Quote from: burnside on December 05, 2012, 02:24:34 AM

I've seen you mention the $10 - $600 figure, which I think comes in reference to issuing 1099's. Out of curiosity, how are you planning on handling the IRS reporting? What 1099 are you going to file? How are you handling the valuations?

Doing some cursory research it looks like the commodities 1099's (1099-B) are supposed to be issued by your broker, who tracks your USD value when you buy or sell your commodity through said broker. You are not a broker, and any such 1099 would not come from you, rather, it would come from the exchange used when gigaminers buy or sell their commodities. (BTC<->USD)

Being a commodity, trading BTC for other commodities = bartering. When bartering, you are responsible for reporting your own income, unless dealing with a bartering exchange, in which case they will give you a 1099-B at year end. See: http://www.irs.gov/taxtopics/tc420.html

None of the other 1099's seem to have any relevance to commodities? And as far as I can tell there's no way you could be privy to how your users make use of their commodities? Thus any dollar values you report on any 1099's are going to be inaccurate, and worse, could end up screwing your customers. (eg, you report a value of $12, but when the customer exchanges it they exchange at $6)

Is your lawyer a tax attorney?

The more I read, the more worried I get that your lawyer may be barking up the wrong tree here. You should not be on the hook for any 1099 reporting. That responsibility falls on the exchanges.

Cheers.

Edit: I think I figured out the answer. Giga has to become a barter exchange (threshold is 100 barters in a year) and track current FMV on every barter transaction. Then at the end of the year he issues a 1099-B with the FMV transactions all added up. Crazy.

My guess would be a 1099-MISC

http://www.irs.gov/uac/Form-1099-MISC,-Miscellaneous-Income-