The CPA I met with seemed to understand the guidance, and he agreed we need to show something, but I almost think he envisions it being revised at some point. At the end of the day I'm taking his advice, he's not done evaluating it yet, but we will set a strategy that applies the guidance in a way that makes sense for me and stick with it until told otherwise.

What should be understood is this method they have outlined where payouts are recorded as income, and equipment will sit as expenses due to life that doesn't justify depreciation, we will very likely end up with an operating loss. Go ahead and calculate 2014 out so far to see how it looks. Due to the steady decline in price the revenues recorded do not come close to covering the equipment costs made months ago. Stay with me, this has a purpose... The problem is if your "business" generates a loss for three out of five years the IRS will consider it a hobby, and at that point you need to pay taxes on all the income and can only claim expenses greater than some percentage of your gross income- I forget the number but it was high. Basically once the IRS sees your activity as a "hobby" you end up with the worst of both worlds; paying taxes without the ability to write off expenses. So much of the annual profitability depends on market forces, it's just so speculative that there really is no certainty of profit in mining, and if 2014 doesn't turn around most miners will be reporting a loss next year, do that too many times and then you need to actually prove to them it is a business and not a hobby. And if you come out the gate saying it's just a hobby then be prepared to pay out the ass without the ability to claim expenses. This is tricky stuff and the important thing is having a system that makes sense and can be explained, remembering what you do this year sets the precedent for how you handle accounting in the years to come.

I'll be cleaning up some spreadsheets and will report back if my CPA says anything new.