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RE: Is Uncle Sam setting up the foundations to Big Brother your Crypto? (U.S. Tax Code)
What I am curious about in regards to crypto controls, and especially taxes, is what to document and report.
Important topics include;
When do I report crypto as "earned"? At the time of mining, or when/if I convert it?
When I buy crypto and it increases in value, when is that considered a gain? When the increase occurs or when I convert it?
Is it reasonable to deduct the costs of investing from the taxable income? Transaction fees, equipment depreciation, cost of physical space where business is conducted ...?
Can I report a capital loss if I convert cryptocurrency for less than I purchased/earned it at?
Check out my blog for more detailed answers but here is the synopsis.
If mining, I would report the value when earned as business income and take all of your costs including video cards and electricity as business expense. If you hold on to the mined coins, the value you report as business income becomes your basis in the coins to establish a gain or loss down the road.
You can take a capital loss if you sell coins at a loss. You have to wash it out against other capital gains and if you have excess loss in any year you can carry it forward to future tax years and apply against taxable gains.
Again, I address all your questions in detail in my previous posts and on my blog.
Thanks for following!