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Actually, it says that you are taxed on their value at the time they are mined.
by jstalin 13y ago
Actually, it says that you are taxed on their value at the time they are mined.
- loumf 13y agoMiners are taxed at the time they are mined. This is probably consistent with diamonds.
- oijaf888 13y agoIt seems pretty backwards compared to any other sort of creation. If I build a house, my basis is how much I spent building it, not how much my neighbor's house is worth.
- loumf 13y agoI don't think this has anything to do with basis. The difference is that mining the coin is considered a tax event -- so you pay tax on the mined value -- with the cost being deductible. This makes sense because the coin is liquid and can be sold in part without reducing the utility of the remainder. That is not true of a house. It isn't as liquid and it's hard to sell part of the house to cover tax.
- tellmetwice 13y agoso if you mined gold you get taxed at the moment you caught sight of it and not when you take it to market? And if you knew how mining pools worked it takes it on a totally different course with shelved shares, etc
- FootballMuse 13y agoHow does this work when mining in a pool is nearly continuous? You earn 0.000000x btc per share in a pool, and you might earn a share every few seconds. What exchange do I use to determine the value of the btc?
- jstalin 13y agoIt's likely that the taxable event would occur when you can control the bitcoins. For instance, many pools have a minimum payout and you can't withdraw any until you meet that minimum. Based on other IRS rules, the taxable event would occur when you reach that withdrawal minimum. As for the exchange to use for the value, it would probably be legitimate to use an average of a few exchanges, if the prices are wildly divergent.
- maxerickson 13y agoShould emphasize that whatever valuation will be expected to be reasonable and done consistently (so don't pick different exchanges for different payments or whatever, and probably don't pick Mt. Gox, and so on).
- im3w1l 13y agoWell in the limit it would tend to an integral, and, assuming you have fixed hash power, approach the time and inverse network difficulty weighted average price.
- SilasX 13y agoStrange. Why don't they treat the cost basis as your cost of production? That is, if you spend $X to mine the bitcoins, and sell them for $Y, why not tax you on $(Y-X) rather than Y minus "whatever the market said they were worth then"? $(Y-X) is your true dollar-denominated realized gain.
- pbreit 13y agoThey do. You can report your costs as an expense.
- xur17 13y agoAnd then taxed again at the difference between that and their current value when you spend them? Or can we use them to buy stuff, and avoid capital gains altogether?
- faet 13y agoIf you buy stuff you are taxed. If you buy 1 coin for 10$ and buy a $100 tv you owe 90$ in taxes.