It's also ridiculous they want to tax as soon as there is money in the wallet. What if you have multiple wallets you use to organize between different systems, you have to pay tax every time you move money around? Even with real money it does not work that way. At least for anything under 10k. If it's over 10k then they do want to tax it each time. Though maybe that's just cash. Too many silly rules.
What are your thoughts on EOS?
Think it has a shot against ETH?
Looks like a good way for the developers to pocket a lot of ETH while they go nowhere (like Bitshares).
For the tax stuff you guys in the US should really listen to Laura Shin's latest podcast on Unchained. She interviews two crypto tax experts and goes over a ton of scenarios. Cleared up some confusion I had but there's still a lot things that need to be more clearly defined by the IRS.
http://unchainedpodcast.co/
I'm taking a KISS approach to crypto and taxes (in Canada) as was recommended by my CPA. I guess they call it the FIFO approach which probably means I end up paying a little more in taxes than I should be, but it'll let me sleep better at night.
So you're saying, we pay income tax on mining revenue? Is that only when we cash it out? I've been cashing out through Coinbase fairly directly from NiceHash, so it's not too complicated. I guess, I want to get my taxes right. From what I read before, they considered CC to be an "intangible asset", and that you would pay short-term capital gains.
The way I ran it this year is thus:yes
no
broadly:
in the IRS's view, you have income the moment your wallet address is credited with a token. that income is whatever the value of that credit is in dollars at that moment. that's supposed to be declared on that year's income taxes. you can write your costs against it such as mining hardware (though i'm not sure whether computer equipment is depreciated vs. expensed, and of course all this stuff probably changed for tax year 2018) and electric bills (though only the portion associated with the mining activity, assuming you're not renting a facility just to mine in).
then, when you sell, whatever gain those tokens have gotten since you mined them is a capital gain. that capital gain is also taxed, at whatever rate capital gains are (short term, same as ordinary income; long term, favorable rates).
if all your mining and selling occurred in one tax year, then it really wouldn't matter whether it's regular income or if its capital gains, as all the tax events happened in one year and are subject to the same rate structures.
but, if you mined in one year, and sold in another, you'd have the mining activity on one year's return, and a capital gain on the other year's return. in the capital gain worksheet, you'd use the basis as declared (and taxed) on the previous tax return to calculate the gain amount.
as an illustration: in year 1 you mine $100 in tokens. you don't sell any tokens. and you stop mining at the stroke of midnight on new years eve. you file your tax return for year 1 and pay 25% ordinary income tax on it, or $25. in year 2, the value of your tokens goes up to $1000. you sell those. you then have a capital gain of $1000 - $100 = 900. that would then be subject to 25% tax rate, so you'd pay $225.
if, instead of selling in year 2, you held the tokens long enough to qualify for LTCG (let's say year 3), you would qualify for reduced rates (let's say 10%). so, you'd have a $900 capital gain, which would have $90 in taxes.
now, since most people don't neatly keep the original mining and the capital gains separate like that, it's a bit messier out in the real world. since the tokens themselves are fungible they probably adopted either a last mined first sold, or first mined first sold rule.
If you want to be 100% right, you could file back taxes for however many years you're permitted to (what, 5? or something?). Realistically, you could get away with probably just doing cap gains/losses for this year, from start to finish, and do that from this point onward without running afoul. A caveat to this might be if you've been HODLing like, thousands of BTC, in which case someone may come knockin' for some back cap gains.What about those of us who mined in 2010-2011 or so? IRS didn’t have an opinion on CC back then... so let’s say I’ve held my earnings (minus a few small newegg purchases) up to this point... will they tax those coins retroactively?
This is what I have so much trouble finding info on...
This tax stuff sounds way too complicated. They really should automate it all so we get a T4 style form in the mail if they want to tax us, it's ridiculous having to do their work manually ourselves.
It's also ridiculous they want to tax as soon as there is money in the wallet. What if you have multiple wallets you use to organize between different systems, you have to pay tax every time you move money around? Even with real money it does not work that way. At least for anything under 10k. If it's over 10k then they do want to tax it each time. Though maybe that's just cash. Too many silly rules.
as mentioned above, it's possible to amend returns, but not that far back (iirc it's 4 years). i guess the question would be, how much did you mine and how much was it worth at the time? if it's small potatoes it probably doesn't matter much. i'm not sure how you'd treat it if it were significant - to be on the safe side i'd probably claim and pay the basis amount at regular income rates and the rest as capital gains, with an explanation on the worksheet as to exactly what you are doing. but i'm not a tax lawyer or CPA so i'm really just guessing.What about those of us who mined in 2010-2011 or so? IRS didn’t have an opinion on CC back then... so let’s say I’ve held my earnings (minus a few small newegg purchases) up to this point... will they tax those coins retroactively?
This is what I have so much trouble finding info on...
Meh, what about carbon tax for leaving your lights on? Or for not having LED lights? Or for not having 19SEER air conditioning? Or for leaving your PC on 24/7?For every kWh used to mine any crypto there should be a dollar carbon tax.
All this computing power should be used for something beneficial to society like helping to find a cure for cancer.
That's my opinion.
The amount of energy use is huge. Comparing it to leaving lights on is silly.
For every kWh used to mine any crypto there should be a dollar carbon tax.
All this computing power should be used for something beneficial to society like helping to find a cure for cancer.
That's my opinion.
That's an insane amount of electricity used to light up our world, widespread LED adoption promises to cut that down to only 4%.
Never mind the fact that mining is now helping me pay off debt, which gets me closer to some personal goals I have like investing in solar power, buying an electric vehicle worth a flip, and with any luck, stop renting this stupid duplex I'm in and actually use my money for my purposes.
If you started early enough (e.g. early/mid 2016) with at least 100MH/s in mining Ethereum and held all the coins you mined to $1000+ before taking profits, you did very, very well. Alternatively, if you had purchased 1000 ETH at $1 or $2 each...
Not huge, I went for density on a 20A circuit, so running 5x 1080ti's along with the 1080 and 960 in my rig, 970 in the gf's rig. It's good for ~$1500/mo right now, and already paid off initial investment (~$6k) and then some. I didn't have the scratch (nor the willingness to bankrupt my family) to go deeper in the pool than that at the time. Even with that investment I thought I had lost my mind, GF convinced me it was still a good idea though, and she was right.How big is your mining operation? I can't imagine making a meaningful amount of money from it unless you had 50 high end video cards cranking 24/7.
The kind of capital investment it would take to get that kind of hardware would likely increase your debt for a few months.
How big is your mining operation? I can't imagine making a meaningful amount of money from it unless you had 50 high end video cards cranking 24/7.
The kind of capital investment it would take to get that kind of hardware would likely increase your debt for a few months.