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Author Topic: Renting mining contracts and taxes ?  (Read 874 times)
Grant
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June 07, 2011, 07:44:19 PM
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A quick straight forward question about renting mining boxes and cashing out only cost at contract expiration to renew the mining box contract.

I live in a country that like most have Capital Gains/Other Income as a seperate income field on my tax report, i do not have a registered company.

Normally when i reported my virtual currency gains, it would come from same source as i paid to, and therefore i could "nullify" my tax by simply not withdrawing more than principal for same fiscal year, however i have now rented a box that mines coins.
Is it possible for me to report the "renting of a mining box" as if it was an outright purchase of bitcoins ? (i know its possible to not report at all, but that's not what i'm looking for, is it LEGAL for me to do it that way)

Just so it's all clear and easy to understand my question, here's what i'm planning to do:

I prepay 400£ for 30days, during those 30days i regularly withdraw from bitcoin exchanges an amount UPTO 400£ only to renew the contract. So my cashflow balance here is 0 and if i were a co this should be perfectly legal to claim is a nonincome set of transactions relating to same invenstment. But is it viewed same way when i'm a persion and not a co ? Or can they claim i purchased a totally unreleated service for the £400 and claim i made a capital gain on £400 ?

Anybody who has experience with renting miningboxes or similar, got a clue ?

PS: And please with all due respect, no trolling or discussion about politics, neocon, neoliberal, keynesianism, and wtfnot, there is a poltics section for that, Im just looking for a straight answer or directions.

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twobitcoins
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June 07, 2011, 08:44:35 PM
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For accurate tax advice, you need to specify what country you are asking about.  (You also need to ask a tax professional, not the internet, but that's another matter.)

In the US, this is how I would look at it:  Bitcoin mining is a business with income and expenses declared on Schedule C.  Renting a mining box is a business expense which reduces your taxable income.  Bitcoins produced are business income, taxed based on the fair market value of the bitcoins on the day you received them -- even if you haven't yet sold or traded any of them.  (Others may disagree with this interpretation.)

When you later sell some of the bitcoins, you have a capital gain or loss equal to the amount you sell them for (or the fair market value of the goods you trade them for) minus the cost basis.  The cost basis in this case is the fair market value on the day you received them, so the capital gain or loss represents any change in value after that time.
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June 08, 2011, 05:56:31 AM
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Thanks a lot for your response, twobitcoins Smiley

Just to clearify its the hightax happy Norway i'm at. And yes i should asked a professional, i'm only curious knowing many ppl do rent miningboxes how they report it (if they're not a co). I should propably reg a Co but that's a huge undertaking, when my purpose is to only cashout the necessary expense to renew mining contracts i would hope its possible to do that as a private-person without being doubletaxed.

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