Topic: IRS Releases Tax Rules on BTC - page 4. (Read 11064 times)

what stop miners from mining btc to fresh wallet and sold it in black market or oversea?

Oh oh oh.  Can I do one? 

What if you lost them in a tragic boating accident?

See above. Answered.

Or if your computer was hacked... Malware...

Under the recently published rules you probably would. Better keep backups.

EDIT: if you are running a business (including a sole proprietorship aka self employed) then you would deduct that as a casualty loss and probably not pay taxes. As an individual (hobby) there are some limitations on casualty losses so you probably would. 100K of mining is probably a business. In fact the IRS will probably force you to run it as a business because they want self employment tax.

Sure, but would you owe taxes?

What happens if you mine 100k in coins and your HDD crashes? You lose your private keys. Coins are gone. What then?

"Fair market value." You first get to decide what that is. If they don't agree with the method or number you use, you accept their number or you reach a compromise or you go to court.

I also think it's odd they don't specify what exchange people should use for valuation. In my neighborhood BTC isn't worth anything, it's $0, and I don't know how to sell (half playing devil's advocate here). So I mean, they aren't worth anything because I asked my wife to buy my Bitcoins, she said "no", and my neighbors said the same. So exactly where do I price them? I heard about a mountain called Gox, do they have the correct pricing?

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??

Now I feel like I like you, not at first but now you are making more sense. Think of all the businesses out there cheating in traditional ways, no freaking way they will bother chasing down people mining a few BTC in their apartment. Solo-mining corporations, totally under siege, and I understand why because they want to make a business and to do the accounting at the block level seems like a reasonable guideline. I just have a feeling those of us mining with pools pushing a few hundred gh/s aren't the real target for these guidelines. I mean, you can take something like eBay, I can't even imagine how many sellers don't report their sales on there, but the major ones kinda have to; however, taking IRS law in a literal application basically everyone is supposed to.

"Hashers" as well as "Miners" derive benefit from the activities, making hem essentially the same for tax purposes.

This is one of those hair-splitting deals that ain't going to work.

My $.02.

Wow.  Tough crowd!

Perhaps "employee" was a poor choice of word.  Of course they need to write off expenses. (Employees can write off home office and work-related car expenses BTW at least in Canada where I am from.)

Hashers simply supply computing power to a mining pool--they essentially rent their equipment to the pool to earn income.  Hashers join pools because they want low volatility and no responsibility outside their "hashing" duty.  They are very similar to an employee earning income.  

Miners run a full node and represent independent sovereigns in the bitcoin network.  They may innovate with code changes, decide which transactions to include in their blocks, organize defences against network attacks, and establish ethical policy regarding double-spending, blockchain forking, etc.  It is from the behaviour of the many bitcoin nodes and miners that the character and properties of the bitcoin network emerges.  

Hashers hash for the income.  Miners mine for many reasons.

Fact, payment is everywhere since the database is decentralized.

According to the US law,  slush would have to generate a report every time a block is found and store the info on a database, and then id all users, and then generate reports, this would be very expensive to do and sluch is not subject to us law, they will not do it it is very costly to do and I am sure the IRS will not give them money to pay for the programmers needed to write the software to comply with US law, and then  some other countries come with some other insane law and then having to comply with over 1000 different laws for different countries, states, cities, it is simply not possible for a business.  

For us it will be very expensive to do also, the IRS is not going to provide the software needed for the compliance to be met.

guess what, it is an unenforceable rule, the IRS might as well search for life on mars and then try to collect tax, good luck with that.

I am sure to require Sluch to id all the users would violate privacy laws of many countries, since it would be against the will of Sluch and its  miners.

The good news is that Slush is not subject to US law since it is not in the US, the dollar is backed by guns and Slush could be forced to comply but that is highly unlikely since there is not sufficient  money  in Slush to apply international pressure, but that is different than saying Slush  has legally to comply.

worst case there is always p2pool which is decentralized and it is everywhere just like bitcoin, no compliance report done by the pool a completely free pool that someday could become an extremely valuable tool.




 

But then how Hashers write off their equipment expense?

So no, Hashers are not "Employee". Please give this more than 5 mins of thought

So this means car dealers and lemonade stands should register as money service businesses. No, wait, that can't be right. Let's just say that the 2014 attacks on bitcoin can't possibly be coherent with the 2013 attacks!

It may redistribute hashing power to non-USA mining pools that won't report to the IRS yearly payments over $600.

Hey, come to think of it... If I receive a 1099div that would make the whole situation a lot easier.

It's funny because Intuit runs Mint.com and turbotax, and Mint.com allows import of Coinbase accounts. Wonder if TurboTax will ask me to import any Bitcoin activity from Coinbase linked on Mint, only purchases and transfers so far, and didn't use it at all in 2013 anyways.

If you are in the USA, you will be paid in the USA and Slush is going to have to comply with US laws regarding payment of any kind.

Not my opinion; fact.

My $.02.

If we can incorporate in Bermuda like many big corps we could avoid much of this...