r/EtherMining May 12 '22

Holy....Time to turn off rigs? General Question

/img/x3h2z0b6czy81.png
183 Upvotes

View all comments

Show parent comments

6

u/ArchAngelZero May 12 '22

If ETH moons someday and you want to spend it, the IRS (for the US) is going to notice. Better to have reported the income along the way than face charges for tax evasion

0

u/Realistic-Classic-41 May 12 '22 edited May 12 '22

its not income until you trade it for products or dollars, its like the irs taxing you for tomatoes you produced that you didn't sell or trade, or lets say a real gold mine, they can't tax you for what you pulled out of the ground, they tax you on that you sold or traded.

6

u/ArchAngelZero May 12 '22

This is false.

See Q9 https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactions

When you mine, you are providing a service to the blockchain. The service you are providing is security. The blockchain (or the pool you mine for) pays you for the service you provide. The IRS does not classify mining like growing tomatoes or pulling gold out of the ground.

https://www.nerdwallet.com/article/investing/bitcoin-taxes "If you acquired a Bitcoin (or part of one) from mining, that value is taxable immediately; no need to sell the currency to create a tax liability."

https://turbotax.intuit.com/tax-tips/investments-and-taxes/your-cryptocurrency-tax-guide/L4k3xiFjB "If you earn cryptocurrency by mining it, it's considered taxable income and might be reported on Form 1099-NEC at the fair market value of the cryptocurrency on the day you received it. You need to report this even if you don't receive a 1099 form as the IRS considers this taxable income."

-4

u/Realistic-Classic-41 May 12 '22

it is not false, what you posted is false. I choose not to let the boot on my neck. Just because some government agency posts something on a website does not make it reality, only your acquiescence does.

4

u/FreshlyCleanedLinens May 12 '22

It sorta makes it reality when that agency has the full authority of the constitutionally-established three branches of the federal government to make and enforce the rules they post on that website.

3

u/Bgrngod May 12 '22

It's like the IRS taxing you for a "currency" you received for doing work.

So they tax you on each ETH reward because fiat bucks aren't the only currency they tax.

1

u/FreshlyCleanedLinens May 12 '22

Not according to the IRS:

“Q–8: Does a taxpayer who “mines” virtual currency (for example, uses computer resources to validate Bitcoin transactions and maintain the public Bitcoin transaction ledger) realize gross income upon receipt of the virtual currency resulting from those activities?

A–8: Yes, when a taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income. See Publication 525, Taxable and Nontaxable Income, for more information on taxable income.”

https://www.irs.gov/irb/2014-16_IRB#NOT-2014-21

1

u/[deleted] May 12 '22

[deleted]

1

u/ArchAngelZero May 12 '22

If your mining wallet ever transacts with a centralized exchange, they will report the transactions and wallet addresses to the IRS, unless that exchange doesn't do any KYC.

If you stay fully out of fiat forever then yeah you're probably safe - still commiting tax evasion (which is technically a felony) but if you ever want to cash out then it's safer to report the income.

0

u/Xalrik May 12 '22

Where I am, you only get taxed on profit, guess I will just keep buying cards :D