GIMPS and bitcoin

[Brian-E]

Originally Posted by BudgieJane

The thing that I posted a picture of hasn't been minted yet, so doesn't have a value at present. When it is minted in a couple of years' time, it will be the new £1 (GBP 1.00) coin of the United Kingdom. Daily exchange rates between GBP and your national currency should be available in your country's financial newspapers (such as the Financial Times in the UK and the Wall Street Journal in the USA)

I guess you were also referring to the old British threepenny bit in your earlier posting. Because the new pound coin will have a similar shape, right?

I was born in Britain and I'm just old enough to remember them. I was six years old when we all went decimal. Threepenny bits might be quite rare now and therefore worth something as a collector's item, but I don't know.

[BudgieJane]

Originally Posted by Brian-E

I guess you were also referring to the old British threepenny bit in your earlier posting. Because the new pound coin will have a similar shape, right?

Right.

I was born in Britain and I'm just old enough to remember them. I was six years old when we all went decimal. Threepenny bits might be quite rare now and therefore worth something as a collector's item, but I don't know.

I don't know, either, as I'm not a coin collector. They were very common in those days, so maybe they've got to be uncirculated to have any value. Except for those that are still minted for Maundy Money, which are valuable anyway.

[Prime95]

Originally Posted by Rodrigo

And if mined bitcoin is to be treated as business income, then presumably all the expenses incurred in bitcoin mining, such as dedicated computers and electricity, should be deductible.

I'd be careful there.

I'm not an accountant, so I may be way off base. I base these comments by extrapolating from online poker. If you are a small-time miner, the IRS may consider it a "hobby" and not allow deductions for computers, ASICS and electricity. However, you may not have to pay self-employment tax. If you are a small-time miner, and keep enough records to convince the IRS your mining operation is a part-time business, then you would be able to deduct electricity, hardware, etc.

As a general rule, the IRS is very keen in sharing in your gains but has little interest in sharing in your losses.

[cheesehead]

If this is correct:

Originally Posted by cheesehead

< snip >

a) "miners" (who are not doing it as employees) need to report their creation of bitcoin "property" as income for the year in which it was "mined", with a value as of the date on which the bitcoin becomes owned by the "miner", and pay tax on such income

< snip >

-- except that the bitcoin would have to have been reported, and tax (if any) paid, as of the year in which it was created/received, not just later when the bitcoin were sold or used as payment).

then this differs from the case of other home-crafted items, such as artwork or pottery, which are not taxed until (perhaps several years after creation) actually sold/bartered AFAIK. (But does property/inventory tax apply?)

But I am neither accountant nor attorney, either.

- - -

Might the IRS's "at the instant of creation" income-taxability of bitcoin be a bit of bias against alternative "currency" -- and an implicit recognition that bitcoin is, indeed, currency rather than property, because it's being subjected to rules that don't apply to other types of "property"?

Does anyone know of an example of anything else that someone creates that is subject to taxation as income in the year of creation, according to the IRS, rather than only later in the year in which it's sold to someone else?

Someone else had a better suggestion: the IRS is recognizing that bitcoin is a new type of thing, that it is property, but it's a new type of property and some new rules apply.

[Richard Cameron]

Originally Posted by BudgieJane

Right.



I don't know, either, as I'm not a coin collector. They were very common in those days, so maybe they've got to be uncirculated to have any value. Except for those that are still minted for Maundy Money, which are valuable anyway.

I'm sure you're right: The brass thruppence was minted in such large numbers that it would have to be uncirculated to interest collectors. But the silver thruppenny bit, which was legal tender up to 1970 actually contained 50% silver so has the inherent value of the silver. Perhaps we should peg GIMPS to the gold standard?

I'm too young that I was really aware of the value of the three penny bit. Crudely adjusting for inflation I calculate that the 2013 pound is worth about what the three penny bit was worth in 1917.

Richard