The accountant that I'm working with told me to simplify things by finding the initial cost basis and then subtract your capital gains. For example say if you wired $40,000 to an exchange and bought that much worth of Ether last year and you just held. Now it's worth $400,000 so you would calculate capital gains off of $360,000. The capital gain percentage being determined by your income tax bracket (different in some provinces).
I'm still trying to figure it all out but I'm setting aside 25% for whatever I cashed out in 2017 for tax purposes.
That seems like a good place to start, though when dealing with the IRS, you always have to be careful. The odd part is that if you paid $40k on mining equipment and then sold the resulting ETH for $400k after holding for one year, they would probably want you to pay standard income tax on the coins that you mined and then pay long-term cap gains on <$400k - initial value of coins>. Then you would have to claim your mining gear as a deduction on your return.
In contrast, if you paid $40k for coins alone and then sold them for $400k after holding for one year, you just pay long-term cap gains on $360k and it's done deal.
Somehow miners are bad, but speculators are good? Whatever.
You can probably treat both situations as the same and maybe get away with it. BUT another thing you have to keep in mind is that if you are making anything over a certain amount - something like a few thousand, I forget the exact number - then you have to pay QUARTERLY. You can't just wait until April like Johnny Lunchpail.
AND if your combined total income (cap gains, earned income, etc) is over $200k for an individual "head of household" or $250k for a married couple, you have to pay 3.8% Medicare tax on everything over that amount thanks to the ACA. Not sure if that changes in 2018, but for anything you sold in 2017, it applies.
For a lot of people who sold long-term holdings in Dec. 2017, if they really made bank, they're paying 23.8% on most of it, AND that money is due by January 15th (actually 16th due to MLK day). That's IRS form 1040-V folks, read the instructions.
Nice power consumption. I think I'm closer to 500W with an 850 P2 and a 1700X. You could mine XMR with your 1800X at around 600Kh which is still profitable. You can do both at the same time. That's how I keep things warm in my computer room
Yeah I've considered XMR. Haven't gotten around to it yet though, still playing with this Vega. I tinkered with voltages and got it down to ~215W total power draw from the wall. Power draw at idle with the same configuration is around 90W. So 125W for the card, doing 36 MH/s? Cool.
If you mined, you have to declare it as income. IRS treats it as if you received something of value, therefore it is your income.
Legally it's treated the same as "receiving property" in the US. Though like-kind is frowned upon for 2017 and earlier, and forbidden in 2018.
What I wonder though, what happens to all the people who mined way way back before IRS regulation (or post IRS regulation) and never declared them as income. What do they do? Just declare it as capital gains income with 0 tax basis?
They probably just have to pay cap gains on those coins when they move them (convert to other crypto or sell for cash). The IRS guidance is from 2014.