RE: Steem Taxes
The logic of taxing Steemit currently displayed here, if implemented officially, is ridiculous. Their only argument for taxing it is apparently Steem has a price. Facebook likes can be bought from click farms, so everyone who gets free likes better start filing. Same with tweets and Reddit karma. I hear you can buy gold in World of Warcraft. I guess everyone who ever looted a mob now has a taxable gain. Doesn't matter that it's locked into a game (or Steem Power is locked into a platform). We say it is taxable, so it must be.
Prostitutes still charge, right? Lord, I must have a huge taxable gain of un-purchased sex I need to start auditing. I knew buying that ButtCoin (patent pending) would come back to bite me eventually.
Don't even get me started on market depth. You couldn't sell 1 million (or some other arbitrary number, depending on the order book) Steem without tanking the price, so 1 million Steem @ a current "price of $1" is not worth anywhere near $1 million. Under this logic, they'd try to tax you on that though. You're totally screwed if they tax you on it @ $2 and the market tanks before you can even physically remove it to pay the taxes they are demanding. If price tanks far enough, you could be in the hole.
It would make more sense to consider it a capital gain, but then you have to set a cost-basis. However, income tax rates, for self-employed, are ludicrous, and IMO make no sense given the other issues.
Oh, and I guarantee you the "elite" would be funneling all this through a trust or LLC and paying 10% or less on all of it, minus expenses. The only reason @jerrybanfield and @mynameisbrian have to worry about paying it this way, is because they are the "little guy", relatively speaking, and will be threatened and potentially crushed otherwise. Regardless of the legality or constitutionality of any of it.
Lets not forget about those wonderful CS:GO weapon skins worth thousands of dollars! All those 8-16 year olds playing the game should be in jail for tax evasion!!
This is why non-crazy tax law usually doesn't tax things until you actually realize a cash gain. Thus, you would only owe tax on your CS:GO skins if you started selling them for profit and made money money, annually, than the minimum taxable level. You would also be open to a lot of deductions, and could form an LLC to pay yourself hourly for the work and deduct that too.
In other words, while it might be crappy, it would be a whole lot less crappy than this insanity.
Yeah this makes the most sense I think. The problem is that if everyone accepts crypto then a lot of people simply wont go back to using cash. And an even larger number of people probably wont even have bank accounts anyway.
But what do the lawyers and tax professionals say? Do they say we owe taxes on our CS:GO skins? I mean I don't know how to interpret the law. Is the IRS going to crack down on gamers?
Yes, we do owe money on CS skins and WoW Gold, if we allow them to change the tax law to tax us at the point of non-monetary gain. If we allow Steem to be taxed, before we actually make a cash gain on it, then that exact same logic will justify jailing anyone who receives anything that is convertible via the free market to money (so, every item in the history of existence) and does not voluntarily pay about 35% self-employment taxes. That will include every online game's currency in history, and any other salable items.
I bet even Reddit Karma has a price you can purchase it for for astro-turfing purposes. That would make every "I can haz cheezburger" post an unrecorded taxable gain.
That's the law you are legitimizing when you pay taxes when you receive Steem.
Yeah exactly, so what is the situation? The IRS needs to clarify or at least tell us where the line is. Their 2014 guidance was good for 2014 when it was only Bitcoin and only cryptocurrency, but the situation has evolved.
This is the exact confusion I have with regard to how to deal with Steemit taxes. I know we must pay something but don't know the best way to calculate it. So why is Steem different if it's not directly traded for fiat? As you said, you can buy Facebook likes or really any account with fiat or Bitcoin, but you cannot directly cash out your Steem dollars into the USD and your Steem Power cannot be purchased with fiat.
LOL, epic.
wasn't there a ruling recently about BTC not being treated as a currency?
It's in a pretty heavy state of legal flux atm. You've got the new proposed bill to more or less try and criminalize it. You've got past federal judges calling it both currency and property in loosely-related cases (theft, etc.). And no doubt all sorts of stuff I personally missed and can't recall here.
The exact legal status is still jurisdiction dependent and subject to interpretation. I wouldn't want to have to work any cases on it. There's not much precedent to look at, relatively speaking, and most if it is open to interpretation.
the more money is involved the more likely taken on. I'm sure a federal ruling will come within the decade.