Post
Topic
Board Legal
Re: Time to start thinking about taxes
by
NorbyTheGeek
on 05/12/2013, 15:17:32 UTC
Okay, I get that buying Bitcoin and then selling for a profit probably falls under capital gains.

What about mining?  Say I started with 0 bitcoin, bought some mining equipment with fiat, and mined 1 bitcoin.  If I cash that out, is it capital gains?  Other income?

With my situation, it gets even weirder.  That bitcoin that I mined has never been exchanged for fiat, but instead has been invested into things like CEX and CryptoStocks.  In addition I have a 2nd bitcoin that I bought for $200 that is also invested in these ventures.

I don't plan on cashing any of it out before the end of the year, in fact my mined coins all get reinvested into something.  But I have no idea on how to treat this stuff with regards to U.S. taxes.  Mining in particular is unique in that I'm "creating" either a commodity or a currency, (depending on how you view Bitcoin) as well as performing a service (collecting a fee for confirming transactions).