Follow along with the video below to see how to install our site as a web app on your home screen.
Note: This feature may not be available in some browsers.
The answer is yes they can, its a public ledger. Every single transaction you've ever done on bitcoin at any amount is permanently stored. They already have tools that tell them who the accounts belong to. That being said the interesting thing is you probably have to write of equipment used for mining if it was prior to this year as it depreciates, so over time. Only equipment bought this year can be fully expensed under new tax law that just passed.http://theminersunion.com/2017/09/11/what-you-need-to-know-about-bitcoin-mining-taxes/
Still not sure how you know when your coin gets added to the blockchain if you using a pool?
Can the government track when you actually received the coin? If not, then who cares because you probably don't even have this information yourself, in fact, you probably never even added the coin to the blockchain, because you were only working on a piece of it and were simply paid in bitcoins for the work you did. So then to me, this means, the coin would become income when it actually gets added to your wallet (either on the pool or your personal I have no idea). But since this is a continual thing it's not practical to track, I mean does it have to be a whole coin? What if it's only .02 percent of one? It makes no sense....
How would I know how much electricity I can claim? Especially when electricity is a variable rate? How do I calculate that!?! It would only be possible to do such things as an estimate at best, and even coming up with an estimate is near impossible.
You know thats not a valid defense right?You guys are worrying too much. Just worry about the final cash out. I doubt irs is gonna waste resources on each trade you made when you are paying right amount of taxes at the final cash out. Stop worrying and pay whatever is necessary when you cash out.
The answer is yes they can, its a public ledger. Every single transaction you've ever done on bitcoin at any amount is permanently stored. They already have tools that tell them who the accounts belong to. That being said the interesting thing is you probably have to write of equipment used for mining if it was prior to this year as it depreciates, so over time. Only equipment bought this year can be fully expensed under new tax law that just passed.
As far as electricity goes just keep this in mind, the is fucked up, but the burden of proof is on YOU not the IRS. So if you can't document what you are writing off don't do it.
https://ttlc.intuit.com/questions/3...e-can-i-write-off-some-of-my-electricity-bill
The problem is that you don't get to keep the coins you mined for the coinpool so how does this work?The answer is yes they can, its a public ledger. Every single transaction you've ever done on bitcoin at any amount is permanently stored. They already have tools that tell them who the accounts belong to. That being said the interesting thing is you probably have to write of equipment used for mining if it was prior to this year as it depreciates, so over time. Only equipment bought this year can be fully expensed under new tax law that just passed.
As far as electricity goes just keep this in mind, the is fucked up, but the burden of proof is on YOU not the IRS. So if you can't document what you are writing off don't do it.
https://ttlc.intuit.com/questions/3...e-can-i-write-off-some-of-my-electricity-bill
So you mined a coin, the coin goes into the coinpool, you get a coin back later or cash value?The problem is that you don't get to keep the coins you mined for the coinpool so how does this work?
How can I see which parts of the coins I mined for the coin-pool, and differentiate those from the coins I was paid out from the coin-pool? I would assume that I need to trace each block I worked on individually and record it's value vs what the pool paid me out? But how do I know which blocks I even worked worked on? This does not seem reasonable to me and would make mining impossible.
The tax code seems to assume I am mining my own coins but in reality I only mine tiny fractions of coins that go back to the coinpool which later pays me out. I am supposed to be able to trace what the coinpool is doing? Or do I only care about what actually goes into my wallet?
So you mined a coin, the coin goes into the coinpool, you get a coin back later or cash value?
edit: or an equivelent amount of coins, but not that coin.
I've tried to get you like a no kidding i know this is right answer, but i can't. What my understanding tells me is that you treat it like a stock asset. You don't actually track individual serial numbers of stocks, you either follow first in first out or first in last out, your purchase price would be $0, your sell price would be whatever it sells at. You flow all this through an llc and you expense your costs appropriately for a home business.Sorta, it's much more complicated than that, and you don't work on a coin, you work on a piece of a coin called a block. The next block you mine isn't necessarily part of the same coin but it might be or it might not, or it might even be an orphan and not part of any coin. Blocks vary in size and this have different values which take different amounts of time to complete based on complexity. There's also several payout methods and you usually end up with some combination of them.
http://www.etcwiki.org/wiki/Bitcoin:_PPLNS_vs_PPS Theres also RBPPS
Then there are also orphan blocks etc which you don't always get paid out for depending on which payout system you have selected. I really don't think the IRS has any way to keep track of all of this cause I sure don't. Sure the ledger is public but you still have to be able to make sense of what your looking at. I'm not sure the average person has access to this information either without some kinda insider knowledge of how the coinpool is operating. So again, I would imagine none of this matters until you get paid out for your mining since your not actually mining the blocks of the coins for yourself but for the pool, and then the pool pays you out in coins or partials.
https://www.coinotron.com/app?action=homeRewardSystem
Your friend is going to have to work that out with Coinbase. They have limits on withdrawals that start out fairly low. Higher limits must be applied for.
Is the xrp different usd values becauseoftime of purchase? if so, this is just barter, so trace it back to the bitcoin value at the rough time of transaction, as far as getting exact, thats actually on you ( i know that sucks) your technically bartering, if no one keeps track of the data for you, your supposed to write it down.Ok so I need to report when I change one coin for another. but the value of some coins is measure in BTC. So if I change litecoin for BTC which prices do I record I can't grab the price for both as they change by the second so I have to just record what the Litecoin is worth in BTC at the time of the exchange minus the transaction fees? Im trying to figure out how to record all of this stuff. One exchange looks like it could be several hours of paperwork to write down.
Example I have 10 LTC. I need to exchange for BTC so I can buy XRP.
So transfer my LTC to an exchange and pay a transfer fee (need to record this fee)
Next I set my LTC to sell for for .00xxxx BTC so when the price is reached (in BTC) my sell goes through.
This sell is actually 8 transactions with transfer fees paid in some other Crypo. Even though each LTC -> BTC was at the same BTC amount, the value of BTC and LTC can be different for each transaction.
Next I want to buy XRP so I set the amount of BTC I want to buy XRP at. This goes through in 2 more transactions in using another crypto for the transaction fee but it's only recorded a BTC value for the transfer fee. The each of the 2 sales has a different USD value for XRP and BTC but the only thing recorded is the BTC exchange rate.
ok so now I have a total of 13 transfers to make one exchange. How do I record it or even find the USD value of each of these?
Also the closest I can really find on a price at any given time for BTC is by the hour and you have 4 prices HLOC, which one do I use as there is no way to get info for your particular transaction?
Sounds like the IRS wants you to report information that does not even exist? If you never trade out for cash how can they tax is as you never have an exact value.... Average the HLOC for a given one hour increment? use the daily average? I really don't understand all I can really provide them would be an amount in BTC at any given time.
you guys are worrying way too much. Unless you are taking a million dollar profit home in everyday you can record that but not even. Overall net gain and net loss is all that matters. What did you go in with and what did you get out with? Is it a gain or a loss? if its a gain pay taxes on it. or hold that money aside if IRS sends you a notice. I mean I think you guys are making it way more complicated than it has to be. Just look at your initial investment and your overall profit.
Until you get audited. Even the revised tax code does not make the proper clarifications and rules for what we're supposed to do.you guys are worrying way too much. Unless you are taking a million dollar profit home in everyday you can record that but not even. Overall net gain and net loss is all that matters. What did you go in with and what did you get out with? Is it a gain or a loss? if its a gain pay taxes on it. or hold that money aside if IRS sends you a notice. I mean I think you guys are making it way more complicated than it has to be. Just look at your initial investment and your overall profit.
Until you get audited. Even the revised tax code does not make the proper clarifications and rules for what we're supposed to do.
you guys are worrying way too much. Unless you are taking a million dollar profit home in everyday you can record that but not even. Overall net gain and net loss is all that matters. What did you go in with and what did you get out with? Is it a gain or a loss? if its a gain pay taxes on it. or hold that money aside if IRS sends you a notice. I mean I think you guys are making it way more complicated than it has to be. Just look at your initial investment and your overall profit.
The issue is what does the IRS/CRA care about? If they actually want us to track all this stuff then it will become a huge issue. PRetty much need to hire a team of CPAs just to mine lol. The issue too is that it will make it not worth it as you will end up paying more in taxes than what you make, if you do decide to do it legally.
Personally I'm going to wait till I talk to my tax person to see what she says, or if I hear of someone getting busted. Here in Canada I don't think they will be taxing transactions too though, but I'm not sure. Basically for the time being I'm just going to track the dollar amounts, ex: every time I cash in I will track that. I'm doing it for my own needs anyway so I can get an idea of ROI on my equipment.
If they do end up requiring me to claim it, then I'm just going to register a business, that way I'll be able to write off my costs too.
Do keep in mind that blockchain is public so the IRS/CRA could easily know all your transactions and will bust you for any miscalculations you make. But until I hear of some official word from them I won't fuss too much. IMO if they want money from us then it should work like a job. You should get a T4 in the mail and then you just hand that to your tax person. I find it retarded that they want us to figure it all out ourselves.
https://www.chainalysis.com/
https://www.coindesk.com/irs-using-bitcoin-tracking-software-since-2015/
The next logical extension given that altcoin exchanges do all trades via internal database is to go after them for records (aka, Bittrex and Poloniex in the US). Whether it is this year or in the years to come, expect these exchanges to start reporting transactions to the IRS for US citizens and most likely issue 1099s.
Do they really care about losses though? They just care that they see money move around, and they want a chunk of it. It's why cashing in more than 10k at a bank raises flags, as the government sees that you somehow got 10k so they want half.
But I guess as mentioned they probably care more about the big fish, so us smaller miners doing less than 1k/month probably don't matter too much. The way I see it, if they want to tax me then find a way to automate it because I'm not doing all the work.
I can see the IRS trying to audit the following:
1) Cost basis. If you're mining shitcoins and trading for BTC after they get pumped 10-100x, you might as well just save yourself the hassle and report a cost basis of zero. You can't possible owe more money than in a zero cost basis.
2) Not paying your estimated capital gains taxes on time. You're supposed to pay as you go and do this quarterly. The fee is small, and with how volatile crypto is, if it takes you an extra quarter to get 100% back into fiat, then so be it. It's not a big deal unless you do this over many quarters...
Now the one that IS a big deal...
3) Short term vs long term gains. If you don't have records of having held something for a while, this can become problematic. What if you sent Bitcoin around exchanges, and actually traded? Or traded into an alt and then back into more Bitcoin shortly after? Are you still long on the original amount of BTC due to a like kind exchange? And what the new BTC. Cost basis of $0 from that point on? And what if this exchange no longer exists? Your records are gone... I can see the IRS trying to force people into paying the much higher short term gains because of all of this confusion. So what do you do here? Pay what you think you owe (a mix of long term and short term - whatever Bitcoin.tax tells you to) and hope you don't get audited?
What people don't realize is IRS doesnt have the time to deal with the small fish on everything. Let's say they try to take more money from you when you actually made then you got no choice but to fight it. If I had 24k one day and a week later it was 14k I am not paying taxes on 24k that I never deposited back in to my account. They can suck me hard lol. I would spend extra on a laywer then give a dime more room IRS. They want 5k out of 20? Fine. But not until I have 20k profit and I cash out.
True, you are playing a numbers game, but understand the IRS has a high conviction rate (inclusive of settlements)... additionally, they have the authority to seize assets as well as garnish wages.
Yea man if IRS sends me a letter i owe 50k when I frickin barely deposited back 14k in to my account from coinbase. How do they try to tax the gains I lost? There is no such thing, they can't come after me for the money I never cashed out to my back and lost in the process. It has to be rational it cant be some dumb made up number and they try to take your money. That's why I said they are likely to go after people with large withdrawals back to bank account.
All of my crypto activity is in an LLC that files as a pass-through. I run a trade bot that, at times, makes thousands of trades a day.
My accountant told me to not worry about every trade and just call it business income when I cash out to fiat. Trading is just business activity.
I never hold anything long enough for long-term capital gains so whether I track every trade or just call the aggregate income, the result is the same.
So in your example, selling stock on your Etrade/TDA/Fidelity/etc account, leaving it as a cash balance and not transferring it to your bank account means you don't owe taxes if you have gains? In your situation of having losses, of course you would be offsetting gains...
That really depends on how it gets traded. I mean if you leave it in cash at the end of year and they do something like a 1099 may be. I honestly think they report when you withdraw money. Like my fidelity acount, once I had to withdraw money as emergency and I didn't know I was suppose to report it. A year later IRS sent me a notice that I didn't claim that income and I had to pay 1100. Which was fine but I am not too sure if they report that money you haven't withdrawn from the account. Crypto is totally different reason IRS had to fight to get people's names form coinbase. But that was for people who withdrew over 25000 dollars. So its still a crappy game. If they actually knew and tracked these people they wouldn't have to fight coinbase for it. So I don't know if they have the resrouces and time to track every transaction.
Everyone, please do yourself a favor and avoid any tax advice from this guy. I don't know what else to say...
What trade bot are you using if you don't mind me asking?
I run a few different strategies that I wrote.
Nice? I guess. I mean, I had to learn how to write software and learn how to trade cryptocurrencies. It's not like someone just dropped by and handed me a disk.