (Similar things happened to stock option exercisers in the dot-com bust, people who held their exercised stock.) (3) Does tax treatment differ for solo- and pool-mining? I can see pool-mining being treated as offering a service to the pool, and any awards are immediately taxable as revenue, whereas in solo-mining perhaps one could argue the award isn't realized until one actually sells the BTC.
- tokenizer 13y ago
  I am not an expert, and am definitely bias, but I think (1) is that all gains are deferred until market. If you're paying a 15% tax on bitcoins mined, then it would stand to reason they would tax you at market, aka, when you exchange that bitcoin for USD. This is me thinking in terms as bitcoin being a commodity however. If this isn't the case, I'd imagine they could structure it like the structure it like reserves and resources, (http://goo.gl/MkDFNX http://goo.gl/MkDFNX). I'm a webmaster for hundreds of mining companies in Canada, and any of them who choose to trade on the TSX or TSX.V need to post this information. I don't know what the tax situation on that is however.
- gamblor956 13y ago
  1) It depends on whether the mining reward is treated as compensation. It probably should be considered compensation, in which case it is taxable ordinary income when received. However, on a subsequent sale, it should be taxable gain only to the extent that the sales price exceeds the value already taxed as ordinary income. 2) If the value of BC crashes between the time earned and the time the tax is paid....then yes, you're SOL and still owe taxes on the value of the BC when received. However, usually there is a corresponding deduction to help alleviate that. 3) Pool mining almost certainly is taxed differently, since it is more akin to investment income than to compensation income.

logfromblammo 13y ago

Wow. I had no idea that complying with the tax laws would be so much more difficult than just ignoring them and concealing your Bitcoin activities from anyone beholden to the authorities. If there is anyone in Congress with even a quarter of a brain, they might want to take a look at how to keep Bitcoin users in the system. Otherwise, as more people read that guide, say "WTF?!", and decide to pay it all as much heed as "use tax" on interstate retail transactions, they will be forced to lean more heavily on debasement of the currency they can control.

jrochkind1 13y ago
Hint: Complying with tax laws is much more difficult than just ignoring them and concealing your activities from anyone beholden to the authorities without bitcoin too. That's not unique to bitcoin, I'm surprised you were surprised. Ask any small business owner around tax time whether filing your taxes is more 'difficult' than simply... not filing your taxes. At least unless-until you get caught and prosecuted, then you might re-evaluate which path involved more 'difficulty', depending on how difficult you find fines, hearings, trials, jail, etc.
- logfromblammo 13y ago
  Your hint is simply not true. Traditional banking rules require attachment of identities to accounts, and automatically trigger reporting to the tax authority for any significant movement of cash. Any account can be frozen and seized with an official-looking piece of paper. The system has tax compliance built into it. Bitcoin has no such requirements. It is actually possible to be secretly, anonymously wealthy. Your accounts cannot be seized or frozen unless you give up your private keys. It is true that people evade taxes in other ways. These often involve foreign accounts in countries that do not strictly comply with tax-reporting demands. Assuming the tax authority cares, it would also have to present evidence, which is somewhat harder to get out of the Bitcoin system. And it is also true that for most people with dollar income, taxes are as simple as filing 1040EZ. There is no need to calculate basis or holding period or do a million lookups of tax code minutiae. If you make $50000 a year, compliance is easy and the risk is low. If you buy something with 10BTC, you have to hire an accountant to strictly comply with the law.