This is what I've come to understand about the guidance so far.
It can only be deducted against regular income to a limit that I think is either $2000 or $3000, otherwise you have to have other capital gains to deduct them against, or deduct them from income if they exceed the limit over the course of multiple years.
Yes but as capital gains. They're only counted as income if you acquire them in the first place by mining or being paid them, in which case you declare income on the fair market value on the day you acquire them, and that establishes your basis.
Yes, according to the guidance. Acquiring goods and services counts as realizing a gain. Your gain is fair market value of goods and services minus cost basis. It's safe to do this in a FIFO manner, and you have to apply your method consistently. There are other methods of tracking cost basis, but don't even try to do something like that without consulting a CPA.
This you might need a CPA to answer. I think the guidance would consider that a loss of basis price to zero for the bitcoins spent, but not 100% sure.
If I buy a crate of tomatoes today and the price drops and I sell them for a loss tomorrow, can I write off the loss if I only buy and sell tomatoes as a hobby, not my primary business?
It can only be deducted against regular income to a limit that I think is either $2000 or $3000, otherwise you have to have other capital gains to deduct them against, or deduct them from income if they exceed the limit over the course of multiple years.
If I sell them at a profit, do I have to report the income?
Yes but as capital gains. They're only counted as income if you acquire them in the first place by mining or being paid them, in which case you declare income on the fair market value on the day you acquire them, and that establishes your basis.
I am not in the business of buying and selling bitcoin, do I have to report gains and losses to the IRS every time I spend them for goods and services?
Yes, according to the guidance. Acquiring goods and services counts as realizing a gain. Your gain is fair market value of goods and services minus cost basis. It's safe to do this in a FIFO manner, and you have to apply your method consistently. There are other methods of tracking cost basis, but don't even try to do something like that without consulting a CPA.
Now here's the kicker...if the IRS says I must report the realized gain every time I spend them, then can I write off the loss hat Hasfast will never send me my miner?
This you might need a CPA to answer. I think the guidance would consider that a loss of basis price to zero for the bitcoins spent, but not 100% sure.
You can still claim losses up to 3k per year, but the gains are uncapped. It is just a matter of if they are considered short or long term capital gains..
