IRS Says Cryptocurrencies Taxed Like Capital Gains AND Income

Have you spent your tax return money already? What, not even filed?

If you’re in the latter category that’s ok, you still have a full six weeks to file your income taxes for 2017 here in the USA.

There’s plenty of time to figure out what to do about those cryptocurrency gains you’ve lucked out on.

Of course, when the Internal Revenue Service is involved things aren’t simple. Depending on how the cryptos were acquired they’re treated differently by the IRS. Surprise!

For purchases of virtual currency…

For traders and anyone testing the digital money waters by buying a little bitcoin, IRS considers cryptocurrencies to be property. That’s assets, not currency.

If you have any income from selling bitcoin that you luckily purchased at a low value and sold high, then those gains are considered capital assets.

Record-keeping is on you, so you need to know if they’re short-term or long-term gains (or losses). Think dates here.

Profits must be reported as capital gains on Form 1040 – Schedule D. Losses can be used to offset gains on the same form. Thank goodness for small favors.

But what the heck ya gonna do if you’re into trading cryptos? Good luck with that!

When you have multiple trades every day, you better get into keeping excellent records. Maybe you don’t have to report any crypto profits for 2017, but lots of us will need to know what to do for our 2018 U.S. Federal Income Tax reporting. I wonder if all 50 states will have the same take on this!

For the crypto miners among us…

If you’re mining cryptos, the fair market value of the mined virtual currency is “includible in gross income.”

For some of us that income would be included in self-employment income, subjected to the self-employment tax.

All that only applies if you were lucky enough to get those graphics cards prior to December 2017. Buying GPUs after that meant you paid too much for your hardware and didn’t make much profit, or that you simply couldn’t buy enough cards to get out of hobby level mining.

Here’s a few tips for tax time…

1. Keep excellent records. Dates, times, values of currencies and exchange rates.

  • Traders should download spreadsheets of trades in a regular routine, like weekly if you’re paranoid, but monthly should do just fine.
  • Miners should backup their wallets to protect their valuables, of course, but also need to keep record of their gains. Keep receipts of all your hardware costs, too.

2. Backup your records. Sure we all should do this for all our important stuff, but really, who wants to retrace their steps in case their hard drive fails or some other disaster hits? Do you have backups for your backups?

3. Make sure you can compute the fair market value of your virtual currencies as all reporting to the IRS must be in US Dollars, of course. What was the value of bitcoin in USD at the time you bot and sold it? Did you have to pay fees upon selling or buying and in which currency? What was the fee currency value then?

The Internal Revenue Service hasn’t addressed this crypto quandry since 2014, so we assume their message is the same as posted in IRS Notice 2014-21 .

Don’t be afraid to get started…

Oh, and if you haven’t started with owning any crypto yet it’s time you did. The future is looking rosy!

Get an account at Coinbase and hook up a bank account or credit card and you’ll be able to buy the best loved virtual currencies right from your phone or computer. (That’s my affiliate link so if you sign up and buy $100 of any digital currency we’ll both earn $10 of free bitcoin!)

 

 

Opera Browser Kills Cryptocurrency Mining Warning at Salon

Hey Crypto-kitties!

I hadn’t used the Opera browser lately, so when I brought it up today I saw immediately that it was updated.

Being a little unmotivated this morning I scanned down the “See what’s new page” and was pleasantly surprised by Opera’s addition of an anti-cryptocurrency mining feature. Or is it a benefit?

Once you turn the ad blocker on, with a single click, you’ll be protected from dubious sites that steal your bandwidth and processing power so they can get the rewards from mining.

But wait! Does that mean you can’t read Salon.com? Of course not.

Surfing over to salon.com one can see everything if they haven’t turned off ads. Sure, you can turn off ads, well, actually turn on the ad blocker.

When I tried going there just now the address bar in Opera showed ’65’ with an ‘X’ in a blue shield at the far right. Hover over that and you’ll see ‘Block ads’ in a text alert. (The number of ads blocked will change according to how far down the page you scrolled.)

Salon Doesn't Like Adblockers
Salon.com offers to suppress ads in return for your computer’s processing power.

The thing is, with Opera browser, I didn’t see this notice and never would have found out about the “opportunity” to help Salon, who posted this note prior to going for it:

www.salon.com Would Like To Use Your Computing Power

You can support www.salon.com by allowing them to use your processor for calculations. The calculations are securely executed in your Browser’s sandbox. You don’t need to install anything.

To dump the ads while viewing salon you’re supposed to click on the “Suppress Ads” button followed by the “Allow for this session” button. Note below this allow button is a “powered by coinhive – more info” missive, but why do the links need to be grey-out, Salon?

Windows Task Manager Before Mining
Windows Task Manager shows roughly 5% CPU Usage before mining

 

 

Windows Task Manager shows a whopping increase in used processing power once the mining app is engaged.

 

 

 

Windows Task Manager After Mining
Windows Task Manager shows A LOT of activity after allowing mining

 

 

So much so, that it jumps from single digit CPU Usage to 70-80%!

 

 

 

 

Shortly after allowing the coinhive to do its mining thing in the background, I clicked around several pages of this alt-adware site and saw the CPU usage fell quickly to much lower values, but I didn’t let this little test continue for but a few moments.

Avast Warning After Mining with Coinhive
Avast aborts Coinhive mining after a few moments

 

Then my anti-virus kicked in and told me it aborted coinhive. That was a bit of a surprise!

So, yeah, what was I really agreeing to have this script do?

 

 

Anyway…visit https://cryptojackingtest.com/ if you want to be sure of your browser’s status regarding cryptojacking.

Surely other websites will jump on the bandwagon and use your computing power for their own gain, or perhaps for the greater good? Yeah, that’d be nice!

Oh, and if you’ve never tried Opera browser before, I encourage you to download it and give it a go. I love the right-click gesture left to go back a page! If you’re on the go, try the portable version of Opera so you can always have it with you. You’ll be happy you checked it out!!