You start with revenue (gross receipts), you subtract expenses and anything left over would be "earned income" but the paperwork is quite a bit more complicated than with a paycheck.
For example, let's say I earned $100 in curation/author rewards over the year and I spent $95 on promotion services (all three types you asked about would be treated as promotion services). Only the $5 profit becomes taxable as 'earned income'.
Now SBI doesn't reach ROI in the first year, so if you're going heavy into SBI you could have a loss. If you keep plowing all your profits into promotion services to grow your Steem presence, you might have a loss every year until you reach your target levels and start taking big profits out. That's pretty normal for small businesses.
Okay, that makes sense @josephsavage. You are distinguishing, I believe then, post payouts from SBI or any similar promotion service, from post payouts "earned" by simply investing our time into the writing of Steem content. Is that right?
Assuming so, the transaction accounting becomes almost impossible to keep on top of, particularly with a service like Smart.Steem. At least upvotes from the SBI or UpvoteShare accounts are named as such, so can be distinguished ...
Still, even that would require accounting for every one of them ... 😧 If they are to be classified differently from a "normal" upvote, from a Steemian who just likes your work ...
And then, do we take into account the price of STEEM, at the point in time we received each of these individual bits of "revenue" ... 😞
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!!
@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).
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.
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.