No distinction required. An upvote is just an upvote and has no material value until crypto is issued for it at post payout.
For my personal accounts, I am treating all block rewards (curation, author, & beneficiary) as 'revenue' or 'sales' and all promotion costs, including SBI enrollments, as expenses. If you try to roll all your promotion costs up into 'cost of goods sold' instead, then you would need a more clear link between each promotion cost and the upvotes it generated (good luck with doing that for MB or SmartMarket)!
Sum of all post payouts (in $ value at time of reward) = revenue
Sum of all money spent on promotion = costs
Revenue - Costs = profit
If you're not incorporated, then you put everything in the appropriate boxes on Schedule C (and supply whatever supplemental worksheets needed) and only the profit (or loss) appears on your 1040.
For full support of your gross figures, you may need transaction-level supplemental information, but it's a blockchain so that's easy to get.
Excellent @ josephsavage. Thank you very kindly for the investment of your time into this exchange. Much appreciated!!
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@josephsavage Is your advisor helping you consider other costs deductible against Steem earnings outside of promotion (the cost of your equipment, the home office allocation if you are working from home, etc.)? As well as the 20% deduction on qualified business income for Schedule C and pass-through entities. Just food for thought :).
@roleerob As far as everyday users, some individuals are operating as a "hobby", not at trade/business, so the different rules apply (Schedule C wouldn't be filed in this case).
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Yes of course, and even the appropriate deductions for travel expenses for the Steem-related conferences that I attended last year.
The 20% deduction I don't remember if we discussed last year but I will check on it this year.
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It's called 199A, depending on your personal situation certain mechanical limits kick in based on W-2 wages, business assets and classification of the line of business, but some taxpayers can skip all the limits and claim the benefit, all depending on personal situation and single vs. married.
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