2018 Taxes on Trades - Boooo

The way I see it as a citizen is that until coins are sold for cash then they are just monopoly money and not taxable. That may not be how IRS and PH see it though.
ie If I buy an apple tree for $20 and plant it in Jan 2018, It produces 1000 apples that fall to the ground and rot in oct 2018, there is no tax on the apples. However If I sell them at the farmers market for cash, then there is tax on US $.

Make sense?

Steve Sokolowski wrote: At this point, I just have to say that since I'm not a lawyer, I can't answer your question about customers. I can only tell you how we see ourselves. You probably noticed I used very specific word choices in that post, and I'm sure you can understand that it's not our place to explain the law to you.

......this is the one area where we can't have a standard conversation like we would anywhere else.

Nope, that's is why I was calling it into question. The word choices that were made seemed out of place and contradictory.
The fact that it was worded with very specific word choices...just makes me want to go back and read it 15 more times.

travelinmusic wrote:The way I see it as a citizen is that until coins are sold for cash then they are just monopoly money and not taxable. That may not be how IRS and PH see it though.
ie If I buy an apple tree for $20 and plant it in Jan 2018, It produces 1000 apples that fall to the ground and rot in oct 2018, there is no tax on the apples. However If I sell them at the farmers market for cash, then there is tax on US $.

Make sense?

It would...except the IRS isn't taxing the tree. It's taxing the ground the tree is planted on. And it expects you to tell the IRS how much production can be made from that square of ground. No matter if the apples get sold that fall on that ground or not, if an apple was made from any tree planted on that ground...then you owe the fare market value of that apple no matter if it was sold or not.

In the winter...if you had that apple stored in a jar and preserved, you can sell it for 5X what its worth. You would then need to find the tax you owe on that 5X more priced apple, and subtract the tax you already paid back when it was grown on the land and then pay that new 4X tax.

And yes I used land on purpose...last I checked the IRS viewed crypto currency as property. Not as stocks/bonds/ tangible object assests...but as property. Which closed up some loop holes on being able to exchange 1 type of property for another without having to pay taxes on each exchange of that property....so its a property for IRS purposes...but if its used on a trade then its taxed anyhow???? IRS wanted to make sure they got paid when it was made, and traded, and sold.

With investment land and property you do what is called a 1031 exchange. As long as you reinvest in new income property the tax will be deferred until some day when you retire and sell outright. Then you pay the tax from day one even if you exchanged into 100 properties in your lifetime.

....So same as coins if they want to play that card. Pay the tax when you liquidate and hold the dollars without reinvesting for 90 days.

I appreciate your defense of the narrative but as a patriot I will always argue against unfair tax, no matter how long it takes.

Yes, and they disallowed the 1031 to be applied to the crypto currency coins.
So it has all of the disadvantages of being a property, and none of the benefits of free exchange.
Every time it is converted or exchanged...coin to coin...BTC to LTC...it becomes a taxable event.

I guess it comes down to who pays for the taxes of those events. The exchanges? The pools? The customers? The service providers(whoever they may be as there seems to be some confusion over this now)

muerioch wrote:Slightly offtopic, but I can't seem to submit that form when I indicate that I live outside the US (which I do). It just doesn't save, next time I load the page it's back to "please complete.."

The help section for the w-9 information for the 1099-MISC form states:

"United States IRS Tax Form 1099
The form works as a one-way submission, as the data is moved offline every week for security purposes. Once an address is submitted it is not retrievable besides the record of when it was submitted. You may change your options and/or address by re-submitting the form."

My guess is that for financial privacy reasons the data that is submitted will not appear on the website interface.

Aura89 wrote:

AppleMiner wrote:

Jamin wrote:I think the USA is going to see an exodus of people involved in crypto over the tax laws.

Same thing was said over TRUMP being elected. Of all the people who know..how many left for Canada?

Well, the canadian immigration did crash due to too much traffic the day after election day.....

MitchellMint wrote:

AppleMiner wrote:You can always choose what coins to HODL, but the pool will not HODL them for you. The pool is not designed to be a bank so they still need moved once they are more than $5 over the default threshold limit.

If im not mistaken you have to pay taxes on the coins the moment they are created. Not when they are traded, or sold into your bank.
You then pay the difference once they are sold from what you paid when they were created.
That way, even if you misplace, lose, have the exchange steal them, or get jacked....Uncle Sam still gets his taxes money.
If you never sell the coins or use them in the meantime without reporting they were used/sold....you should have still paid taxes on them when they were made. Unless you aren't reporting that(withouting tax info=federal offense) But I mean if you are running a legit company shouldnt be any issues.

Im no tax lawyer but my lawyer said, "Any Trade for one coin to the next will require reporting and is subject to taxes" The amount Percentage is still up in the air. Also each transaction will be taxed separately. So, if you make $10 on one trade and lose -$20 on another, you still owe a percentage on the $10. Nothing is cumulative anymore. Sucks right? ProHashing multipool presents a problem since I am mining 100 different coins a day thanks to PH programming, and get a payout for BCH... the shared mining of VERT received a value, then was traded for BCH... The Trade is subject to Taxes. And if I HODL BCH, no other taxes will occur. If I mine VERT, LTC, XVG, NYAN... etc --> its traded to BCH, daily that's more paperwork.

I may be incorrect, but i don't think we, the users at prohashing would be subject to tax on the random coins we mine in a multi-pool, as i never see those coins, i never had possession of those coins. Those coins went directly to Prohashing, they did the trades, and i received payment for my miners work in my chosen currency.

Based on Steve's description, we would not; however, Prohashing will. Since the exchanges are now taxed. Prohashing uses mined coins to pay its miners when it can; however, in some circumstances (such as bitcoin) payment is made in a coin that Prohashing doesn't and can't mine. In those situations, Prohashing will be taxed on the difference in value between the strike price of its mined coins (LTC for example) and the price of the payment coins when they do the swaps on the exchanges. Due to volatility in crypto prices this could at times exceed the 5% pool fee.

Do we know if Prohashing will be reporting earnings in Box 1 "Rent" or Box 7 "NEC" of the 1099? From the wording here, it obviously sounds like rent, but A.13 in the tax guidance refers to independent contractors. I believe it has impact on paying self employment taxes, so I just want to be sure of what to expect. Thanks.

The wording is a bit confusing regarding-> (to ensure continuation of payouts.)
Does this mean we will not get a payout until the form is submitted?

overlordx wrote:Another issue to consider is without Form W-9s from the Miners how is the Mining Pool going to issue 1099s?

Exactly, how is a 1099 going to be issued?