There are two types of taxes you need to worry about with Bitcoin.
The first is regular income tax. If you earn bitcoins by mining or doing any other kind of work, you must declare the market value of your bitcoins as earned income whether you sell them or not.
The first is regular income tax. If you earn bitcoins by mining or doing any other kind of work, you must declare the market value of your bitcoins as earned income whether you sell them or not.
So you are telling that if i draw a great painting, i must decrale its market value as earned income, whether i sell it or not?
When mining with a large mining pool, I agree, the bitcoins you receive are a payment for services rendered (selling hashing power). The pool operator is the payee. These coins should be treated as income, probably valued at the time of payment.
However, when solo (or p2pool) mining, the story changes. There is no payee, there is simply a computer program (and network). There is no payment, you create the bitcoins (out of thin air) when you solve the next block. Any tax responsibility should be similar to taxes you would owe if you bought some tools (hashing machines) and used them to build something (bitcoins), probably valued at the time you sell or exchange them, although they could be considered inventory (which might be taxed).
Disclaimer: I am not a CA.
Well, bitcoins mined have a fair market value at the time received. If there is a difference between that value, and the value you sell or exchange them for, pretty sure that is capital gains.
As others said, always good to seek the advice of a real attorney (which I, and presumably we, are not).
