3 ms·

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.

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.