Topic: USA Tax - 1040 Schedule C "Inventory" <-- bitcoins? how many ? (Read 197 times)
It should be to know it all from the source of the owner, and must state the actual amount to know the tax amount, even if it feels a bit heavy.
Do you have a separate legal identity operating as the miner or is it just you and your not sure how to allocate assets/expenses to your personal income.
If the mining operation is via a company you have a nice degree of separation between yourself and the operation which will make a clear divide.
Any operational cost of mining, power, capital depreciation, rent for space of rig, perhaps a tech fee for your time all offset the income of the company being the bitcoin assets acquired.
If you are undertaking the mining operation yourself it just goes against your income and so all bitcoin assets are your assets, as are expenses etc. This way you could write off losses from mining (if you had any) against your personal income to lower your tax obligations.
If the mining operation is via a company you have a nice degree of separation between yourself and the operation which will make a clear divide.
Any operational cost of mining, power, capital depreciation, rent for space of rig, perhaps a tech fee for your time all offset the income of the company being the bitcoin assets acquired.
If you are undertaking the mining operation yourself it just goes against your income and so all bitcoin assets are your assets, as are expenses etc. This way you could write off losses from mining (if you had any) against your personal income to lower your tax obligations.
Since as a miner, you produce bitcoins, I am guessing that this would count as "inventory" in the Schedule C form for "Profit or Loss from Business", and particularly to my question, as a sole proprietorship. However, as a sole proprietorship, there is no distinction of business assets and personal assets, so what determines the "inventory" in this case? Are you supposed to declare all of your bitcoin holdings or do you just draw an imaginary line to what the business "inventory" is?
(I'm obviously not looking for official tax help, I will talk to an accountant eventually)
(I'm obviously not looking for official tax help, I will talk to an accountant eventually)
Imaginary line won't help and I suggest you not to play with IRS. Your mining equipment is your business asset and must be included in your business inventory. The cost of electricity can be shown as operating cost, but a CPA will know how to classify that properly. Your bitcoins is your business inventory and it is better if you declare it correctly. I would suggest you to take a professional help because they know how and where to place these properly.
Since as a miner, you produce bitcoins, I am guessing that this would count as "inventory" in the Schedule C form for "Profit or Loss from Business", and particularly to my question, as a sole proprietorship. However, as a sole proprietorship, there is no distinction of business assets and personal assets, so what determines the "inventory" in this case? Are you supposed to declare all of your bitcoin holdings or do you just draw an imaginary line to what the business "inventory" is?
(I'm obviously not looking for official tax help, I will talk to an accountant eventually)
(I'm obviously not looking for official tax help, I will talk to an accountant eventually)
Jump to: