Bitcoin Forum

I'd like a few others to chime in on a hypothetical example which tries to apply the new IRS ruling for miners (or hashrate providers per se).

A miner buys a mining device for 5 BTC @ $100/BTC ($500 cost), the expected life of which is well under 1 year.

The mining device uses $100 in electricity over the year ($100 cost)

The device generates 2 BTC @ $200/BTC and 2 BTC $250/BTC over the year ($900 income)

The miner spends the 4 BTC in 4 transactions:

1 BTC @ $200/BTC
1 BTC @ $300/BTC
1 BTC @ $400/BTC
1 BTC @ $500/BTC

The total gross income is $900

The total cost of the income is $600 ($500 + $100 Electricity)

So the net income is $300.

For capital gains, the basis is:

2 BTC @ $200
2 BTC @ $250

and to consume those 4 BTC via FIFO:

1 BTC $200 from 1 BTC @ $200 => $0 Gain
1 BTC $300 from 1 BTC @ $200 => $100 Gain
1 BTC $400 from 1 BTC @ $250 => $150 Gain
1 BTC $500 from 1 BTC @ $250 => $250 Gain
------------------------------------------------------
4 BTC         from 4 BTC                 $500 Gain.

So the owed taxes are calculated from:

$300 taxed as income plus $500 taxed as capital gains (short term in this example).

Sound right?

Nothing is impossible. The above message shows that it is to the benefit of Govt to design a framework of rules and regulations to legalize the cryptocurrency. Designing rules and regulations are possible by supporting the legal team and cryptocurrency experts. So action should be taken in the countries where it is not legal. This will increase the revenue of Gove because the number of cryptocurrency users is very large in every country. This act will not only increase the revenue of the Gove but will also eliminate unemployment in third-world countries.

Um, what "new IRS ruling for miners"? Link please...
What you describe is how the IRS has always treated mining income. In short, nothing new here.