I'm pretty much convinced that it would take a while to find a CPA that doesn't look at you like you're talking about aliens, or asks for a 1099 from the "Bitcoin company".

My thinking on this exact question is that establishing the basis now as legitimately as possible should reduce problems with any future capital gains (hopefully!).

I know, famous last words right?

I'm personally not too concerned about the record-keeping, unless there's some compelling information I'm not privy to yet, because it seems insane that the IRS would get so granular as to scrutinize pool shifts. I'm figuring just settling the amount mined by day and extending by say a Coinbase quote for that day would be perfectly fine for establishing basis. That's already kind of insane, but the wording of the guidance kind of suggests to me that would be the right approach. Admittedly this is pretty trivial to track just with very basic relational database proficiency, spreadsheet lookups, or very simple coding.

I'm tempted to just write a quick and dirty python script that does this straight off the CSV Bitcoin-qt can dump, assuming the Coinbase API has a function for historical lookups via HTTP GET (?). If anybody thinks that might be useful I'll post the script if I actually do that.

The guidance pretty explicitly says this is not true, although this is exactly what most people probably would've thought before. Income tax on the mined Bitcoins themselves is paid upfront based on fair market value regardless of what you do with them per the published guidance, but that fair market value then later serves as the basis if you trigger a taxable event that produces capital gains.

Is this all just standard schedule C stuff for an individual or does this require any special legal manuevering?

Is there anybody out there with real advice on the basics on how mining hardware could properly be deducted for US tax purposes?

Standard depreciation schedule ideas seem completely insane for the cost of hardware that gets bricked within well under a year.

Any legitimate advice, even on how to properly explain this to a tax professional, is greatly appreciated, as I'm sure lots of people have this same question.

Please no general conspiracy theories or bitching, because I understand it's nice to have political opinions, but what you think about the IRS is not helpful to people trying to actually accomplish something.

Do you have to actually incorporate in 2013 or can this be done retroactively?

Now that is just adorable.

ASICs may have actually saved Bitcoin, because without ASICs the overall Bitcoin network hashrate would've been vulnerable to botnets and rogue supercomputer usage. Because of ASICs, no general-purpose supercomputing installations have any chance of remotely mustering enough hashrate to threaten the network.

Incorrect, that is only for purchasing and selling Bitcoins themselves.

Mining and getting paid directly in BTC both have an income declaration component that's independent of taxing gains.

How come I don't get to declare losses on my dollars due to inflation?

You could just as easily argue the opposite, that the two items in the guidance document lock miners into income upfront on a basis that reflects the late '13 rally prices.

What kind of depreciation schedule would fly for an ASIC miner?

The standard 5 year for computer equipment is absolutely insane. Most of these units become useless as bricks within a year even if that.

The mining aspect seems to be incredibly confusing.

Is there anything wrong with the idea of declaring mining revenue when gains are realized (i.e. sold for fiat or goods purchased), at basis $0.00? Then deducting hardware/electricity as expense?

Instead of going on some message board and smearing feces all over the walls making accusations and innuendo, then why not get in contact them and clear it up, because there has to be a reason you're getting flagged as high risk.

These kinds of things have more to do with your bank than with Coinbase.

When did this magically become a law of nature?

This is a very specific and definitive claim being made here that needs alot more substance and reasoning than just a sophomoric bush league analogy.

Take the current target and divide by 115792089237316195423570985008687907853269984665640564039457584007913129639935.

That number represents the probability of any given hash solving a block.

You now have a very standard binomial probability problem where n represents the number of hashes your hardware is capable of generating over the amount of time you're considering.

If you call the above calculated number P, then the probability of producing a hash that qualifies for the target difficulty after n hashes is going to be 1 - (1-P)^n

There is no such thing as compliance in rigged markets with fiscally powerful actors.

I think what the OP is probably referring to is the fact that Bitcoin has been around longer so there is a perception that Litecoin might have more potential for gain being earlier in its adoption curve.

I think they need to diversify into a different type of product such as this, because the current round of ASIC mining projects are all rapidly becoming boondoggles as all the manufacturers are struggling to meet power targets even at smaller process nodes. It's becoming near impossible at this point to jam enough hashing power to justify an expensive new purchase within the confines of 1440 watts.