All I'm thankful for is I didn't preorder those 1TH+ miners... with the difficulty this high and now daily mining being taxable as ordinary income (and not when btc are sold/exchanged) and with cost of hardware and power, there's no ROI left. IRS has essentially gifted mining to the Chinese.
The only way you'd owe taxes is if you were making income by mining (by definition!).
From what I understood, that's only if you file "self-employment", then you can include expenses like hardware and power and then it will all net out plus some writedowns ... if not, then its just ordinary income (although obviously a monetary loss with costs and taxes included)
The real reason this is bad is for miners is that it could greatly increase the risk. The IRS just said you are taxed at the rate when you receive the coin. What happens if the coin loses value from the point when it's mined to the point when you sell it?
Lets say I mine 1 btc on a pool and the pool sends me the BTC. I have a record of the transaction being sent to my wallet. I can then look up the value on bitstamp at the time I received the BTC, lets say it's worth $580. The IRS says I'm taxed on the $580 as "income" minus any expenses such as cost of miner and electricity. Now I wait 6 months and the coin I mined is only worth $200 and I sell. The question becomes, have I just realized a $380 capital loss to adjust income? This is the big question I have from reading the IRS FAQ.
It would be so much simpler if mining income was calculated when you actually sell the bitcoin. It's the same way for individuals that mine gold, the only difference here is that bitcoin has a public ledger and gold does not.
