Topic: What price info to gather for IRS for exchanging mined coins for other alt coins (Read 1135 times)

Exactly, that advice makes absolutely no sense because there is not a recognition event either. There is no requirement to report the assets unless they are held with a financial institution (FBAR).

To get the lay of the land and the reasonable approaches you may want to pick up a copy of A Lawyer's Take On Bitcoin And Taxes.

If your mining equipment is part of computer equipment used in an ordinary trade or business and is dual purposed then it could be completely reasonable to take a 179 deduction on the equipment and use it to offset income from the business and have no recognition from the mined coins because you have not converted them to fiat or used them in a transaction.

I think it's better to talk to your accountant, about this. Secondly, why would you add up your coins at the end of the year? Are you going to report the value of the coins? Last time i checked there is no requirement to report your assets.

Ok,  but does that mean I don't get to write off my mining equipment?   I spent a little over $1900 for my mining rig.    If I have no income to report this year for all my mining because I don't cash in any of my mined coins, does that mean I can't write off the $1900?   I would have a $1900 expense and no income?   My tax accountant was telling me that I would add up the dollar value of all my coins at the end of the year and use that to offset the cost of the mining rig.

Your last paragraph is correct, as is your accountant.  You pay taxes when you realize a profit in fiat, not monopoly money.

I don't want to get into any discussions on whether or not crypto currencies should be taxed.  But I do have a question on what the US IRS tax requirements will be, especially concerning how to report trades of mined coins on exchanges.   Say for example I want to mine one kind of coin because they are more profitable to mine, but I want to convert them into some other coin because I believe that that coin has a better chance of appreciating in value over time.  So I take my mined coins and send them to an exchange, sell them for bitcoins (because that is all the exchange will allow me to sell my coins for) and then I buy the coin I actually want with the bitcoins.  My question is, is any of this taxable (for example as a capital gain), and if so how do I figure out my purchase price for the coins I am selling?  Both my original coin, and the bitcoins?   The bitcoins are a little easier, because I can go to Mt. Gox and figure out what bitcoins were worth at the time of purchase.  But the original coin slowly trickled in while I was mining it over time.  So how do I price that?   Do I have to figure out the price of the coin when I started mining, and when I finished mining and average it out?   This seems to be an incredibly time consuming task seeing as I will probably have lots of transactions where I only have mined say $15 worth of the original coin over the last several days. 

My tax accountant says not to worry that he thinks the IRS might let me treat the exchange of one crypto currency into another as a like kind exchange.   But I wikipedia'ed "like kind exchanges" and it sounds like the IRS only allows this for certain kinds of assets such as real estate, and that it doesn't allow like kind exchanges for stocks and bonds.  And the IRS seems to be hinting that it wants to treat crypto currencies more like stocks and less like currencies.  Can anyone shed any light on this?   What coin price information should I be gathering and when? 

What does seem to be more clear is that when I sell my crypto coins for dollars/fiat or use my crypto coins to buy physical objects that would be required to be reported as income.