wow.. i see you havnt spoken to an accountant.
you pay tax when you get your FIAT for that coin.. you work out the gain/profit or loss by looking at the fiat value of the bitcoin when mined and the fiat you receive when selling.
imagine you mined 1 bitcoin and you paid tax on todays valuation of $450. the tax is paid. what about when the price moves tomorrow. do you pay tax again on a rise. and ask for a refund on a drop. NO no no
now then. when you mine a bitcoin you wait until you have sold the bitcoin for coldhard fiat in your bank, then you look at the price value at the time of the fiat sale and you calculate that against the initial price at the time of mining..
you dont have to keep a log of every $ movement whilst hoarding, because the maths of adding and subtracting every movement would end up with the same total as just taking the numbers at the start and the end..
i seriously dont know why people are too lazy to speak to an accountant. but then think they have to do lots of work suddenly, when its not needed.
the mind boggles
From IRS Notice 2014-21 (that LostDutchman linked to):
Q-8: Does a taxpayer who mines virtual currency (for example, uses computer resources to validate Bitcoin transactions and maintain the public Bitcoin transaction ledger) realize gross income upon receipt of the virtual currency resulting from those activities?
A-8: Yes, when a taxpayer successfully mines virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income. See Publication 525, Taxable and Nontaxable Income, for more information on taxable income.
I don't need an accountant to understand that. I'm not an accountant or a tax professional, but the IRS notice was written in plain english and as someone who does their own taxes, it seems straightforward.
There's two separate things, as I understand it:
1) an income generated when the bitcoin is mined based on the market value at the time it was mined (regardless of whether it's ever sold). This gets reported and taxed as income (could be business or hobby income, but that's a separate question)
2) a capital gain or loss when the bitcoin is sold or spent. If it was mined, then the cost/basis is the market value at the time it was mined that was already taxed as income.
If you're not selling the bitcoins that you're mining, you still have to come up with the USD to pay tax on the income.
No, you don't have to keep tracking every rise and drop. You just have to track it at the time it was mined (cost/basis, reported as income), and the time it was finally sold (to calculate a capital gain or loss).
I don't do my own heart surgery or program my own computer so you should stop doing your own taxes.