RE: Valuing Steem Rewards As Taxable Income Is A Vast Overstatement Of Tax Liability - Part 2 - The Thin Order Book & Flash Crashes

[jerrybanfield]

@lexiconical this is a great series of posts for encouraging an open minded approach to the rewards on Steemit which I enjoyed reading and reconsidered my position on even to the point of making comments saying I would change my mind.

Reading the comment by @sean-king though reinforced the view I shared before in the article you reference at https://steemit.com/steemit/@jerrybanfield/steemit-tax-calculation-and-payment-system which I believe still most closely complies with the existing law in the US. While what you have shared here is exactly right in theory, the key point for me is that I want to sleep soundly at night knowing that I have taken the best approach I know of with the taxes. Your points are all valid but the fact remains that it would be easy for the IRS to hit me with massive penalties on an audit including as much as prison time for failing to report my Steem Power and SBD income received. It is worth it to me to just pay the taxes and then sure if I did not do the calculations exactly they way they like then I might be off by a little bit and no big deal. Until we can get the IRS workers to stop showing up from work because they are conscious of the fact that they are a key point in the system for oppressing the entire world, then a conservative approach is the most reasonable angle to take. I am all for standing up to tyranny but in this case an approach that is less easy to counter is logical. Better to pay the taxes and work on raising all of our consciousness than make an easy target for tax fraud!

Comments

[livingprosperity]

The assumption being made here is that STEEM coins and STEEM dollars are income. As far as I know, the federal government doesn't recognize digital currency as a legit form of money; therefore, the IRS cannot tax it as income. I have read that the IRS classified it as property, but not sure if that's been changed.

[finleyexp]

According to IRS guidance, digital currency is to be treated as property for income tax purposes. This means:

The notice provides that virtual currency is treated as property for U.S. federal tax purposes. General tax principles that apply to property transactions apply to transactions using virtual currency.

It goes on to add:

Wages paid to employees using virtual currency are taxable to the employee, must be reported by an employer on a Form W-2, and are subject to federal income tax withholding and payroll taxes.
Payments using virtual currency made to independent contractors and other service providers are taxable and self-employment tax rules generally apply. Normally, payers must issue Form 1099.
The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer.
A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property.

So there you have it:

1. Employer-Employee taxation is no different from payment in property. Form W-2
2. Independent Contractor (etc)-Client taxation is no different from payment in property. Form 1099
3. Capital Asset Gains/Losses are no different from gains/losses in property that the taxpayer reports as Capital Assets. Form 8489 Publication 544 (2016), Sales and Other Dispositions of Assets
4. Virtual Currency payments are no different from any other payment in property. Publication 17, Chapter 12 covers: Bartering, Rents from Personal Property, Found Property, Lotteries and Raffles, Sale of Personal Property

The IRS is also clear that FMV has to be determined for the property within the year it is reported as income. If it is held as investment property, then the FMV is within the year that a Capital Asset gain/loss occurs. It should be noted that the IRS does suggest using data close to the property exchange date to determine FMV.

If you're really concerned over whether your crypto actions will get you arrested, may I point your attention to FinCEN the agency most likely to arrest you. I've just finished this article which really just starts the conversation: Congressional Carnival [S1E2]: Former Libertarian Candidate and Bitcoin Trader Sentenced to 46 Months in Jail for “Conspiracy to Run an Unlicensed Money Services Business” [STEEMIT EXCLUSIVE #1].

[stimialiti]

https://steemit.com/cryptocurrency/@xervantes/earn-free-coins

what do you think about it? You know about it? Know about the owners? Does it remind you anything similar in the past?