Crypto Tax Series “E-Book” 2017 Edition (U.S.)
The 2017 Edition E-Book is Complete! If you are new to my blog, it is geared towards U.S. citizens and covers tax reporting from the perspective of (1) a cryptocurrency investor, (2) a Steemit author and (3) a cryptocurrency miner.
Goals
I joined Steemit and began blogging in August 2017, and while I haven’t covered every topic I had planned to yet, I am still pleased to complete 15 unique articles on U.S. cryptocurrency taxation. The plan has been to categorize these articles into an open source e-book and release as a post periodically (so that it is easy to jump between articles in a logical order). I will continuously update the E-Book over time as significant additions are made to the content (but not so often as to become spam-y, this is a monthly or bi-monthly e-book post).
Because my last update the e-book was in October, December seemed a like a good time to release the “final” 2017 e-book.
Onward to 2018
For 2018, I have more topics planned.
(1) Deductions First, I plan to go into more detail into the tax deduction side of the equation (the Steemit authors).
(2) Cloud Mining I would also like to discuss cryptocurrency cloud mining and high yield lending from the tax perspective.
(3) Bitcoin ETF GBTC I temporary held GBTC (the EFT that holds approx. 0.092 bitcoin per share) which treats itself as a trust for U.S. tax purposes, I would like to write an article on considerations for people that bought/sold the stock and recently received a Bitcoin cash dividend.
(4) Initial Coin Offerings (ICO)’s vs. IPO’s – I would like to provide an article discussing the U.S. tax equation of an Initial Public Offering of common stock (company side and investor side); and compare that to the Initial Coin Offering.
(5) General Compliance I received a helpful suggestion that some general discussion of the process of estimated tax filings would be a good tool. There may be some other topics that come to mind along the way.
(6) Bitcoin Tax Compliance Websites One other topic that interest me is the data aggregation websites that will do the “crypto tax” reporting by offering a software package. I would like to provide a technical review including pros and cons of the packages. This isn’t my highest priority unless I receive requests to prioritize it, but definitely would be interesting.
(7) Tax Reform/Current Events – If tax reform or future guidance could impact any of the previously published content, I would like to provide article updates.
In Summary
Please enjoy; feel free to comment or clarify any of the content. This is intended to be in an open source nature, so if you have content you would like added that is relevant. Happy holidays and New Year!
P.S. I may fit in another 1/2 articles before year-end, but the holidays are so busy so we shall see.
Crypto Tax E-Book – 2017 Edition
Introduction To Series
Part I-A – General Tax Consequences of Holding Crypto for Investment under U.S. tax law (part 1 examination of Notice 2014-21)
Section #1 (General): https://steemit.com/money/@cryptotax/crypto-tax-blog-investing-in-bitcoin-let-s-learn-u-s-tax-rules-part-i-a
Appendix A (Securities): https://steemit.com/money/@cryptotax/your-ico-tokens-may-be-securities-does-it-impact-your-u-s-taxes
Appendix B (Examples): https://steemit.com/money/@cryptotax/bitcoin-taxes-help-me-please
Appendix C (Like Kind Exchange): https://steemit.com/money/@cryptotax/cryptocurrency-like-kind-exchanges-what-can-we-learn-from-gold
Appendix D (Loss from Theft/Ponzi) https://steemit.com/money/@cryptotax/was-your-bitcoin-stolen-potential-tax-benefits-for-your-loss
Part I-B – General Tax Consequences of Performing Services for Crypto in Exchange under U.S. tax law (part 2 examination of Notice 2014-21 and Sec. 83)
Section 1 (General): https://steemit.com/steemit/@cryptotax/are-steemit-author-and-curation-rewards-taxable-usa-edition
Section 2 (Deeper Analysis): https://steemit.com/steem/@cryptotax/are-steemit-rewards-taxable-in-the-usa-part-2
Section 3 (Examples): https://steemit.com/steemit/@cryptotax/crunching-the-numbers-example-of-how-to-calculate-taxable-income-on-your-steemit-author-rewards-usa
Section 4 (Steem Dollar Update): https://steemit.com/steemit/@cryptotax/for-u-s-steemit-authors-the-new-steem-dollar-sbd-tax-dilemna-because-it-couldn-t-get-any-more-complicated
Part II – U.S. Tax Consequence if you held and received Bitcoin cash during hard fork
Related (Tax Fork Concept): https://steemit.com/bitcoin/@cryptotax/using-blockchain-to-pay-tax-debts-can-a-bitcoin-tax-fork-btax-pay-your-tax-bill
Gold Fork: https://steemit.com/money/@cryptotax/is-bitcoin-gold-is-taxable-in-the-u-s
Part III – U.S. Tax Consequence of Mining
Section 1 (General): https://steemit.com/money/@cryptotax/bitcoin-earned-from-mining-is-taxable-income-how-to-calculate
Part IV – Current Events
November 2017 – Coinbase Update: https://steemit.com/bitcoin/@cryptotax/an-update-for-coinbase-users-and-why-you-should-follow-this-tax-blog
2017 Conclusion - This article
Disclaimer: This series contains general discussion of U.S. taxes in a developing and unclear area of tax law. As always, you should consult your own tax advisor in your jurisdiction to determine your specific situation as this is not personal advice; and consider any future guidance by the Congress/IRS after the date of this article. Under Circular 230 to the extent it applies, this article cannot be used or relied on to avoid any tax or penalties in the U.S., its States or any other jurisdictions. This post/book does not create a client relationship between the author and the reader.
Picture Credit
https://pixabay.com/en/users/Clker-Free-Vector-Images-3736/
@OriginalWorks
The @OriginalWorks bot has determined this post by @cryptotax to be original material and upvoted(1.5%) it!
To call @OriginalWorks, simply reply to any post with @originalworks or !originalworks in your message!
In some countries whole industry lives from tax advice... a lot of work upcoming with crypto...
Agree tax professionals will be busy for some time as mass adoption grows.
The more I read the content, the more I discover how valuable this work is. Thank you for sharing your knowledge on this complex subject.
Thank you for the kind words!
I'm looking forward to the articles about deductions! ;)
Thanks for doing this. It all makes my head hurt, even though your articles make things very clear. I like working with numbers, but when it comes to this, it's tough. It just seems like so much record-keeping for fractions of a cent. I do think I can make sense of all my articles and their earnings. The earnings on comments and curation are something else!
For many months, I was doing curation for the @foraging-trail and @gardening-trail as part of the SteemTrail project. We were paid in TrailCoins, which have zero value now. I guess I need to track those payments and their value at the time, and account for that. And then declare capital losses at some point. Does that seem reasonable? Thanks!
Hi, great question. I'm not very familiar with the TrailCoins and price history. It sounds like you are familiar with the general concept of the property for services rules (i.e. which is discussed in some detail in the Steemit articles linked above). Hope the following info is helpful as a general starting point for U.S. income rules (however this isn't personal tax advice to your specific situation):
Typically, when a crypto treated as "convertible virtual currency" is received in exchange for services (such as blogging), this is taxable event and the fair value for taxation is measured on this date. Then, another second taxable event when property is disposed of for USD (or Bitcoin etc.), with a stepped up basis to ensure no double-tax. There can be situations that allow for a write-off earlier such as abandonment or theft. Also, a crypto currency subject to property taxation rules typically would have to be a "convertible virtual currency" (tradeable between users and can be exchanged for USD/crypto). Generally, the Notice 2014-21 prescribes that the value be determined based on established markets, but it is up to the taxpayer to determine value. So one question I would ask is how is value determined on date of receipt for this coin, was it ever traded on an exchange, etc.?
The worst case scenario for anyone receiving crypto for services: A crypto received for services is worth more than $3,000 resulting in ordinary income, is a capital asset, and is sold for a more than $3,000 capital loss. The capital loss limit in the U.S. was $3,000 per year (however I haven't checked tax reform to see if this changed yet).
Good luck and Steem on!
Obligatory Disclaimer: This series contains general discussion of U.S. taxes in a developing and unclear area of tax law. As always, you should consult your own tax advisor in your jurisdiction to determine your specific situation as this is not personal advice; and consider any future guidance by the Congress/IRS after the date of this article. Under Circular 230 to the extent it applies, this article cannot be used or relied on to avoid any tax or penalties in the U.S., its States or any other jurisdictions. This post/book does not create a client relationship between the author and the reader.
Thanks for such a detailed reply. Yes, the TrailCoins were traded on OpenLedger, the bitshares trading site. Of course, the market for them was really small! The guys running the project would buy them back periodically, for bitshares. I didn't even think to track what values everything had on the dates I got the TrailCoins or made my trades. I bet a lot of other folks are in the same boat with all their crypto activities.
That would make a killer app, I think. Providing a way for people to easily sift through the blockchain and organize their actions into a tax-focused spreadsheet. I'd pay for something like that!
Great article.
Oh my this is fantastic work! Sensational. Great job, I hope you can write some more of this. Would love to follow you moving forward. More power to you.