RE: The IRS is data mining social media, Steemit is on the radar
I said this in another post but taking the conservative approach, suppose you earned a lot of Steem Dollars when the price of Steem is high and then we enter a bear market. So now your entire stash isn't enough to pay the taxes you owe?
The central question is at what point is a person truly in possession of "income"? A person can receive a token which only one exchange on the Internet is exchanging for some ridiculous price and then that one exchange can crash or stop trading, yet you owe taxes at the receipt price despite the fact that the exchange is unreliable?
If the goal for us bloggers is to both lower our risk of being audited as much as possible while also not paying more taxes than necessary, what can we do to protect ourselves? I'm not sure there is anything we can do even with the most conservative (costly) approaches. I suppose better tools, better exchanges, etc can all help but they aren't here yet.
If we are going to promote the conservative approach then we should be very concerned about Bittrex being the only semi regulated exchange for Steem Dollars and Steem. This is extremely risky as if that one exchange does go down then what are we supposed to do if we owe taxes which we can't pay due to no exchange? This scenario is actually something I'm personally worried will happen and have no idea what to do if it does.
Thanks Dana. What you are describing happens to stock compensation recipients all the time, you definitely ask all the right questions, you could have been a tax person :).
My overall plan is to not promote conservatism for conservatism sake, my goal to give people the information they would normally have to pay for (research and analysis) to make their own decision, and if the guidance supports a certain approach as a "bright line", I will share that information. This way, people will be better off whether they take a conservative or non-conservative approach, because there will be some level of technical guidance behind their decision (although it's impossible for me to give personal advice to any one person without their entire situation).
I think most people will not be able to afford to take the most conservative approach because there is no automated cheap way of doing it. Manually entering everything into a spread sheet is a full time job which can take weeks. And the Steemit site doesn't make it easy, and they could.
Provided that we can run the calculations then people can pay the estimated taxes just to protect themselves from future audit but that might not even work.