5 ms·

Would he still owe them if he hasn't sold or otherwise used the coins for anything?

by pktgen 13y ago

praptak 13y ago
The situation is pretty unique which means there are pretty much no relevant rulings. In general, if you gained something of value, then yes, you owe the tax on that. OTOH this is a situation where someone gained a string of bits and only later this string of bits has gained value. On top of that - did it really? Some say it's just a bubble.
- Negitivefrags 13y ago
  I'm fairly certain that it would work just like shares. At the point a company is first created it's shares have zero value and so it's founders pay no tax when they receive them. The fact that they gain value later has no bearing on that situation. Of course, creating shares at a later point in a companies life (when they may have value) does have tax implications. Thus, any coins that were mined before there was any value you shouldn't need to pay tax on.
  - yebyen 13y ago
    I think you're right(ish), with one caveat that I think you understand, but this time last year I would not have... If you ever sold them, and long-term capital gains should apply, you would still owe the long-term capital gains tax on the proceeds from the sale. So, subtract your cost basis (which for THE actual creator of bitcoins is arguably more intensive than average miner who merely creates bitcoins), subtract that which has not been (depreciated?) on any other gains, and pay tax on those gains from the proceeds of the sale.
- kgo 13y ago
  Actually the current guidelines are pretty clear. Mining is income. When you receive your coins from mining, that's a taxable event. Current value - mining expenses = income. After that any gains or losses are unrealized until you sell, creating another taxable event. Current price - cost basis = capital gains. Since bitcoins were worthless when Nakamoto was mining, he has no tax bill there. No taxes are owed for simply holding the coins. If he sold today, he'd be taxed at the long term capital gains rate of 15% for 100% of what he sold. EDIT: but of course I'm making the silly mistake of assuming he's an American.

Would he still owe them if he hasn't sold or otherwise used the coins for anything?

by pktgen 13y ago

Would he still owe them if he hasn't sold or otherwise used the coins for anything?

The situation is pretty unique which means there are pretty much no relevant rulings. In general, if you gained something of value, then yes, you owe the tax on that. OTOH this is a situation where someone gained a string of bits and only later this string of bits has gained value. On top of that - did it really? Some say it's just a bubble.

Negitivefrags 13y ago
I'm fairly certain that it would work just like shares. At the point a company is first created it's shares have zero value and so it's founders pay no tax when they receive them. The fact that they gain value later has no bearing on that situation. Of course, creating shares at a later point in a companies life (when they may have value) does have tax implications. Thus, any coins that were mined before there was any value you shouldn't need to pay tax on.
- yebyen 13y ago
  I think you're right(ish), with one caveat that I think you understand, but this time last year I would not have... If you ever sold them, and long-term capital gains should apply, you would still owe the long-term capital gains tax on the proceeds from the sale. So, subtract your cost basis (which for THE actual creator of bitcoins is arguably more intensive than average miner who merely creates bitcoins), subtract that which has not been (depreciated?) on any other gains, and pay tax on those gains from the proceeds of the sale.
kgo 13y ago
Actually the current guidelines are pretty clear. Mining is income. When you receive your coins from mining, that's a taxable event. Current value - mining expenses = income. After that any gains or losses are unrealized until you sell, creating another taxable event. Current price - cost basis = capital gains. Since bitcoins were worthless when Nakamoto was mining, he has no tax bill there. No taxes are owed for simply holding the coins. If he sold today, he'd be taxed at the long term capital gains rate of 15% for 100% of what he sold. EDIT: but of course I'm making the silly mistake of assuming he's an American.