|
Title: Mining rig tax deduction Post by: neutralist on September 12, 2013, 06:15:11 PM This post is aimed primarily to US people but everyone are welcome to comment.
If you have paid your mining rig (especially if you use ASICs) with USD or other fiat currency (not BTC), you might be eligible for an investment expense deduction or capital depreciation on your tax return. How many of you intend to write off your purchase of USB block eruptors, especially those who bought them above $50+ ? Let's face it, this little thing will never ROI at any price, so it is reasonable to treat it as TOTAL LOSS. Title: Re: Mining rig tax deduction Post by: vaio127 on September 12, 2013, 06:17:17 PM Sounds like a decent idea, but I'm not sure an IRS agent would feel the same way if you happen to get audited.
Title: Re: Mining rig tax deduction Post by: murraypaul on September 12, 2013, 06:19:12 PM If you are writing off your mining equipment as a tax loss, I'm sure you are also paying taxes on Bitcoin earned as either income or capital gains, yes?
Title: Re: Mining rig tax deduction Post by: hayek on September 12, 2013, 06:31:46 PM Register as a business.
Buy a rig to mine with, do some development on it. Do some business for 3 out of 5 years. Write off rig on taxes as a business loss. Title: Re: Mining rig tax deduction Post by: neutralist on September 12, 2013, 06:42:06 PM If you are writing off your mining equipment as a tax loss, I'm sure you are also paying taxes on Bitcoin earned as either income or capital gains, yes? If you treat BTC as commodity money like this federal judge (http://www.nbcnews.com/technology/bitcoin-currency-federal-judge-says-virtual-cash-real-money-6C10874611) does, then a taxable event will only occur when you convert your BTC to USD (or when IRS takes BTC directly as tax payment, which requires legal tender status) , and yes the entire conversion is now taxable as capital gains since you have no tax basis to start with (e.g. you did not buy the BTC with USD initially, you mine it with the rig which has already been written off) Title: Re: Mining rig tax deduction Post by: AndrewWilliams on September 12, 2013, 08:38:20 PM You can deduct expenses on your taxes if you can show it is related to your business ...
Title: Re: Mining rig tax deduction Post by: DannyHamilton on September 12, 2013, 10:29:56 PM If you are writing off your mining equipment as a tax loss, I'm sure you are also paying taxes on Bitcoin earned as either income or capital gains, yes? If you treat BTC as commodity money like this federal judge (http://www.nbcnews.com/technology/bitcoin-currency-federal-judge-says-virtual-cash-real-money-6C10874611) does, then a taxable event will only occur when you convert your BTC to USD (or when IRS takes BTC directly as tax payment, which requires legal tender status) , and yes the entire conversion is now taxable as capital gains since you have no tax basis to start with (e.g. you did not buy the BTC with USD initially, you mine it with the rig which has already been written off) First you need to establish that your activities in Bitcoin Mining constitute a "business" and not a "hobby". If it is determined that your activities are a "hobby", then you'll only be able to deduct the expense from the revenue you get from the hobby and not from any other revenue you may have. If it is determined that your activities are a business, then you may be able to deduct a larger portion of the expense, however, you may be obligated to deduct the depreciation over multiple years rather than taking the full deduction in a single year. Note that while you may not be required to pay income taxes on the inventory you hold (this isn't entirely clear yet), you will probably be required to pay taxes on the bitcoin you spend, even if you don't convert it to fiat first. |