For trading, it should be straight forward. You would have to pay capital gains only on your profit. That might be taxed at some concessional rate or may even be exempt from taxes, depending on your jurisdiction.
That's correct. But note that you must be able to provide evidence that you bought BTC at certain price etc, otherwise they can expect you to pay tax based on total value.
In case of any doubts, don't be afraid to ask relevant tax office, as there may still be some uncertainties in interpretation of tax rules.
okay that part i got but what about all the other stuff botany said? is he correct?
What he said makes sense, but I'm not an expert. If you want to get the proper advise, you should start with providing more details (where are you from? How many BTC have you mined, do you mine as continuous/commercial activity or was it just one-time only etc). Hopefully someone better informed will help you a bit more.
But again, if you're talking about significant amounts, seek for professional advice (or ask your tax authorities directly), never rely entirely on advise from forum.
Mining is different. In your example above, I don't think you should be paying tax on $490 of income and $40 for capital gains, because it is double taxation. Common sense tells me that you should pay income tax on $490, but that would again depend on which country you are in.
Agree, you pay either CG or Income Tax, not both. Although, if you mined 1 BTC and sold for $490, you should pay income/CG tax on that amount LESS electricity/mining hardware depreciation costs.
I've no idea whether you are liable for tax if you mined BTC and didn't sell them, if it's a significant amount, I'm guessing you'd be expected to declare them at current value.