Calculating cost basis for bitcoin mined on pool.

lim_1

newbie

Activity: 14

Merit: 0

Quote from: bitcointaxes on January 04, 2016, 04:59:12 PM

Quote from: lim_1 on January 02, 2016, 08:55:09 PM

When I mine bitcoins on a pool, I allow my rewards to accumulate on the pool until it reaches a certain threshold (1 BTC). Say it takes 10 days to to reach that amount. Then the pool pays out 1 BTC to my wallet say on date x. Therefore is the cost basis determined by the price of bitcoin on date x? Or do I have to calculate it based on the price of bitcoin * reward I get for each day?

As soon as they arrive into an account under your control, it is income. So you earn income every time a deposit is made, to the value of x BTC * market value (which could be a consistent BTC daily price). This is the taxable income in USD you received as well as setting the cost basis for those coins for when they are sold/spent.

What the heck? only one guy giving sound advice, everyone else with many stars giving crap advice on how to evade taxes. lol!

foxbitcoin

sr. member

Activity: 593

Merit: 250

You could withdraw the mining reward to a new address every time! One time you could buy small amount of goods or services using one or a few wallets to evade the tax for the your whole Bitcoin holding if you are found out through spending!

NorrisK

legendary

Activity: 1946

Merit: 1007

Quote from: Amph on January 06, 2016, 06:40:59 AM

Quote from: NorrisK on January 05, 2016, 02:08:18 AM

Quote from: Amph on January 04, 2016, 04:03:20 AM

if you're not going to dump those cois, don't even bother, because the only price that matter it's the one that you dump your coins to

as long as they remain in bitcoin form they are untoucheable if not used for purchase, and in that case the value that matter is the one at which you use them to buy

Good luck convincing the IRS of that.. Wink

Stocks are also taxed on their current worth, not their worth when you bought them. The same goes for bitcoin, gold, and whatever other assets you hold.

They might not know about your bitcoins, but that doesn't mean you don't have to pay tax over their worth.

that's actually the difference with bitcoin, with other asset they always know that you hold them, with bitcoin is different there is no way that they can know if you ar a bitcoin holder and how many you have, especially if you was an early adopter that mined those in 2011 for example...

so you can actually go ahead and ignore the whole taxes thing if you don't spend them

If you hold a significant amount this can be quite risky though. If you ever want to spend them and you start spending too much at one time that does not fit your current lifestyle, you are bound to become investigated somewhere along the lines.

This can all be avoided if you buy everything directly with bitcoin ofcourse, however, that still would not explain a house without mortgage and a brand new BMW from a 50,000 USD job.

Amph

legendary

Activity: 3248

Merit: 1070

Quote from: NorrisK on January 05, 2016, 02:08:18 AM

Quote from: Amph on January 04, 2016, 04:03:20 AM

if you're not going to dump those cois, don't even bother, because the only price that matter it's the one that you dump your coins to

as long as they remain in bitcoin form they are untoucheable if not used for purchase, and in that case the value that matter is the one at which you use them to buy

Good luck convincing the IRS of that.. Wink

Stocks are also taxed on their current worth, not their worth when you bought them. The same goes for bitcoin, gold, and whatever other assets you hold.

They might not know about your bitcoins, but that doesn't mean you don't have to pay tax over their worth.

that's actually the difference with bitcoin, with other asset they always know that you hold them, with bitcoin is different there is no way that they can know if you are a bitcoin holder and how many you have, especially if you was an early adopter that mined those in 2011 for example...

so you can actually go ahead and ignore the whole taxes thing if you don't spend them

NorrisK

legendary

Activity: 1946

Merit: 1007

Quote from: Amph on January 04, 2016, 04:03:20 AM

if you're not going to dump those cois, don't even bother, because the only price that matter it's the one that you dump your coins to

as long as they remain in bitcoin form they are untoucheable if not used for purchase, and in that case the value that matter is the one at which you use them to buy

Good luck convincing the IRS of that.. Wink

Stocks are also taxed on their current worth, not their worth when you bought them. The same goes for bitcoin, gold, and whatever other assets you hold.

They might not know about your bitcoins, but that doesn't mean you don't have to pay tax over their worth.

bitcointaxes

jr. member

Activity: 57

Merit: 10

Quote from: lim_1 on January 02, 2016, 08:55:09 PM

When I mine bitcoins on a pool, I allow my rewards to accumulate on the pool until it reaches a certain threshold (1 BTC). Say it takes 10 days to to reach that amount. Then the pool pays out 1 BTC to my wallet say on date x. Therefore is the cost basis determined by the price of bitcoin on date x? Or do I have to calculate it based on the price of bitcoin * reward I get for each day?

As soon as they arrive into an account under your control, it is income. So you earn income every time a deposit is made, to the value of x BTC * market value (which could be a consistent BTC daily price). This is the taxable income in USD you received as well as setting the cost basis for those coins for when they are sold/spent.

Amph

legendary

Activity: 3248

Merit: 1070

if you're not going to dump those cois, don't even bother, because the only price that matter it's the one that you dump your coins to

as long as they remain in bitcoin form they are untoucheable if not used for purchase, and in that case the value that matter is the one at which you use them to buy

NorrisK

legendary

Activity: 1946

Merit: 1007

I would take the price of at the moment the BTC is transferred to your wallet. This is a transaction you can prove to the taxing agencies. Before it is transferred to you, you don't own the coins as they are not on an address you own the private keys to.

I would keep it simple and only use the value on the transaction day.

lim_1

newbie

Activity: 14

Merit: 0

When I mine bitcoins on a pool, I allow my rewards to accumulate on the pool until it reaches a certain threshold (1 BTC). Say it takes 10 days to to reach that amount. Then the pool pays out 1 BTC to my wallet say on date x. Therefore is the cost basis determined by the price of bitcoin on date x? Or do I have to calculate it based on the price of bitcoin * reward I get for each day?

Topic: Calculating cost basis for bitcoin mined on pool. (Read 1494 times)