04-01-2013, 06:22 PM
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The People's Post
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Join Date: Dec 2008
Location: invisible 7-11
Posts: 63,922
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the only questionable area of btc tax concern i can uncover is the actual mining.
Quote:
How are Bitcoins that I have mined treated for tax purposes?
This is a tricky question, in that bitcoins are really the first digital currency that was created in this manner and actually have a significant value in relation to other currencies. Essentially it is somewhat uncharted territory. Literally bitcoins, and even digital currencies are so new, that there is little to no precedent for some aspects of bitcoin mining, from a tax perspective.
Since Bitcoins are currently traded in various online marketplaces, when someone receives a Bitcoin, they can reasonably calculate it?s value in the local currency. Because of this, it is possible that the taxing authority will treat the receipt of a Bitcoin through a mining pool, or from an individual mining operation, as a taxable event. At that time, the taxpayer would be required to estimate the value of the Bitcoins in dollars and record that amount. This would have to be done either daily or weekly depending on the value of the Bitcoins if their value keeps fluctuating as much as it has the past few weeks. These amounts would be recorded as revenue from bitcoin mining operations and would be taxable less allowed expenses.
When selling mined Bitcoins, however, you would also be taxed on the increase between the value you recorded them at when you first received them, and the value you sold them for.
Another possibility is that the government will consider mined Bitcoins ?intangible personal property?. As a rule, however, financial instruments are excluded from this particular category. The question is, are bitcoins a financial instrument, or rather, will the taxing authority consider them a financial instrument? We will have to wait and see if bitcoins become popular enough for a position to be taken on that.
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