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Author Topic: IRS says mining is "income" (40% tax) instead of cap. gains (20% tax)  (Read 3897 times)
Searing
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May 20, 2014, 02:34:49 AM
 #41

You can't take a 179 deduction for assets you didn't purchase the same year.  You can't take a 179 deduction for assets that you are depreciating.  

that is what I ment I'm depreciating assets from last year...but this years equip i should do your 179 option...again last year I think I had more equip then the 179 was worth doing....so she depreciated in stead..20% 5 year method....but this year with the coin i make the equip i have on order ..it looks likely to make sense this year...again she also wanted me to show "some profit" as a new business as a hedge down the line..must show profit for 5 yrs biz type of thing

not sure...again I'm trying to remember stuff from april 2013 when forms were flying...i may not have it exactly right but at least I'm getting enough info to ask the CPA stuff this year...but I seem to remember this coming up and she depreciated the stuff as computer equip (5 year plan) instead ...we can only go by the guidelines..i'd assume this year or next the computer designation will go away for bitcoin miners..and we did call the IRS hotline too...so...anyway...I shoulda paid 4K only paid 550 usd..and my taxes show my equip being depreciated on 5 yr plan...not sure what the IRS hotline said ...on the call...she was doing the talking and a lot of u-huh's going on.


again just trying to muddle thru

thanks for your help

Searing

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BitchicksHusband
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May 20, 2014, 11:50:27 PM
 #42

Of course since the IRS has no way to monitor the trading arm of BTC yet you could just try not reporting it lol

As long as you don't think they'll be able to identify you on the blockchain sometime in the next 7 years, go for it.  But I have a feeling they might.

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May 20, 2014, 11:59:35 PM
 #43

Of course since the IRS has no way to monitor the trading arm of BTC yet you could just try not reporting it lol

As long as you don't think they'll be able to identify you on the blockchain sometime in the next 7 years, go for it.  But I have a feeling they might.

as stated in a previous post my bank screwed up my wire xfer 6x the main bank did not like that and did an investigation....knowing this i wen t "legal" and paid taxes thus when they asked ....could show legal and their mess up (changed banks). I'm in USA if i could have I'd simply have held coin till say next year when imho some of these dumb IRS rules would be modified....but alas was not to be...but then again I don't have an itchy feeling on my back as an IRS target now.....so as a newb wire xfers are like an IRS wildlife 'tag' imho


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scryptasicminer
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May 21, 2014, 12:44:56 AM
 #44

Don't think they can enforce the rules abroad.

The way I see it. People are paying miners with bitcoin abroad and gambling on seals with club.

I do not think miners pay tax on their mining profit.
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May 21, 2014, 04:03:00 AM
 #45

Don't think they can enforce the rules abroad.

The way I see it. People are paying miners with bitcoin abroad and gambling on seals with club.

I do not think miners pay tax on their mining profit.

in USA you pay on mining profits...and IRS expects you to say what you make overseas..but yeah...you'd likely get away with it overseas

in my case with all the big dollar paper over 10k money order attempts my bank made (6) and failed plus the other 4 that went rhru
and 3 refunded back...well ...I looked at that at tax time and marched in and paid taxes for 2013..glad i did or i'd be IRS all in my face now
the bank started to investigate me and was gonna report..needed the tax forms and proved it was their mistake ..without taxes paid
this year...I"d be dead IRS road kill right now (shudder)

but my circumstances are (hopefully) unique....

but yeah in USA under IRS guidelines posted 20 days before taxes due.april 15th...you are required to pay on mining profits you have made on
bitcoin and give the IRS 25% on such  back to 2009 when bitcoin was invented (heh doubt many people did that)..on the other hand I am allowed to
deprecate equip 2013 1st year 1/2 or some such usually 20% a year...so there is that..

...the IRS now has free reign to ask you about your bitcoin $$$ and if you did not pay taxes can beat this
dead horse 7 years into the future 2020 from the 2013 ruling

The IRS has stated they did this so they can 'find' large criminal enterprises that "would not show taxes back to 2009" I think they are
over reaching myelf and this will only work IF they found bitcoin of a large criminal group...as to small fry like us..unenforceable imho

me I started mining in 2013..had the above problems which was correct choice in going  legit (despite my tendency to hide btc)

so if nothing else if BTC in 7 years is 4K a btc and I want to buy a houseboat...IRS will have nothing on me

but yeah....my case is unique w/o a "paper trail' I see this for the most part as unenforceable (unless the wife divorces you
the IRS gets lots of tips from ex spouses of so I was told)


anyway my situation could be worse could be in China I guess?

(always one guy left behind in the crowd to take the fall) sigh

Searing

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scryptasicminer
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May 21, 2014, 11:44:31 AM
 #46

Don't think they can enforce the rules abroad.

The way I see it. People are paying miners with bitcoin abroad and gambling on seals with club.

I do not think miners pay tax on their mining profit.

in USA you pay on mining profits...and IRS expects you to say what you make overseas..but yeah...you'd likely get away with it overseas

in my case with all the big dollar paper over 10k money order attempts my bank made (6) and failed plus the other 4 that went rhru
and 3 refunded back...well ...I looked at that at tax time and marched in and paid taxes for 2013..glad i did or i'd be IRS all in my face now
the bank started to investigate me and was gonna report..needed the tax forms and proved it was their mistake ..without taxes paid
this year...I"d be dead IRS road kill right now (shudder)

but my circumstances are (hopefully) unique....

but yeah in USA under IRS guidelines posted 20 days before taxes due.april 15th...you are required to pay on mining profits you have made on
bitcoin and give the IRS 25% on such  back to 2009 when bitcoin was invented (heh doubt many people did that)..on the other hand I am allowed to
deprecate equip 2013 1st year 1/2 or some such usually 20% a year...so there is that..

...the IRS now has free reign to ask you about your bitcoin $$$ and if you did not pay taxes can beat this
dead horse 7 years into the future 2020 from the 2013 ruling

The IRS has stated they did this so they can 'find' large criminal enterprises that "would not show taxes back to 2009" I think they are
over reaching myelf and this will only work IF they found bitcoin of a large criminal group...as to small fry like us..unenforceable imho

me I started mining in 2013..had the above problems which was correct choice in going  legit (despite my tendency to hide btc)

so if nothing else if BTC in 7 years is 4K a btc and I want to buy a houseboat...IRS will have nothing on me

but yeah....my case is unique w/o a "paper trail' I see this for the most part as unenforceable (unless the wife divorces you
the IRS gets lots of tips from ex spouses of so I was told)


anyway my situation could be worse could be in China I guess?

(always one guy left behind in the crowd to take the fall) sigh

Searing


IRS should spend their time improving their system and stop tax rebate fraud and identity theft.

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May 22, 2014, 02:42:42 PM
 #47

I think US citizens should just say NO!
"No taxation without representation!"
They taxed the bank that held your money
Taxed the transfer
Taxed the purchase
Taxed the shipping
Taxed the product
Taxed your internet
Taxed your income
Taxed your power
And now they want to Tax your investment?
....
When will people say "NO!", Seriously, people are being Taxed 2-3x more than they should be

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May 22, 2014, 02:51:39 PM
 #48

Just to make sure of a couple of things

-that 40% on income is after you remove the price of hardware and electricity right?
-when you pay your tax you also contribute to your social security and retirement plan right? I'm not to familiar with the american system, but here in europe when you work and you have your gross salary and net salary, and the different is to pay off for all those + tax (well at least in some countries)?
-I'm not promoting tax evasion here, but how can IRS know how much you bitcoin you've mined 
murraypaul
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May 22, 2014, 02:59:06 PM
 #49

I think US citizens should just say NO!
"No taxation without representation!"

You have representation, what on earth are you talking about?

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May 22, 2014, 06:32:23 PM
 #50

Just to make sure of a couple of things

-that 40% on income is after you remove the price of hardware and electricity right?
-when you pay your tax you also contribute to your social security and retirement plan right? I'm not to familiar with the american system, but here in europe when you work and you have your gross salary and net salary, and the different is to pay off for all those + tax (well at least in some countries)?
-I'm not promoting tax evasion here, but how can IRS know how much you bitcoin you've mined 

Don't think they can enforce the rules, since you can have the mining operation elsewhere.
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May 22, 2014, 09:33:50 PM
 #51

I think US citizens should just say NO!
"No taxation without representation!"

You have representation, what on earth are you talking about?
The Gov's representation on Bitcoin tax, What right do they have to Tax bitcoin income?
"Your using our internet that you paid for"?
"Your using our power we sold to you to earn income, to earn income"?
What's their reasoning?

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Searing
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May 22, 2014, 10:46:35 PM
 #52

Just to make sure of a couple of things

-that 40% on income is after you remove the price of hardware and electricity right?
-when you pay your tax you also contribute to your social security and retirement plan right? I'm not to familiar with the american system, but here in europe when you work and you have your gross salary and net salary, and the different is to pay off for all those + tax (well at least in some countries)?
-I'm not promoting tax evasion here, but how can IRS know how much you bitcoin you've mined  

NOTE: LONG POST ON IRS IN USA...if you don't like don't read this!

in my case if the bank messes up your wire xfers and shows 10 total and you only set 4 all for over 10K and then 6 of them
were there mess ups by the bank which they did not catch..so they got flagged as well
and of those 3 refunded from KNC (internatioal orders) which also freaked out the bot at the bank
keeping track of such stuff.....(kept a Titan from KNC) and on every wire xfer over 10k you sign a bunch of
forms you are 'not' trying to cheat the IRS ..well..any money orders in USA over 10k the results are sent to the feds
to check (or not) or in my case with the bank mess up above ..figured they'd check (they did or bank was gonna
report me) I decided that I had too much "paper' and went legit (just in case before this all came out)
 which IN MY CASE was my only real option or I'd
be in a world of hurt with the IRS...did find out however I could 'deduct' equip so paid only 550usd out of 4k owed..
so working so far...but again if you are a newb doing wire xfers over  10K? hell I think it may have changed to 5K this year?
esp international ones...the bank at least looks at everyone of them..if they have no idea and their mess ups
are counted and refunds counted..I lit the bank computer up like a xmas tree. Being paranoid paid off in my case!

yeah you do social security etc on the taxes thus the 25% of gross income.....don't forget you may have state
tax on top of that...my cpa set me up as a home biz also got some credit for being a new biz etc...

as for what the IRS can find out about your blockchain check out the BFL threads..they are gonna go after those
guys big time IMHO

again this is what I think I know what I really know is i don't know...talk to your CPA about this stuff

only good thing about all this is after 1 yr and 1 day I only pay 20% on capital gains if i sell my coins to the IRS...
that WILL imho be checked with all them nice exchanges that have your info...so even on coins you buy
I'd suggest you keep that in mind..if you mined like 50 coin and sold them on an exchange that now reguire
bank type info that could also red flag you imho. Again with any coins
and/or being legit can take them at a 'loss' if i mined and sold for less to knock down taxes next year...and the
depreciation of equipment..also no fear of the IRS when btc hits 10k a btc ..i be legit (in spite of myself)

anyway ask your CPA if in USA ...likely rules will change in 2015 back to equip risk is your own....and only
thing will be 20% tax on capital gains when you sell for a profit....like I was told by my CPA before
the "irs guidelines of 2013" and had to do a 'revision of my taxes" 20 days before the IRS deadline for
filing april 15th.....due to my above bank difficulties....weird times in the usa.

The biggest threat I see is with all the info you give the exchanges now to buy sell trade etc
at least USA ....well....they can find you that way...just like my bank...a little bot goes off
and then they ask why (shudder)

anyway how i got backed into this otherwise I'd have sat on my coin till maybe these rules get better
in 2015 when congress gets involved.

Searing

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Bogleg
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May 22, 2014, 11:40:11 PM
 #53

Just to make sure of a couple of things

-that 40% on income is after you remove the price of hardware and electricity right?
-when you pay your tax you also contribute to your social security and retirement plan right? I'm not to familiar with the american system, but here in europe when you work and you have your gross salary and net salary, and the different is to pay off for all those + tax (well at least in some countries)?
-I'm not promoting tax evasion here, but how can IRS know how much you bitcoin you've mined 

Seriously, how are they going to know if you hold bitcoin or doing mining in your basement?
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May 23, 2014, 12:55:07 AM
 #54

Just to make sure of a couple of things

-that 40% on income is after you remove the price of hardware and electricity right?
-when you pay your tax you also contribute to your social security and retirement plan right? I'm not to familiar with the american system, but here in europe when you work and you have your gross salary and net salary, and the different is to pay off for all those + tax (well at least in some countries)?
-I'm not promoting tax evasion here, but how can IRS know how much you bitcoin you've mined 

Seriously, how are they going to know if you hold bitcoin or doing mining in your basement?


they won't unless they can check your bank records (me ) see it is a bitcoin miner
ordered via wire xfer with a web link.. then i'm screwed

or

if you sell your $$$ on an exchange these days they have all your info....thus big $$ amounts in/out just
like a bank pop's up red flag

if you stay off major exchanges...buy your equip personally with btc

you are just fine

again not defending this just saying in my situation last year this year I'm kinda stuck ..i assume
after Nov 2014 elections next year congress will act..probably in the way they said in the hearings last
summer it is a currency...ie owe 20% on profit if you sell it..equip is your own risk..no depreciation.

likely get rid of this 'property' definition required to track each bitcoin transaction mined
on the irs guidelines of 2013..

likely will go reasonable in 2015 if congress has a say...they seem knida miffed at IRS right now

again this i my situation...but 2 things

1) you get an audit by the IRS and they start asking people 'under oath" on stuff you likely
are gonna get your bitcoin stuff found...a 300 buck utility bill would probably be their first
clue...

2) don't p/o the wife and get divorced you get reamed by the IRS and she then has proof/keeps
1/2 of your bitcoin in the divorce and/or you go to jail....on tax fraud too boot

me if i did not have the paper trail..i would have just sat on it..I'd never spent any so far
was a newb in 2013 at worst I would have 'claimed' massive success in 2015 on my taxes
should it look prudent to do so..but again my guess is by 2015 it will just be tax on the coin

but who knows...in the USA a case could be made that the IRS is always gonna tax you on
what you mine out of thin air for a coin (or how the IRS sees it) you could make a case
that is the IRS really gonna let some big mining farm make coin out of thin air and not
tax them? (or you)

whatever...I was snag'd by my banks paper trail...make for the hills...forget about me
I be *shudder* legit now ..(dang it)..I feel like a tag'd moose with a radio collar ...all
the other moose are 'snickering'

Searing

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murraypaul
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May 23, 2014, 09:02:31 AM
 #55

I think US citizens should just say NO!
"No taxation without representation!"

You have representation, what on earth are you talking about?
The Gov's representation on Bitcoin tax, What right do they have to Tax bitcoin income?

Why should it be treated differently to any other income?
You supply hashes to a mining pool, the pool pays you for those hashes, whether your hash solves a block or not.
You are being paid an amount proportional to the work you have done.
Sounds like income to me.

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SRC: scefi1XMhq91n3oF5FrE3HqddVvvCZP9KB
Searing
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May 23, 2014, 11:45:59 AM
 #56

I think US citizens should just say NO!
"No taxation without representation!"

You have representation, what on earth are you talking about?
The Gov's representation on Bitcoin tax, What right do they have to Tax bitcoin income?

Why should it be treated differently to any other income?
You supply hashes to a mining pool, the pool pays you for those hashes, whether your hash solves a block or not.
You are being paid an amount proportional to the work you have done.
Sounds like income to me.

yep it is income...i may have used wrong terms....25% fed taxes and soc security included in that but that is what they
tax your income at unless you make big bucks which not sure where it jumps to then....so if i make 25k in mining
and my income is 35K i have a gross income (before deductions) of 60k ...thus the equip deductions such as they are

but anyway look up irs guidelines virtual currencies 2013....it is laid out there how they (now) want to play it

again this is regurgitated thru me from my CPA ask someone who knows about this...I just post my own experiences
as a starting point if you are in a similar situation for whatever reason and feel the need to tell IRS etc

so it goes

Searing

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Fiyasko
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May 23, 2014, 03:08:41 PM
 #57

*takes a step back* Wait.... The IRS can tax your investment's income?
Or do they just declair that bitcoin mining isn't an investment...

Yeah it's income... when converted to Fiat, but I thought the US declaied that bitcoin IS NOT MONEY and it's a commodity?
IRS taxes income of commodities?!

I... I am uhhh, Really lost now.

http://bitcoin-otc.com/viewratingdetail.php?nick=DingoRabiit&sign=ANY&type=RECV <-My Ratings
https://bitcointalk.org/index.php?topic=857670.0 GAWminers and associated things are not to be trusted, Especially the "mineral" exchange
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May 24, 2014, 04:10:53 AM
 #58

*takes a step back* Wait.... The IRS can tax your investment's income?
Or do they just declair that bitcoin mining isn't an investment...

Yeah it's income... when converted to Fiat, but I thought the US declaied that bitcoin IS NOT MONEY and it's a commodity?
IRS taxes income of commodities?!

I... I am uhhh, Really lost now.

made an exception for mining ..the IRS does not like the idea that you can add electricity with a bitcoin
miner and thus with a quick xfer make $$$ in their view out of thin air..they want it added to your income

so each time you send bitcoin to your address you are to keep track and at that day whatever the bitcoin
price is you add it to your income for the year for tax purposes

yeah it is dumb and yeah who would do that (unless in my situation)

and it will likely go away by congress in 2015

but yeah....20% capital gains if you sell a coin mined or not after 1 year and 1 day (property land stipulation it think this is?)

if you mine it 25% off what the bitcoin is worth (irs/soc sec etc) and you also must keep the coin for 1 yr and 1 day
and pay 20% on capital gains if it applies (if you are legal you could declare a capital loss too)

if you sell a coin bought or mined within a year it is 46% capital gains ...you add that and the 25% off
the top for mining the IRS asks for ..who would do this ..(unless of course caught like me by IRS/bank cabal)

again from what I gather congress in USA is kinda ticked at IRS and likely will change this imho because it is
dumb ..keep track of every bitcoin transaction ..ie you mined bitcoin in 2009 for 2c and you buy a 600 buck
tv this year with that bitcoin and the irs is assuming you will pay 599.98 in capital gains ie dumb

oh and the guidelines say you have to report to the IRS all your bitcoins from 2009 to present

and they gave the us citizens 20 days to do so before taxes were filed april 2014 when guidlelines came out

it is a giant IRS 'fishing expedition" in my view to track down criminal use of bitcoin ..no way will anyone
moving bit bitcion money do this .thus the IRS has a 'hook' on their funds/transactions again imho

anyway it will be changed imho but with elections this year (Nov 2014) it probably won't
get fixed back to something more sensible till 2015 back to the old way
 ..imho they don't care where you got the coin you sell it 20% capital
gains...you buy equip your risk no depreciation..but till then my situation I'm stuck by
these rules...

everyone else i guess just sit on your coin and wait it out till 2015 i USA I guess
they change the rules and you have to report bitcoin ..well golly 2015 was a
very good year for me (bats eyelashes)..or not

but if you did a lot of wire xfers for bitcoin equip or do a lot of  btc exchange stuff the IRS
could look you up doubtful ...but could...paper trail at the bank made me go legit
which otherwise I'd be having an IRS audit as we speak due to bank reporting rules
and mess up ..my legit tax forms 2013 got me out of such (again my unique situation
on why i reported taxes 2013 under the above dumb regulations)

anyway these are my views/suppositions/etc from my situation talk to your
own tax professionals or not...ie CPA tax folks

but essentially the IRS is treating bitcoin as property/land thus the 1yr 1 day stuff
to avoid speculation as they do with land ..and property aspect is like a farmer
you can depreciate a tractor you can depreciate a miner...that does offer me
some relief from the above in that i can run that out 5 years..but again i'm stuck

anyway my warped viewpoint of what is going on (gets me thru the day)

Searing

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Skele
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May 26, 2014, 07:43:47 PM
 #59

Mining is subject to the division of labor and market forces, miners are performing beautifully, regardless of half truths about "fair distribution" of mining work. Should we socialize mining? Should we involve government to price fix and manipulate, to award unfair advantage to an economic actor who can not find it naturally?

Bad Actors are found everywhere in society and we should point out examples, such as Roger Ver, so that we will learn not to cry out to government for solutions. Never Call The Cops!! They protect the state, not you.
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May 27, 2014, 12:42:23 AM
 #60

"made an exception for mining"
This is why the entire tax system (for most places in the world) need their tax code Thrown Out and rewritten, not edited.
Exceptions, for pretty much anything with enough "pull"... What's the point of a global code when you bend the rules where it matters most?

*feels really bad* I'm glad the IRS doesn't tax me, I dearly hope that those afflicted can undo this taxation

http://bitcoin-otc.com/viewratingdetail.php?nick=DingoRabiit&sign=ANY&type=RECV <-My Ratings
https://bitcointalk.org/index.php?topic=857670.0 GAWminers and associated things are not to be trusted, Especially the "mineral" exchange
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