Quote from: gigavps on December 05, 2012, 01:46:25 PM

Hi burnside,

I'll take your questions one by one below.

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

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?

Direct payments will be reported via 1099 as your suggested. As to which 1099 it is, is yet to be determined. My accountant is also a tax lawyer and will be advising me on this end of things. Valuations are handled at the time of the payments, so if BTC is $13.5 and you receive 4 BTC, the total value transfered is $54.

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

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)

I believe your thinking here is incorrect. I must report the value give at the time it is transferred. It is up to you to report any gain/loss incurred from converting the coins to something else. So in your example, I'd report the value given at $12 and you would report a loss of half the value because of the exchange rate fluctuation.

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

Is your lawyer a tax attorney?

Please see my first comment.

Appreciate the response. The IRS will expect a person to report on their taxes whatever you report to the IRS on the 1099. Please keep that in mind when determining FMV. For instance, you could probably get away with taking the lowest traded price for that week from across a selection of exchanges.

Quote from: MoPac on December 05, 2012, 03:27:46 PM

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

Edit: I think I figured out the answer. Giga has to become a barter exchange (threshold is 100 barters in a year)

I strongly suspect this isn't the case. There are lots of examples out there where organizations make payments to individuals or other entities in a noncash manner, but they aren't considered barter exchanges. While I can't name the proper form, I'm sure it can be reported more simply than what you're describing.

1099-B isn't any more difficult I don't think than any of the other 1099's. What other organizations do you have in mind? Based on what I was reading, the barter exchange concept was designed specifically for the sites and organizations out there that allow swapping of non-cash goods and services. Apparently they even recently sent out a notice to people on their mailing list (tax accountants and attorneys mostly) saying that they're focusing on it more now because as the economy got worse, more people started resorting to barter.

Quote from: MoPac on December 05, 2012, 03:27:46 PM

Quote from: burnside on December 05, 2012, 03:23:32 AM

It occurred to me that using an exchange may get you out of the 1099-B requirement. Since the threshold for having to issue a 1099-B is the number of barters (trades) and when you use an exchange your trades are greatly reduced, you may get in under the 100. For example:

I think the situation in the past was something like this: when the exchange was handling the actual processing of dividends, the responsibility was on the exchange, not Giga. Now the responsibility shifts. What you say might be correct, but I think it's more or less moot now given that there really is no viable exchange alternative for him to move to at the moment.

I guess Giga's already been delisted from MPEx, but there are other options. Cryptostocks.com and BTC Trading Co (btct.co) are established and gaining ground. A couple of others are getting close to launch. But I'm not sure it'd be ok for him to use any of those. The new Gigamining LLC is a US entity, and as such probably can't legitimately use any foreign exchanges.