I'm actually hosting a Ask Me Anything right now and would love to get more questions.  A lot of the same questions that were asked are covered here as well.

https://cryptoama.amafeed.com/i-provide-strategic-tax-and-accounting-solutions-for-cryptocurrency-traders-and-479288

I am actually hosting a Ask Me Anything on taxes and cryptocurrency and have answered a lot of these questions.  Check it out or ask questions here:

https://cryptoama.amafeed.com/i-provide-strategic-tax-and-accounting-solutions-for-cryptocurrency-traders-and-479288

As an Enrolled Agent working for a CPA firm, here's a couple different things to keep in mind:

1) If at any time you hold financial assets (cash, investments, securities) with a value greater than $10,000 at any time during the year then you're required to file a FBAR by April 15 of the following year.  We normally prepare this with the tax return, since they kind of go hand-in-hand and have the same due date.  If the amount is greater than $75,000 at any time or greater than $50,000 at the end of the year, you also need to include Form 8938.  If any non-US person gifts you money, crypto, an investment, or anything with a value of greater than $100,000 you need to file Form 3520.  I could go on, but from what you shared there's definitely a foreign reporting requirement.  Just know that accidentally not filing a FBAR has huge penalties.  Intentionally not filing a FBAR is criminal and can lead to jail time.  So definitely not something to be taken lightly.

2) As a US citizen, you have to report your worldwide income, including what you make in Korea and what you earn or gain in coin.  That said, there's a number of provisions in place to limit or avoid being double-taxed by both Korea and the US, including the Foreign Earned Income Exclusion, Foreign Tax Credit, Foreign Housing Exclusion, and specific tax treaty provisions.  So make sure you work with a CPA or Enrolled Agent with experience in foreign reporting and cryptocurrency to properly report your income.

3) Proactive tax planning can help ensure you are taking advantage of the best strategy to minimize your taxes.  There's so many tax planning strategies from entities, retirement plans, to cost basis allocation, and time spent outside the US to make sure you're minimizing what you're supposed to pay in tax.

www.sweeneyconrad.com

www.linkedin.com/in/thomasjonestaxman

Citizenship planning is probably better suited for an expat attorney, but taxes certainly is our specialty.

Of course, I'm biased in my response since I work for a CPA firm and provide tax advice, but if taxes are your #1 expense and if you just had a windfall from the winter Bitcoin rally, doesn't it make sense to invest in someone who can really help you minimize your tax situation?  TurboTax and H&R Block are not necessarily known for their incredible tax planning capabilities.

IRS Notice 2014-21 was the first big interpretation the IRS offered on virtual currency transactions.
https://www.irs.gov/pub/irs-drop/n-14-21.pdf

Cryptocurrency is taxed depending on how it used.  For most, that would be as investment property subject to capital gains treatment.  Bitcoin futures received special Sec. 1256 60/40 LT/ST treatment.  Mined, staked, forked, found, won, earned coins are ordinary, but depending on the activity could possibly be self-employment income subject to 15.3% self-employment tax.  Just make sure you're taking allowable expenses (computer equipment, home office, subscriptions, etc.)

But if it is self-employment income (for example, you are in the business of mining) then it opens up options to create retirement accounts.  Why is that important?  Because any crypto investing or mining you do in a self-directed retirement account is tax deferred (or tax free if Roth).

Corporate entities provide some planning opportunities with the 21% flat rate.  Again, lots of fringe benefits are available here too.

I'm just saying, if a great CPA or Enrolled Agent can save you $20,000+ with strategic tax planning while keeping you out of trouble, why would you skimp on their $2,000+ bill?  Seems like a decent ROI.

Here's a few ideas:

• Proactive planning to time transactions to take advantage of LT capital gains rates
• Bitcoin futures Sec. 1256 treatment yields a 60/40 LT/ST treatment
• Use FIFO, LIFO, HIFO, or Spec Id cost basis methods to take advantage of timing opportunities
• Consider using a corporate entity for the 21% corporate rate, but this requires planning on taking profits
• Use a self-directed retirement account to defer gain (or be tax free if Roth)

Of course, secattorney, anyone consider these options should consult with their CPA, Enrolled Agent, or Tax Attorney to properly plan a strategic, proactive tax plan that fits their unique situation.

I'm more familiar with CoinTracking.info but the software is the same and still in its infancy.

Note that moving forward in 2018 and beyond, coin-to-coin transactions do not qualify for like-kind deferral of gain treatment.

If this is a 2017 issue, then definitely work with a CPA or Enrolled Agent who's up on the current like-kind debate because there's a number of factors to consider.  (Just take the IRS court case that determined a cow-for-cow trade was taxable and did not qualify for like-kind treatment because one cow was male and the other female.)

So assuming we're talking about coin transactions moving forward, essentially every transaction is a taxable transaction (unless you're holding your coins in a self-directed retirement account as an investment).  That means when you sell coin, buy something with coin, trade, or exchange it, mine it, "find it" (fork or staking), you're going to have to report the transaction and there will be some sort of gain or income calculation.  For gain transactions, if the coin is held as investment property and it qualifies for capital gains treatment, then the cost basis is what you purchased it for (much easier said than recorded).  If you are holding coin as if it were cash and using it in a business transactions to purchase goods or services for your business, then the gain would be ordinary.

I could go on and maybe it does warrant a separate discussion, but I agree that bitcoin.tax has a ways to go.

#1 Assuming you're asking about US taxation, you're looking at the income from mining be taxed at your Ordinary tax rate (37% if Gross Income >$600,000 married or $500,000 single) at the time it is mined.

#2 If you hold a newly mined coin, then you have a new investment with a cost basis = #1 above.  If you sell, trade, or exchange that within 12 months of mining it, you will pay ST capital gains (which is your ordinary tax rate) on the amount it has appreciated since it was mined.  If you hold it 12 months, it qualifies for LT capital gains (which is either 0%, 15%, or 20% depending on which Ordinary tax bracket you're in).  This is similar to how stock awards are taxed (ordinary at vesting, capital gain at sale).

#3 Often with proactive planning, there may be benefits to incorporating a mining activity.  New 21% flat corporate rates would allow you to reinvest profits into the mining, but beware of the double taxation when you pay yourself.  If there's sufficient activity to qualify as an active trade or business, a pass-through entity like a LLC might qualify for the 20% pass-through deduction.  Mining can also be done in a self-directed retirement plan (IRA LLC or SD Solo 401k) to completely defer tax (or be tax free if Roth).

So I suggest working with a tax advisor who can help minimize your taxes from the beginning.  Definitely worth their weight in gold.

It really depends on the countries involved.  My firm works A LOT with international taxpayers and foreign investors, but as is typical with most US CPA firms, we handle the US reporting and work with a sister firm in the other country to handle reporting in that country.  The EU hasn't negotiated a single tax treaty with the US.  Instead, it's on a country-by-country basis.  I have clients throughout Europe in common business-partner countries (UK, Ireland, Germany, France, Netherlands, Luxembourg, Switzerland, etc.).  It adds an extra dimension of complexity and compliance to the US tax reporting.  Common reports and forms include FBAR, Forms 8938, 3520, 5471, W8-BEN, and 1042.

As far as US taxation of crypto, I agree it is important to make sure you find someone who knows it and wants to work with it.  Too many tax preparers either are ignorant or want to stay away from the complexity of reporting coin transactions.  I'd suggest making sure the advice you're getting comes from either a CPA (Certified Public Accountant) or EA (Enrolled Agent).  Ideally, they'll also have an advanced degree in Accounting or Tax, indicating they're really committed to their work and it's not just a seasonal side job.

I'd also say I think strategic, proactive tax planning is underemphasized.  A lot of tax preparers just focus on reporting transactions and not trying to plan to save money.