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Thanks. That makes sense. I'm going to change the story since I think I understand what you're saying, but I'm still curious... So if you were a miner and yo

by yebyen 13y ago

Thanks. That makes sense. I'm going to change the story since I think I understand what you're saying, but I'm still curious... So if you were a miner and you spent $600 on hardware Which brought you 6BTC... and you cashed out 0.6BTC as $700, and bought more hardware with 0.8BTC, which so far nets you $0 (hasn't arrived yet) Hopefully you'll indulge my line of inquiry... You don't owe taxes on the remaining 4.6BTC because you have no realized gain from that asset, you paid taxes on the money you used to buy the first batch of hardware (say it all came from your employer and they did withholding, so you've paid those taxes) So that leaves you with $1300 of "realized" income and a cost basis of... which of either $600 or $1300? Not sure which because in this slightly different case you haven't actually bought and sold the bitcoins, and your hardware could belong to your ongoing mining operation, right?

yebyen 13y ago
I flubbed and added two numbers that ought to have been in opposite columns. $700 is the cash value of the 0.6BTC sold. $870 is the cash value of the 0.8BTC order for more hardware at the time the order was placed. So you've got 4.4BTC in assets as unrealized gains, $1570 (700+870) in realized gains, and $1470 in mining expenses. Does that mean you owe taxes on $100 in recognized gains, and the rest are unrealized assets that are not taxed until they are sold? I think I understand. That sounds a lot more favorable to the miner than the speculative buyer, but it seems to be correct.