mining rig capital or current expense?

[httpcore]

I'm wondering how I should file my mining rigs. Normally, I would make servers, laptops and desktops a capital asset and depreciate it. However, mining rigs and ASICs have a shorter life span and I typically sell them within a month or two of usage. I would like to file it as expenses but I'm not sure since IRS ruled coins as capital assets.

How are you guys filling your taxes?

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[KyrosKrane]

The IRS did NOT rule that coins are "capital assets"; they ruled that they're property.  If I buy a car today for $10,000, and then sell it in a year or two for $15,000, then I technically owe taxes on the $5k profit.  Same way, if I buy $10k of bitcoins, then sell them for $15k, I owe taxes on the $5k profit.

As to the question of depreciating mining equipment, I understand that IRS rules on depreciation require that equipment have a useful life longer than one year. Since mining equipment generally has a useful life of under a year, that means it's OK to expense the cost right away.  As always, check with your accountant if you have any doubts.

[redwhitenblue]

I'm wondering how I should file my mining rigs. Normally, I would make servers, laptops and desktops a capital asset and depreciate it. However, mining rigs and ASICs have a shorter life span and I typically sell them within a month or two of usage. I would like to file it as expenses but I'm not sure since IRS ruled coins as capital assets.

How are you guys filling your taxes?

If you are selling your ASIC rigs within a few months and in the same tax year that your purchase them, your question is irrelevant. From a business perspective it is best to sell any BTC mined right away.

Your tax equation should be as follows:

*Purchase price minus selling price (for ASICs) will be a short term capital gain.

*Cost of electricity to run ASICs should be an investment expense.

*(since you are selling your mined BTC right away your tax situation will be much simpler). The amount you sell your BTC for is short term capital gains (profit), (your cost basis is zero).

This is only applicable to situations when any ASICs that you own are sold in the same tax year. In the event of a tax audit and the IRS determines that something is misclassified then the net effect of total taxes due would be the same and you would not be penalized.

Although I believe this information to be correct it is advisable to seek professional tax assistance prior to filing taxes. 

[Harley997]

I'm wondering how I should file my mining rigs. Normally, I would make servers, laptops and desktops a capital asset and depreciate it. However, mining rigs and ASICs have a shorter life span and I typically sell them within a month or two of usage. I would like to file it as expenses but I'm not sure since IRS ruled coins as capital assets.

How are you guys filling your taxes?

My understanding is that a miner would be considered a capital asset that depreciates over time.

Unless you bought your miner late in the year it will likely not matter as the useful life of a miner is not very long and will likely not be a full year.

[ajareselde]

I'm wondering how I should file my mining rigs. Normally, I would make servers, laptops and desktops a capital asset and depreciate it. However, mining rigs and ASICs have a shorter life span and I typically sell them within a month or two of usage. I would like to file it as expenses but I'm not sure since IRS ruled coins as capital assets.

How are you guys filling your taxes?

not filing anything, buying rigs with my money, paying taxes on them, and later sell them localy and storing the other half in cold wallet.
as far as IRS is concerned :

[ShakyhandsBTCer]

It shouldn't matter either way because most most miners are both bought and sold in the same year (turnover is quite high).

If you do happen to hold a miner at the end of the year then it should be considered a capital expense, but do not take my word as tax advise.