Yet 'Steem Power' isn't actually a currency, only liquid Steem and SBD are.
Actually, Steem Power is just Steem in a "Savings Account", or more like a "Certificate of Deposit", or some other vehicle that restricts the amount that you can withdraw based on a predetermined agreement.
Just because your Steem Power is not "liquid" doesn't mean that it is not still "Steem", or income, or an asset.
When discussing financials, "realizing income" or gains is important because, depending on the laws of your residence, once you "realize" income or a gain, you MUST report it as income or a gain.
Anyway, without going too deep into the details, Steem Power IS Steem, and IS an asset / income / gain from the moment that it hits your wallet.
Cheers! :)
Great addings here! Thank you.
How would you calculate a Steem Power price? Is it equal to Steem or SBD, or the average value of both? How do you declare the income then? If SP was taxable, we would need to track every single redeem event with the according price at this specific point in time. Considering the high volatility of the Steem/SBD prices, that'd be like sports :-P
I think I should become a Steem tax accountant! That might be the best paid job on this blockchain in a couple of months/years...
Internal Revenue Notice IR-2014-36 IRS Virtual Currency Guidance. The gist of it was that for tax purposes crypto is taxed as property.@surfermarley the reality is there is no tax free lunch for those subject to US tax laws - including expats (although with expats some foreign income exclusions may apply). The IRS did release some cursory guidelines around cryptocurrency transactions on March 25, 2014 with
If an individual earns rewards here, the IRS views that as earning taxable income. The writer is paid in property with a determinable fair market value, and that would need to be recognized as income. Curation rewards earned would be treated the same as would Interest earned from locking up STEEM as STEEM Power. You are correct about needing to track every single event, but respectfully, the sports analogy is incorrect. You can fairly value STEEM at the close of each trading day from exchanges such as Bittrex (both for earning and spending purposes). CoinTracker Info is an awesome application to help keep these records.
In terms of deferring tax liability associated fom crypto to crypto trades based upon a 1031 like property exchange, I council those whom I advise not to. The reason is under that subsection of the tax code, a series of exemptions to that rule could apply to crypto and disqualify the exemption, so you'd potentially owe back tax, fines and interest. Case in point, the DAO was ruled by the SEC as an unregistered security, which would disqualify any 1031 tax deferral on DAO tokens because securities are one of those listed exclusions. The SEC even commented each token offering would need to be ruled on a case by case basis. Some blockchain governance models (POS and DPOS) have the potential to have the crypto be ruled as interest or interests in a partnership, which would invalidate the 1031 claim as well.
I'm going to be giving a Crypto Tax Workshop for Beginners through the Rocky Mountain Steemit group and I've been asked by @aggroed to broadcast it on MSP Waves. If you or anyone else is interested, I have a blog post with all the details.
So you are the one here that's really well informed! Excellent addings, thank you!!
Also I love the idea of a crypto tax workshop, that's exactly what we need here.
I'll check out your blog!
Steem power converts to Steem, so that would be your basis.
@arcange's SteemSQL database has the witness quotes of the value of Steem, which are updated very often. You can find spot values for Steem there.
I'm not sure how to consider Crypto for taxes yet. I know some is property and some is capital gains upon conversion in the US. I'm sure there will be more information on the interwebs for me before tax time is over here in the US.
Gain? I disagreed with that view. Let's say a steemian last week had to declare his/and or her tax, a total income of US$ 560K, he/ and or she paid 20% or US$112K of tax, but today the same amount went down as the value of steem bearish and what once was US$560K is now US$490K total income.
That value now in a 20% tax would equal US$ 98K. Can you see my point of view? In less than a week an extra payment of US$14K for a 'gain' which fluctuate, (and honestly governments does not need this extra income from business owners) that's why, it is clearly to me, crypto must be declared as a gain only after conversion to FIAT currency.
Actually, you'd declare the initial gain this year (for 2017 results), and any losses due to price fluctuations would be declared next year (for 2018 results). You can disagree, but you'll be putting yourself at risk of an audit, and potential fines and increased taxes, if your holdings can be identified by the IRS. Especially if you ever report crypto holdings, or exchanges report that you have crypto holdings.
Realizing the gain in a Fiat currency is not actually required. Holding a cryptocurrency is treated like property in the US. When you convert that crypto into a different crypto, or Fiat, you will realize a gain or loss from your initial investment upon conversion. That's the law as I understand it. I don't have to agree with it, but that's what it is. If you choose to not report in this manner, that's your own choice.
This is not financial or tax advice, I'm just sharing my understanding of US tax law as of the last time I checked it in early December.
Interesting @evolved08gsr . Thanks for your constructive feedback, really appreciate it. <3
It looks like @lpfaust posted something above that's a little more detailed. I'm sure there's a decent amount of information on the www about this stuff, with more detailed explanations. I need to do more research myself too on the line-by-line details and requirements.