Also, another question in relation to this being a physical item: Can I pass off the value of the BTC1 on each coin for capital gains and then count the remainder of the coin's profit as non taxed hobby income? It seems that the value of the BTC itself is the main issue here, and if there were no BTC involved it would be a much simpler person-to-person transaction of occasional nature that would not normally be taxed.
Example: I bought the coins loaded with BTC1 each back in 2012. The value of BTC1 at that point was about $3.50. Now, if I sell the coin for any amount higher than the market value of ~$3k, could I count the amount over ~$3k as non-taxed hobby income since this isn't any sort of regular business? That would separate out the value of the BTC from the value of the coin itself.
That's an interesting matter because when you're trading a loaded coin its value is many times higher than that of an empty one. So, this is comparable to selling a physical item + exchanging BTC on that address fiat. If you sell it for cash it will be impossible to trace, especially if the original address on the coin hasn't been used, so that's something to think about for sure if you're willing to take the risk Example: I bought the coins loaded with BTC1 each back in 2012. The value of BTC1 at that point was about $3.50. Now, if I sell the coin for any amount higher than the market value of ~$3k, could I count the amount over ~$3k as non-taxed hobby income since this isn't any sort of regular business? That would separate out the value of the BTC from the value of the coin itself.
