5 ms·

If its treated as property then the maximum is 20% of capital gains. Do you not think you should pay taxes on gains?

makr17 13y ago
> If its treated as property then the maximum is 20% of capital gains. if it is _long_ _term_ capital gains. short term gains are taxed at the same rate as regular income.
- donpdonp 13y ago
  Long term gains apply to assets held over one year. The rate on such gains for an income under $36000 is ... wait for it ... 0%!
  - deleted 13y ago
    [deleted]
molsongolden 13y ago
If you haven't held the asset for over a year then it will be taxed at ordinary rates not capital gains.
dclusin 13y ago
The lower 20% (Didn't it recently go up to 29%?) rate is only applicable if you have held the asset for 2 years. If you buy and sell short term, as I have, then short-term capital gains applies.
- oijaf888 13y ago
  Did they also extend the time? It used to be 1 year and 1 day to qualify for long term capital gains treatment. Or 2 years from the date of the grant of incentive stock options.
- gibybo 13y ago
  Capital gains varies a little depending on the asset (currencies, precious metals, real estate, etc have special rules), but generally it's 15% for long-term capital gains (1 year, not 2 years) and your regular income tax rate for short term capital gains. It was recently raised to 20% for people in the highest income tax bracket. AMT of 28% may be used instead in certain circumstances.
dismiss22x 13y ago
Maximum of 43.4% if its sold within a year.
modeless 13y ago
I think he's talking about mining, which is now subject to income tax (likely 25%) and self-employment tax (15%).
- sliverstorm 13y ago
  In that case, it seems only right that tax should only be on net profits, right? I.e. after your opex such as equipment costs & electricity?
  - patio11 13y ago
    The IRS literally said exactly that, assuming you run your business like a business. This would require, among other things, adequate record keeping to substantiate what portion of your electrical costs were necessary and customary in your business, since you can't deduct the personal use portion of the bill. You'd probably have to depreciate equipment rather than deducting it, unless it has an expected useful life under a year or hits some de minimis threshold. (The IRS rule on this one is really wonky. Suffice it to say that most Bitcoin miners have to depreciate not deduct.)
    - uiri 13y ago
      I think that given the speed at which bitcoin mining hardware is obsoleted, it is perfectly reasonable that most ASICs would have an expected useful life of under a year.
      - DrStalker 13y ago
        For tax purposes does it matter when the device is obsolete or when it reaches the end of it's expected lifespan as functional hardware?
        patio11 13y ago
        The relevant test is "economic useful life", which the IRS helpfully defines: (b) Useful life. For the purpose of section 167 the estimated useful life of an asset is not necessarily the useful life inherent in the asset but is the period over which the asset may reasonably be expected to be useful to the taxpayer in his trade or business or in the production of his income. This period shall be determined by reference to his experience with similar property taking into account present conditions and probable future developments. Some of the factors to be considered in determining this period are (1) wear and tear and decay or decline from natural causes, (2) the normal progress of the art, economic changes, inventions, and current developments within the industry and the taxpayer's trade or business, (3) the climatic and other local conditions peculiar to the taxpayer's trade or business, and (4) the taxpayer's policy as to repairs, renewals, and replacements. Salvage value is not a factor for the purpose of determining useful life. If the taxpayer's experience is inadequate, the general experience in the industry may be used until such time as the taxpayer's own experience forms an adequate basis for making the determination. The estimated remaining useful life may be subject to modification by reason of conditions known to exist at the end of the taxable year and shall be redetermined when necessary regardless of the method of computing depreciation. However, estimated remaining useful life shall be redetermined only when the change in the useful life is significant and there is a clear and convincing basis for the redetermination.

> If its treated as property then the maximum is 20% of capital gains. if it is _long_ _term_ capital gains. short term gains are taxed at the same rate as regular income.

donpdonp 13y ago
Long term gains apply to assets held over one year. The rate on such gains for an income under $36000 is ... wait for it ... 0%!
- deleted 13y ago
  [deleted]

molsongolden 13y ago

If you haven't held the asset for over a year then it will be taxed at ordinary rates not capital gains.

dclusin 13y ago

The lower 20% (Didn't it recently go up to 29%?) rate is only applicable if you have held the asset for 2 years. If you buy and sell short term, as I have, then short-term capital gains applies.

oijaf888 13y ago
Did they also extend the time? It used to be 1 year and 1 day to qualify for long term capital gains treatment. Or 2 years from the date of the grant of incentive stock options.
gibybo 13y ago
Capital gains varies a little depending on the asset (currencies, precious metals, real estate, etc have special rules), but generally it's 15% for long-term capital gains (1 year, not 2 years) and your regular income tax rate for short term capital gains. It was recently raised to 20% for people in the highest income tax bracket. AMT of 28% may be used instead in certain circumstances.

dismiss22x 13y ago

Maximum of 43.4% if its sold within a year.

modeless 13y ago

I think he's talking about mining, which is now subject to income tax (likely 25%) and self-employment tax (15%).

sliverstorm 13y ago
In that case, it seems only right that tax should only be on net profits, right? I.e. after your opex such as equipment costs & electricity?
- patio11 13y ago
  The IRS literally said exactly that, assuming you run your business like a business. This would require, among other things, adequate record keeping to substantiate what portion of your electrical costs were necessary and customary in your business, since you can't deduct the personal use portion of the bill. You'd probably have to depreciate equipment rather than deducting it, unless it has an expected useful life under a year or hits some de minimis threshold. (The IRS rule on this one is really wonky. Suffice it to say that most Bitcoin miners have to depreciate not deduct.)
  - uiri 13y ago
    I think that given the speed at which bitcoin mining hardware is obsoleted, it is perfectly reasonable that most ASICs would have an expected useful life of under a year.
    - DrStalker 13y ago
      For tax purposes does it matter when the device is obsolete or when it reaches the end of it's expected lifespan as functional hardware?
      - patio11 13y ago
        The relevant test is "economic useful life", which the IRS helpfully defines: (b) Useful life. For the purpose of section 167 the estimated useful life of an asset is not necessarily the useful life inherent in the asset but is the period over which the asset may reasonably be expected to be useful to the taxpayer in his trade or business or in the production of his income. This period shall be determined by reference to his experience with similar property taking into account present conditions and probable future developments. Some of the factors to be considered in determining this period are (1) wear and tear and decay or decline from natural causes, (2) the normal progress of the art, economic changes, inventions, and current developments within the industry and the taxpayer's trade or business, (3) the climatic and other local conditions peculiar to the taxpayer's trade or business, and (4) the taxpayer's policy as to repairs, renewals, and replacements. Salvage value is not a factor for the purpose of determining useful life. If the taxpayer's experience is inadequate, the general experience in the industry may be used until such time as the taxpayer's own experience forms an adequate basis for making the determination. The estimated remaining useful life may be subject to modification by reason of conditions known to exist at the end of the taxable year and shall be redetermined when necessary regardless of the method of computing depreciation. However, estimated remaining useful life shall be redetermined only when the change in the useful life is significant and there is a clear and convincing basis for the redetermination.