Quote from: marseille on January 14, 2017, 06:02:14 PM

Quote from: DebitMe on January 14, 2017, 04:53:55 AM

Quote from: marseille on January 14, 2017, 01:38:50 AM

Quote from: DebitMe on January 13, 2017, 05:12:25 PM

Quote from: marseille on January 13, 2017, 06:28:06 AM

Quote from: DebitMe on January 11, 2017, 11:02:02 PM

Technically to be 100% right, you should record the price after each block found with the pool you are using. Of course that is not going to happen (although would be a great piece of software idea..) so instead I mine all coins to a single address that I dump at the end of each month and record my basis as that. So you owe ordinary income on that part, then any fluctuation of price when you sell the assets would be capital gains.

This is interesting. The question is how the IRS will know that I mined bitcoin, if no pool reports it to the IRS. Many pools are not even in US, I doubt they will take the trouble to report to IRS, moreover the pool has no idea which country I live.

The IRS will probably not know if you mine bitcoins or not, especially on the level of home mining. But the question was how you should report your income. What your suggesting is tax evasion which is illegal in the United States and probably most countries in the world. Just because the IRS doesn't know about something doesn't mean it is OK not to do it.

I know some friends report the bitcoin income only when they sell them. They report it like capital gains and deduct their mining efforts/cost etc. But they don't seem to report it after mining, as it seems too much cumbersome.

As a CPA I would advise against this. They really should be reporting that income in the year it was earned. If they get audited they would certainly be assessed penalties and interest on the unpaid taxes associated with the mining.

OK Got it. Thanks for the info. But if I buy bitcoin from exchanges, I don't need to report until I sell it right? It should be just like the stock trading. For mining it could be different due to the cost base. Otherwise I don't see much diff.

Yes I agree, if you buy it from an exchange, then your basis is whatever you paid, and when you sell it you will either recognize a gain or a loss. (hopefully a gain, lol). Although I am unfamiliar of reporting requirements. For example, if you have a foreign bank account, you need to report that to the IRS with amounts and what not. I don't believe that is required with bitcoin, but I am not totally sure.