Topic: [IRS] If Bitcoin is property, then the IRS may have a BIG problem! - page 3. (Read 5485 times)

The mining aspect seems to be incredibly confusing.

Is there anything wrong with the idea of declaring mining revenue when gains are realized (i.e. sold for fiat or goods purchased), at basis $0.00? Then deducting hardware/electricity as expense?

Yes. (Other than the s corp part)

It is not a problem for the IRS. It is normal for things to be taxable upon sale.

The IRS will soon be as irrelevant as Blockbuster Video. They and the fiat empire upon which they are built are being rendered obsolete as we speak.

My point being, using the above methodology, unless you sell the product you've created... The "property" you now own that you have produced using hardware and software (or in this industry they call them miners), would not be taxable until you sell that property for fiat or exchange for goods.

If they are going to treat it as property, how would mined coins by a company set up as a corporation be treated?  My impression is that per the IRS's position, bitcoins mined would be the same as a the creation of a product you create/produce for sale but does not sell. It becomes on the shelf inventory, and there is no taxable event until it sells. This applies to all companies that make products through a process, hard materials or digital.  If you own a software application, or a script (plugin) you developed, and sell it for $50 per copy, and make 1000 copies on CDROM, you don't owe the IRS taxes on the copies until they sell. It's all 1s and 0s, so what difference is there between using computers to create scripts or plugins or software, or bitcoins? All property right? You just have to view it from a manufacturing standpoint.  And the fact that they have ruled it is property, the manufacturing stance would in my opinion apply. Manufacturing being the creation of something tangible "property" from the use of labor, machines, raw materials, and energy resources.  So you mine the coins, put them on paper wallets as inventory to sell. But hold them... For sale at a later date, which would be taxable.  You'd have to set up an s-corp to do this, or is my thinking way off??