Buy bitcoin, instead of a rig, and watch it explode. Prices are damn low at the moment.

You guys really REALLY need to start reading before you post... the pool is STILL under DDOS attack.  Hence, pool is down/don't work/fubar/etc....  

Jeez, it's even in the posts right above yours, it's not like you even have to scroll, much less go back to a previous page... after all, it IS only a 2 page thread so far... so even then it wouldn't be so bad.

Yes.
Income taxes are "voluntary", Harry Reid said so.

I believe this is a monumental opportunity for bitcoin.
Watch the IRS flail about as it attempts to tax everything that moves including 1's and 0's.
And fail stupendously.

Since the tax is due in USD and not bitcoin, I expect this will quickly hasten the demise of the dollar and send BTC exponentially upward.
This will also result in the US government hyper inflating away its debts, and the IRS turning into a septic cleaning service to clear out all their inked TP.


Grab the popcorn. This should be a good show. David vs. Goliath like.

Giving this pool a shot today.  Looks interesting and the reported profitability seems excellent.

Short answer:  Yes, I think it's fair.  Otherwise I would have switched to another pool.

Long answer:
Despite what someone thinks, Terk does a great job with this pool. It is not Terks fault that
altcoins (usually) aren't that profitable as they were a month ago.
Over the last 14 days, we have 12 days > 100% LTC. And the two days under, is by just a few percent.

Of the 2% pool fee, there is fees to exchange altcoin to BTC, fees for paying each user, and
costs of having the pool servers running - it's not exactly an old computer under his desk.

In addition to the actual expenses to be covered, Terk have done - and still does a lot of work for us.

Firstly he has created the pool - this consists of quite a lot of code - handling mining, multi-location servers,
calculation of profiteable coins, auto-exchanging into BTC, paying each user, the very nice pool web page, and so on.

Even some of the coins we have mined (at least in the past) isn't on an exchange that has an API. Then Terk has manually to trade the coins.
And he is also constantly monitoring the market for new (good) coins and other ways to improve profit.

Terk also takes the time to read the forum, answer questions and help people.

He is doing all this while he still is working on improving the pool software, fighting DDoS and other attacks, keeping the servers running
etc, etc.

So yes, I definately think it's fair that Terk still is "taking a profit" when we're at 94% or 98% LTC in a day.
(I guess I would end up with something like 90-95% myself if I were to mine LTC directly or via a LTC pool)

Its not even legal tender so the merchant would have to convert back to fiat anyways. If they need fiat to operate their business

The easiest way to do this is through a service similar to credit or debit cards.   Isn't there some service for this already?

Its a pain to use bitcoins currency.   No different if you work for dollars then instead of a checking account you buy gold.  When you need dollars you sell that gold back to dollars to make purchases

It isn't really good or bad. People that thought they could somehow get away with not paying taxes in the US are naive as hell.

If anything I think overall it is good because they clarified that you can indeed pay a lower tax rate for long term gains.

I doubt this news is the reason for bitcoin's price being down, it has taken a hell of a beating lately and been extremely volatile. I wouldn't assume that this news is even affecting the price.

As far as coins spent at merchants, I can't even think of a feasible way to deal with that... it's one thing if you make a large purchase, but what if you made many small purchases? Mountains of paperwork...

That is true, for me the Gridseeds will remain profitable all the way until 0.0001 BTC/MHs/day. Maybe that will be the new lower limit. I still think there is a large amount of GPU miners, especially in Europe that will stop mining very soon and the Gridseeds coming in won't replace all that hash rate quickly.

I'm not sure. By some rough math, around 0.003 BTC/Mhash/day is when a lot of people will stop breaking even on electricity costs when running GPUs and electricity higher than 0.15c/kWH. I think we will see a lot of hash power drop around the barrier which should stabilize it for a bit. I'm just guessing though.

The IRS allows a number of methods to determine basis.  The default option is FIFO.

So if you bought the following Bitcoins

10 BTC @ $10 ea
20 BTC @ $30 ea
50 BTC @ $60 ea
10 BTC @ $20 ea

and then you decide to sell some Bitcoins (either for fiat or in exchange for goods and services) and the exchange rate today is $50 per BTC then you simply start at the oldest coins.

If you sold 10 BTC it would be ($50-10)*10 = $400 capital gain.  
If you sold 20 BTC it would be ($50-10)*10 + ($50-20)*10 = $700 capital gain.
If you sold 70 BTC it would be ($50-10)*10 + ($50-20)*20 + ($50-$60)*50 =$500 NET capital gain.  Note the third batch is sold at a loss.

Understand capital losses would work exactly the same.  Someone who bought BTC at the peak and then today decided to spend/sell them would get a tax break on the difference in value.

There are more complex forms of computing basis by tracking each individual coin but it doesn't NEED to be done.  It is done by people who want to control their taxes (note it doesn't reduce your taxes but it allows you to control when you pay it).  Hedgefunds and major companies will almost certainly be using coin control to pick the exact coins they sell/spend in order to exactly control their tax liability.

The guidance never uses the word bitcoin, specifically.  It says "virtual currencies" and, if I remember correctly, E-Currencies.  I don't see any reason to think Litecoin, Dogecoin or any other alternate crypto currency would be considered any different.

Capital gains are based on the average cost. If you bought 1 bitcoin for $1, and 1 bitcoin for $2, you now have 2 bitcoins, that you bought for a total of $3 dollars. Therefore your average cost was $1.5 / bitcoin. So when you buy a coffee for $2 using 1 bitcoins, you should calculate that you only spent $1.5 to acquire that 1 bitcoin (on average), and therefore you made a $0.50 profit.

Most investors used the above method, called the "average cost basis method", in their accounting of capital gains for stocks and such.

You can also use the first in first out (FIFO) method. That means if you bought bitcoin for $1 first, and then later bought another bitcoin for $2, then later you bought something with 1 bitcoin, you would calculate your cost to acquire the bitcoin as $1 (since that was the first bitcoin into your wallet, it is the first bitcoin out of your wallet: hence "First in first out").

You can pick either the average cost basis method or the FIFO method in any given year, whichever is more tax advantageous for you.

Every time someone buys a product with their bitcoins, they now have to declare profit or loss for that transaction compared to value of that coin when they earned/mined it.

He means "First In, First Out".
In other words, the first Bitcoin you spend is considered to be the first Bitcoin you purchased, the second Bitcoin you spend is considered to be the second Bitcoin you purchased, etc.

MinorError,

In the US cash based accounting transactions assume FIFO for the currency / cash asset on the balance sheet.

H@shKraker

 This changes nothing and if you understood a litlle of USA tax law you would be happy the IRS-US government finally gave guidelines.