Introductory post for a multi-part series of articles about cryptocurrency tax regulations and related topics.
Today there was some discussion in STEEM's Slack group about US tax rules related to mining STEEM, so I decided to share my own interpretation of those rules based on what I've read and some strategies for coping with those rules. Originally I was planning to make one posting, but eventually I decided to separate the post into multiple parts because of the length and because I decided to write about other related regulatory issues that may be of interest.
My Background in Tax Law and Accounting
I want to preface this series by discussing both my limitations and credentials in legal issues in general and tax law specifically. I am not a lawyer or an accountant, so none of this constitutes "professional advice". I do have a pretty good background in this area: I live with a non-active lawyer and I assisted her with her studies to pass the California bar, I've been filing the year-end taxes for my US corporation, SynaptiCAD, for many years (after first working with corporate tax accountants for several years to learn some of the ends and outs), and I have personally traded traditional stocks, bonds, options, and other derivatives for a couple of decades now. To get an idea just how long I've been filing corporate taxes, you can visit my linkedin account (but bear in mind that the profile picture was taken within a year or two of when I started SynaptiCAD).
But undoubtedly, my most relevant experience for writing this series is the time I've spent in the past couple of years researching how to best setup and operate my own cryptocurrency company, BlockTrades.
IRS Guidelines on Digital Currencies
On March 25th, 2014, the IRS announced initial tax guidelines for digital currencies. Prior to that time, there was considerable ambiguity in how to pay taxes associated with crypto (and I think a lot of ambiguity still exists about how an individual can properly account for taxes under these guidelines). I'll discuss my interpretation of those guidelines beginning with cryptocurrency payments and capital gains and difficulties associated with compliance in Part 1, but for the diligent reader, here is a coindesk article that includes the full text of the IRS guidance itself.
Thanks for this. My son brought me to this platform and has taught me a great deal about blockchain technology. This is very valuable to those interested in learning about the legal aspects of it.
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