Legality of Mining Bitcoins

[notlist3d]

I would still get a CPA.  I just see some parts can be interpreted different, and these were just a few that jumped out in first minute or so.

For example

A–8: Yes, when a taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income. See Publication 525, Taxable and Nontaxable Income, for more information on taxable income.

What does successfully mine mean?  I consider sucessfully mining once I sell for USD.  I don't see it as successful when you just have BTC, as you don't know at time of sale if it's gain or loss.

Or other question

Q–6: Does a taxpayer have gain or loss upon an exchange of virtual currency for other property?

A–6: Yes. If the fair market value of property received in exchange for virtual currency exceeds the taxpayer’s adjusted basis of the virtual currency, the taxpayer has taxable gain. The taxpayer has a loss if the fair market value of the property received is less than the adjusted basis of the virtual currency. See Publication 544, Sales and Other Dispositions of Assets, for information about the tax treatment of sales and exchanges, such as whether a loss is deductible.

Notice it say's if you receive at exchange.  You do not receive the fair value until you sell.


Also go on and see in it the mention of "The character of the gain or loss generally depends on whether the virtual currency is a capital asset in the hands of the taxpayer".   If a capital asset as I consider it, I think you need to read up on capital asset taxes.

And I'm not putting you down or trying to be mean.  I'm just saying on something so new and if your dealing with a lot of money see a CPA.  Do not consult the internet for big tax questions.

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[jonnybravo0311]

Any answers to taxation questions are going to be varied and inconsistent.  The regulations around virtual currencies are not clearly defined by any stretch of the imagination.

@notlist3d, I'd disagree with this statement you made:

What does successfully mine mean?  I consider sucessfully mining once I sell for USD.  I don't see it as successful when you just have BTC, as you don't know at time of sale if it's gain or loss.

If you're mining, the instant you acquired that coin it is a gain.  There is no loss incurred by the action.  You can certainly try to offset the gain by factoring in the cost of electricity to have mined the coin, but that implies you've set yourself up as a mining business, and are incurring expenses related to the operation of that business.

Short answer: do what notlist3d stated and find yourself a CPA who is versed in virtual currency tax laws.

[notlist3d]

Any answers to taxation questions are going to be varied and inconsistent.  The regulations around virtual currencies are not clearly defined by any stretch of the imagination.

@notlist3d, I'd disagree with this statement you made:

What does successfully mine mean?  I consider sucessfully mining once I sell for USD.  I don't see it as successful when you just have BTC, as you don't know at time of sale if it's gain or loss.

If you're mining, the instant you acquired that coin it is a gain.  There is no loss incurred by the action.  You can certainly try to offset the gain by factoring in the cost of electricity to have mined the coin, but that implies you've set yourself up as a mining business, and are incurring expenses related to the operation of that business.

Short answer: do what notlist3d stated and find yourself a CPA who is versed in virtual currency tax laws.

And I could be wording it wrong.  I am not a CPA I have had a surprising amount of accounting classes, but not way I decided to go.

There is a not a loss but costs when you gain a coin.  The equipment itself is a loss until paid for, and electricity is something you spend money on aswell.    So I would say that it should come out of the gain.    Yes at end you hopefully end up with capital gain and pay tax.

But again CPA all the way. Mine is just my thoughts.

[Nowi]

Ifcourse that you can.

I am located in Wisconsin, USA. I am under 18 years of age. If I earn bitcoins, do I have to pay any sort of tax? Isn't there some sort of threshold that if I pass it, I have to pay the tax?

Maybe you can say that is profit of your parents etc, then pay tax, you can't profiting of selling bitcoins with legal way.

And, can you calculate the amount of bitcoins you will earn by your hashing rate?

On internet you can find some actually calculaters

[notlist3d]

Ifcourse that you can.

I am located in Wisconsin, USA. I am under 18 years of age. If I earn bitcoins, do I have to pay any sort of tax? Isn't there some sort of threshold that if I pass it, I have to pay the tax?

Maybe you can say that is profit of your parents etc, then pay tax, you can't profiting of selling bitcoins with legal way.

And, can you calculate the amount of bitcoins you will earn by your hashing rate?

On internet you can find some actually calculaters

The way I read it was it was a capital gain or loss.  So look into that for your situation.

I think with it being a capital asset until sell there is not taxable profit.    But again I'm not a CPA only someone with a lot of accounting classes a while back.

If you are getting big see a CPA.

[Xian01]

There is nothing illegal about mining Bitcoins.

From an accounting perspective, you owe capital goods tax for the daily average value of mined Bitcoin on the date it hits your wallet.

Every quarter, I need to send off my mining income BTC details to our accountant so we can get even with Uncle Sam.

[notlist3d]

There is nothing illegal about mining Bitcoins.

From an accounting perspective, you owe capital goods tax for the daily average value of mined Bitcoin on the date it hits your wallet.

Every quarter, I need to send off my mining income BTC details to our accountant so we can get even with Uncle Sam.

Agreed owning Bitcoins I consider a good thing.   The ones that are getting in trouble are exchanges.  If your a business and a exchange you better have all papers in order in US, and follow KYC rules.

So if in exchange yes lots of legislation.  Owner of BTC not so much.  Either way I keep a log of my expenses for mining.

[BTCBinary]

That's one of the big questions in many countries...
You can try to take a look on Bitlegal

[Jorge320]

If your earning enough profit to consider it taxable income then you have a whole new set of priorities to consider.  Mine, enjoy, spread the word of BTC...

- Jorge

[GriffinHeart]

Only two countries I know of have restrictions against mining, they are undeveloped countries... I don't think you'll have a problem there... Just selling them is some ways is a bit shaky.

[WalkerIVIV]

lol mining as illegal activity?

[Amph]

lol mining as illegal activity?

if you do not declare your income in case it is big enough iot could be seen as illegal or punishable if you want to avoid tax, the point is that they cannot know about your mining activity especially if it is done abroad

what if for example i go to liberland and start a mining activity(my oen private pool with 10 peta) there and receive profit directly to my wallet in my home in new york, no one will ever know about it