Are Hive Rewards Taxable Events?
HBD image by @doze
Short answer, I don't know. When it comes to taxes, everybody should consult their tax experts in their jurisdictions. Everybody's tax situations are different, tax laws in various jurisdictions are also different. One should never rely on blog posts for proper tax information. The content of this post are my opinions and purpose of the post to have a conversation whether Hive rewards are or should be considered taxable events. I don't know much about tax laws outside of the US. For this reason, this post also only focuses on taxes in the US.
Hive is well known for its rewards. There are many of them. There are rewards for creating content. There are rewards for curating content. There are rewards for producing blocks. There are rewards for keeping HBD in savings. There are rewards for staking Hive. And these are just rewards in native coins like Hive and HBD. But there are also airdrops and many layer 2 rewards. Clearly there are many ways of earning real world value in the form of crypto rewards on Hive network.
When people earn financial value, tax agencies want their piece of the pie. However, as always legislature and tax agencies lag behind technologic advancement and never on time with with clear laws and rules. Especially when it comes to crypto assets there has been a lot of confusion how they should be taxed. There is clarity in some areas like bitcoin and crypto in general are considered property for tax purposes, and selling them at a profit would trigger a taxable event. If you simply buy and sell a crypto asset using fiat, you would need to pay capital gains taxes. Or if you accept crypto assets as payment for your goods or services, you may want to keep a record of fiat value of the asset at the time the transactions happens and report that as a taxable event. That much is clear.
However, there is a lot more is going on in the crypto world, and especially on Hive. It is a full economy that hosts smaller economies. In a sense it is a network of economies. There are many types of rewards. Are they all taxable events, are they all same kind of income?
There are many opinions and those who think all rewards are taxable events. They might be right. Even the founder of several DPoS blockchains, Dan Larimer, expressed his thoughts on this when he came back to Hive last year. Here is what he said.
Lastly, anyone building anything that results in economic profit and loss imposes tax consequences on their users. Tokens like Voice or Hive create tax events every time they change hands. This is why I decline rewards when I post on Hive, they are not worth the tax accounting. With the growing sophistication of the tax authorities and the loss of privacy, none of these token-based ecosystems / platforms stand a chance unless they automatically do all of the tax calculations and boil it down to a 1099. The only way to automate such calculations is to have full knowledge of every purchase price and sale price. Such things are not possible if users are trading on multiple exchanges in a decentralized manner.
Those are good points and I am sure he has good reasons and more experience to come to conclusions above.
However, I would like make an argument that most Hive rewards are not necessarily tax events until they are sold to fiat. Today I have a good reason for that. I saw an article today on Bitcoinist, titled IRS Will Not Tax Unsold Staked Crypto As Income and it was talking about a lawsuit filed by a couple last year making a very good case how staked coins are not taxable until they are sold and asking IRS to refund taxes they paid. I read about this lawsuit last year and agreed with their arguments and remember thinking back then that the same logic could apply to rewards on Hive.
This lawsuit is not specifically about Hive. But it is about proof of stake protocols and how tokens obtained through these protocols can be considered taxpayer created property and these taxpayers should not be obligated to pay taxes until they sell or exchange them.
Good news is, the couple who is involved in the lawsuit, Joshua and Jessica Jarret received a letter form Department of Justice stating that IRS had approved a full refund for their 2019 taxes against tokens they earned through staking in the Tezos network. Wow. Full refund. It does seem like IRS accepted their argument. However, the story doesn't and here. This is only a specific situation that applies to this couple and the refund is only for 2019.
It gets more interesting, because the couple is rejecting this settlement and wants more clarification on how such income should be taxed and want to continue with the lawsuit to they have a better and clear understanding for future tax purposes.
Before we start applying the same logic to Hive rewards, let's try to understand two more things: what IRS says about crypto taxes and what taxpayer-created property is.
IRS says:
A taxpayer who receives virtual currency as payment for goods or services must, in computing gross income, include the fair market value of the virtual currency measured in U.S. dollars, as of the date that the virtual currency was received.
In my understanding taxpayer created property is like an artist creating an art, a farmer growing crops, a baker making a cake, an automaker building cars, etc. If you have better definition or explanation feel free to share in the comments. The core idea is something that didn't exist before is being created by the work put in or some actions of a person.
Now let's look at witness or block producer rewards. Witnesses need to run servers, spend time and skills to setup and maintain their witness nodes and perhaps even engage in other activities to produce blocks. Every time they produce blocks, they receive rewards as HP (Hive Power). This HP didn't exist before. These HP are newly created assets. They are the property of whoever created them. Isn't this same as a baker making a cake that never existed before? This HP or a cake may not even be worth anything until they are sold or exchanged for value. If you agree that this is a taxpayer created property, then it shouldn't considered as income?
In a similar fashion interest earned on HP or HBD in savings shouldn't be taxed as income until they are sold as well. Because in both cases again account holders receiving these additional newly created coins for their actions of staking their Hive or HBD assets. To me it is no different than witnesses producing blocks, and being rewarded with newly created coins.
What about content rewards? Doesn't that sound like what IRS is saying in the above quote? Can't the content authors creating be considered as goods and they are receiving virtual currency as payment. I don't believe so. If authors created content and auctioned their content and sold to the highest bidder, or even just sold at a fixed price, that would be a different story. This would require another person on the other side of the transaction. However there is not peer to peer transaction when authors click the claim rewards button. It is simply a rewards distribution mechanism that no individual paying out of their pockets.
Just like witnesses earning block producer rewards, authors are also receiving new created blockchain coins just for participating with their content in the Hive economy. It is no different than mining. Hence, authors are engaging in creating a new property. And this property should not be taxed until sold or exchanged for some financial value. The same logic can be applied to curation rewards, rewards on tribe tokens, airdrops. Because they all share one feature, they are all newly created property due some actions people have made.
Of course none of this means all of these rewards are not taxable. They are taxable and should be taxed when they are sold or exchanged for value just like any other property.
There are situations though we cannot apply this logic, I think. For example if an artists create an NFTs and sells in the market. Just the fact they sold their property would probably trigger a tax event. Also, when Decentralized Hive Fund pays out some funds to proposal creators wouldn't be able apply the logic above. Since in this situation, it is clear that a person or a group are getting paid fixed amount for their services, efforts or product. And it is not clear if the payment is a newly created property or already in existence and belongs to the community.
Of course, most if these opinions are wishful thinking. Taxes do not necessarily follow logic. They follow the laws legislature makes and agencies enforce. There is long ways to go to get any kind of clarity regarding taxes for each action and event in crypto world. But the lawsuit mentioned earlier is a small win and if it can get a win a court of law, it may create a precedent that may shine some light into this confusion.
For now, we will just continue consulting the tax experts and do the best effort to remain compliant with laws and taxes. We can always look at the positive, and make a note that we must have done something right this year if we need to pay taxes. Let me know your thoughts and experiences on crypto taxes in the comments.
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I'm sure the anonymous nature of Hive attracts people for this reason among many others...
Hive is not anonymous, you're handle doesn't change and most people dox themselves via centralised exchanges to get out into fiat
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Am sure if there is a will, there will always be a way
Nope, only creation of reasonable doubt, sure you can draw down your account and go try and swap those funds for a privacy coin and then try to swap that for P2P currency to keep of KYC off ramps but the fact is your wallet would always show what funds where in there at what time and dox you to anyone who takes all but 5 mins to look at your earnings vs how much you declared
P2P physical exchange?
Physical or online, if you do online you may want to mask your IP and use a tor service and run your own node or you just doxxing your data
hmm
Lol how does that obfuscate the fact that you earned it in the first place, a blockchain is a public ledger?
who knows who I am on Hive?
The moment someone touches any KYC rail it is pretty easy to trace, even if you're a nym on here people always leave trails somewhere, could be the social media account, an email address, a phone number, no ones nym is full proof
hmm
finally someone who understand :)
Taxes is now a hot topic in India, the 30 % taxes has already called for a campaign by Indian crypto investors. The actual taxes will be on the earning not on holding...and seems the campaign will keep going but government is not in mood of listening.
I have a feeling the tax rate on crypto will be reviewed and reduced.
Don't assume it...government digged into free fund for them...anyhow there is a campaign going on but I doubt government will ever bother to take note of that.
That's a lot but progress. Wasn't India trying to ban all crypto just last year? As they/politicians learn more and see the benefits to the Indian economy, maybe things will get even better.
They are considering to launch own digital rupee and not ready to accept any kind of private crypto currency....still there is no clarity as far as I know they're are approx 5-6 billion worth of crypto portfolio...and every month they look themselves in doldrums.
https://twitter.com/geekjen/status/1489459899750772739
https://twitter.com/ilbiscom/status/1489522674833498114
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This was helpful in setting a good argument about taxes. The local laws from my country have no clear laws regarding staking rewards and everything else Hive offers here.
This is absolutely true which I agree with you on that
In India, though the legality of the crypto currency is not yet defined but the taxes are defined at 30%. It is quite strange but they do tax.
In the USA the law actually says we are required to pay tax on income from illegal activities. Ha! Criminals rob a bank, then declare it on their tax forms? Not likely.
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Haha really? I didn't know that! Sounds funny
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The famous gangster Al Capone was not ultimately caught by law enforcement, but by tax enforcers.
That's very true...
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without KYC how would the IRS even know who to collect from?
FUCK IRS
Edward Snowden warned us that nothing is private. Your best bet is to be small enough the watchers won't care about you.
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Maybe they wouldn't know now, but they will in the future.
Even with bitcoin some people received letters from IRS after several years to pay taxes on the bitcoin profits from the past years.
This is really a nice content,since the advent of tax on cryptos,I think every crypto holder is paying tax either-or indirectly which hive may not be an exception although it's not obvious.the only way we might notice is when converting hive other cryptos to fiat
Hive is a tax nightmare for me, particularly with the layer 2 tokens, which don't generally have a price history to use to determine cost basis. And, then, you don't have any control over what layer 2 tokens you receive. They just pop up in your wallet.
My thoughts are:
Going by the IRS case, only the HIVE from Inflation is not taxable until sold. The inflation rate is the reward for staking.
Proof of Brain (PoB) rewards, such as posting and voting, are for work that you do. Thus, it is income. If you stop posting and voting, you would not earn rewards. You would only earn inflation and HBD interest.
Having said that, if you haven't tracked your HIVE transactions, like me, then you'll have to use a zero cost basis. Most software will automatically do this. You end up paying a bit more in capital gains tax. But, it makes up for not reporting the income when you first got it.
What I am doing to make my life easier for future taxes is:
I can't go back and fix my poor HIVE accounting. It's a nightmare with claiming rewards every few minutes. But, I can make things easier for future.
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I think first question you need to ask here is, are HBD, Hive and HP classified as crytocurrencies.
If the answer is yes, then in the eyes of the IRS these are classified as As Property
Then it would follow that the only time it would be considered for income tax is when you change ownership of said cryptocurrency/HIVE/HBD/HP.
So it is easy then. Since technically each time you earn these tokens/crypto it is on the blockchain so you can get the date and amount, cross reference with the easily available price history found on multiple platforms like Binance, CoinBase and a host of other exchanges.
Since it is the difference between what you acquired them for (the price when you got them) to what you sold them for. The difference either positive (capital gain) or negative (capital loss) will be the one you add onto your tax forms.
However when you convert HBD to Hive or vice versa that is an event and is considered a taxable event (under the title "Taxable vs. Non-Taxable Crypto Events" in the link provided above.)
While there is confusion when the law talks about it being an income tax activity the first rule would be the one that applies that since cryptocurrencies are "property" the taxable event will occur when you exchange to another token or sell for fiat.
Hmm I have read IRS publication 525 and IRS bulletin 2014-16 Notice 2014-21 and come to the realisation that I agree with the income tax implications for the claiming of HP/HBD and interest components.
Dang US tax laws are harsh.
It is simple, yet not easy. I don’t know where I could export a CSV of my transactions. Thus, I would have to manually copy and calculate thousands of transactions. This is where I fail. It’s far too big of a job.
If there is a will there is a way
hive.blog has an export feature including the last 2 months.
Personally, I copy/paste from peakd.com into csv, use some formulas, some manual categorisations and some manual re-formatting and auto calculate the various income and cost streams. The advantage of peakd is that you can go back to the first-ever entry. hive.blog doesn't allow you to do so. not sure about leo though.
If this gives you such trouble, overstate the income/gain and stop wasting your time tracking it.
Your account value from what I can see now like mine is immaterial. It may as well be $0.
Unless you have a pile of NFTs or something.
Tax authorities don't care about you.
If I was in the tax authorities I'd focus on the biggest players but Hive is obscure and there is virtually no chance anyone except a public figure will be audited relating to unreported hive or tokens or hbd.
My 2 cents anyway
I have another account that is much larger than this.
But, you make a good point about overstated income. This is where costing HIVE at zero works out. If tax software comes out that can read HIVE, I could file an amendment to get some taxes back.
Yes it is a tricky thing, it's easier to file tax to the best of your knowledge than think will the taxman come after you down the road but yeah there are lots of ways to earn on hive and hard to track the cost of it all.
Good points. I don't think I have to worry about that right now because I'm way too small but those are good ideas going forward
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I think the point that @geekgirl was making was that author and curation rewards are not receipts of payments, as described in the IRS statement. Nobody gives you Hive or HBD for your author rewards, they are created out of thin air by the blockchain. Even with upvotes, it is still not a payment. They are just as much direct inflation as the HP staking reward.
However, at least according to what I can see on this "law dictionary" site, the definition of income does not appear limited to receipts of payment:
https://thelawdictionary.org/income/
I'm not a lawyer so my opinion doesn't hold much weight, but it seems like if it came down to it, it would qualify as income by the above definition.
The IRS will err on the side of collecting money.
Which is exactly why since there is no real "law" on this and mass confusion that people need to stand up to their government and protect this one last freedom. If the government starts taxing on perceived value it will KILL crypto.
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I have yet to withdraw money from HIVE. So I haven't paid taxes on it yet. The price of HIVE could easily drop back down to a dime before I withdraw the funds.
When I withdraw HIVE, I intend to use my checking account as the control point.
I live in the US and figure that I could declare the earnings either as capital gains or as income.
I think business income is the correct classification because I actively engage in HIVE and have a few expenses related to the income.
I suspect that the only way I would get in trouble with this strategy is if I used HIVE for personal expenses.
I really don't see any advantage in declaring the HBD interest separately as, in most cases, the tax rate on interest is the same as income.
For that matter, I wouldn't bother doing any tax calculations in HBD because the value of HBD varies in relation to the US dollar. The only thing that will matter to the tax collector is the number of dollars I receive when I sell my investments.
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Yes, it does get complicated if all of these activities are considered as taxable income. You list does make sense, and probably that's how IRS would expect them calculated.
It is possible to automate this process. It would be easier to get all the numbers and create a final report using HiveSQL, since everything is stored in a database. It might be a little bit more complicated for tribes transactions though since they are stored in custom_json.
Perhaps I should look into HiveSQL. I need a way to export all transactions so that crypto tax software can sort it out.
Why you all want that all must be taxed ??? I just not get it. All these taxes must also have a selection option that allows you to deny all this, if there is not this, then it means that your government acts by extortion, which is very...very abusive behavior. No one has the right to demand money, and to demand it... is humanly speaking, criminal .
THIS!!!!!!!!!!!! FINALLY SOMEONE NORMAL!!!
And you ALL wait a minute... and think about what your government has done for cryptos?? Did they be active in developing stuff? Which was their contribute to crypto?????....... How are you saying? ..... ahhhh!!! NOTHING!!!
SO WHY THEY DESERVE TO EARN OVER IT???? WHY THE FUCK????
Agree on all account but, IMO, here isn't the question of "Why all must be taxed?", instead, "When?". Agree about "abusive behavior", but, can we do anything to counter measure this abusive behavior of most of the governments around the world. With rising popularity of cryptocurrencies and decentralization among common people and general population, governments, sooner or later, will derive (or invent 🙂) the ways to tax them.
Universe gave you this head... and now it is your responsibility to use your own head , NOT to let it be used, you have the right to decide for yourself what you pay and how or to say NO. I understand that some taxes will be needed, but to tax a system that is under development and that is 40 years ahead of the practice of banking systems and many laws, there is no alternative but to take back the free economy and let it move on its own. Every tax what they do in this coin world that is done then it is done in order to damage and cripple this entire system.... what helps old banks to get all in there hands and we are back in same SHIT HOLE
Love this statement.
Love this statement too and I say a big "NO", but wouldn't that be after taxation is applied, sooner or later,... which is going to happen whether we like it or not.
and,
As I said earlier, I agree with you about your thoughts in this comment, as well.
lol. I am yet to see a person who says they pay taxes because they want to. There are problems with taxes yes, but ignoring them is not always an option. :)
So you say that there in world is someone who want very bay taxes .... and now that this one wants to do this, I must give all what I have so this one users some where in this fuck up world want pay very tax :)))...If you are this one :)) and want to pay taxes, please take a regular job.. NOT COME IN COIN WORLD.. and make a contract with the state, so that it can tax all your income and regular job , there is no need to climb into every system and push one person's tax on everything and destroy the free economy ... what wants to help as all have something. " Communism is a philosophical, social, political, and economic ideology and movement whose goal is the establishment of a communist society, namely a socioeconomic order structured upon the ideas of common ownership of the means of production and the absence of social classes, money, and the state. "... are those who try to tax everything even to existence on the planet. Who has the understanding that they own everything you have, and they use taxes to achieve it.
Euhm, so who is paying for the roads you use? the schools you send your kids to? the parks you chill at? the removal of the garbage you create?
Take Coffee sit and think what you ask and want, and look this video same time :)) MORE ROADS :)) FUNNY MAN ... this is the most lame excuse in politics :)) and up to this point I see 1000% that schools are not working as they should, so I'm not interested in them.
I know all of that, and I know the systems we live with (and in) are not perfect. Some are less perfect than others. Some (to more) are the opposite of perfect.
You say: No taxes. I say: Who will pay for the things that are there for the community. That's all. The reality is that we always need some form of tax, whether that be whatever we have at the moment, or some community taxes or whatnot since we always need infrastructure and community services that will cost money and are there for the community, how small or large the community is (defined).
BTW, I didn't say ANYTHING about more roads :) Was mentioning roads since these are paid by tax money. No tax money, no roads, more or less. You know, I've seen the roads in the USA... They can be quite dangerous, to be honest; Potholes so deep, one can easily find oneself in the hospital when not watching carefully when walking or cycling around. I suppose too little tax money or tax money spend wrongly, or... I don't know the reason, to be honest. No such 'bad' roads in my country (the Netherlands: NL). In general, we pay more taxes in NL to peeps in the USA. This also shows the differences in the quality of infrastructure and community services we enjoy in my tiny country of the lowest lands around the globe :) But but but all this is beside the point I try to make :) Note that my view of the world is not black/white. Hence also my view towards whatever form of tax is not black/white. I do believe we can improve a whole LOT in our world and we shall improve. This can start with redefining what society is, and how we determine a society. Maybe we shall remove country borders. Maybe we shall go back to small communities in form of city-states. Maybe we shall remove all central entities and create whatever. But also that is beside the point I try to make :) I believe the point I try to make is that we need to find solutions to problems rather than making bold statements that drive the formation of camps that 'fight' each other. The latter will never ever result in solutions.
This is a hot topic right now, thanks for the review of news and the discussion as it applies to Hive.
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The decentralized nature of Hive is also a factor to consider when looking at achieving tax proficiency. Remember, hive and other blockchains have people from other parts of the world and not only people from the US. The question I want to ask is, who collect these taxes? This is because people could either sell their tokens through peer to peer and refuse to take the other channels that'll require taxing. For instance, in Nigeria, there's a ban on cryptocurrency transactions and Nigerians are still making several transactions in cryptocurrencies. To tax in a decentralized ecosystem is a bit difficult. This is just my little point of view.
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Individuals would need to declare their income and pay the government voluntarily.
As far as I can understand it is would be considered additional income and would be charged income tax based on the fiat value acquired for that financial year.
But because there are so many complicated tools people use like LP pools and such it ramps up the complexity
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In my country (the Netherlands) it's the same: Income is any task for one gets funds in one or the other way, doesn't matter where the money comes from. When earning irregular, it may be possible to classify the income as income from a hobby, which is not taxed as income, though the income should not become regular. when posting to HIVE more than a few times a year, it's gonna be super difficult to convince the tax officer it's a hobby... though for us it may be a hobby :)
VAT is also applied, regardless of the party that 'pays' is handling the VAT side of things. So I have to pay VAT to the tax agency on the earnings I make on HIVE.
The other side of the coin is that any cost I make to 'earn' on HIVE, I can deduct as costs. Like a laptop and other gear, I use to create posts and whatnot. But also the energy I use. The internet subscription I need to have to get to HIVE and so on and so forth.
I am no fan of government and I think taxes are theft, but I am also a realist and know that if you want to enjoy their payment rails you have to pay the fee.
I see it all the time, people thinking they too smart for the government because nothing has happened to them YET! The past doesn't equal the future and that gamblers fallacy will burn a lot of people. 99% of people who use bitcoin and crypto have horrible opsec and some think they can use a privacy coin and its all dandy and its going to erase all the times they dox'd themselves alone, there is a reason these chain analysis firms are around, they are government-funded projects
A lot of people are going to find they're not as wealthy as they think they are once that tax bill hits them in the face
You are so right. That's why I handle my taxes as well, also my crypto taxes. One can always bend the rules a bit, as many do, but in the end, our tax agencies know more about us than we like to believe. Even when they don't at the moment, they will in a few years. AI will help a lot. Added to that, even when someone not making any reference to his/her true ID and does not use a centralised exchange, the content itself + behavioural analyses will, in the end, make anonymous peeps, not so anonymous anymore, I'm pretty sure of that.
Thanks for this in detail post. This is a topic that is really relevant - and can become a big problem, if some countries decide to look for crypto earnings. As far as I know, it shouldn't be a problem, as long as the assets stay on the blockchain and do not get exchanged for fiat money. But that could be completely wrong in other countries. Or even in my own.
So far my earnings haven't been too big - so I am probably under our tax exempt amounts.
No financial or taxation advice though.
I don't think that it is possible. How to integrate a fiscal system of a goverment into any blockchain? And what is the source of taxation on HIVE? Can our activities on HIVE be called an ecomonic fact?
🙄
Interesting case. Here in Poland it’s almost a consensus that the only moment you pay taxes is when you sell crypto for fiat. If I stake coins for rewards it’s not taxed. If I exchange one coin for the other it’s not taxed as well. Even when selling crypto for a stable coin it is not taxed. There’s only 19% tax applicable when selling for fiat, it’s a tax for capital gains to be precise.
I like the Polish law. Simple and clear. Win for everybody.
Not really, our law system is super complicated and unintuitive, especially when it comes to tax law. We have one of the worst systems for running businesses—a lot of complicated laws, taxes of various kinds. The case with crypto is an exception—probably because the last few Polish governments have underestimated crypto and probably have had no idea what it is and how to approach it. But whatever the cause, for now we have quite alright tax law when it comes for crypto.
Although I did not mentioned that if you do run a business activity and you are rewarded using crypto, you should still pay the income tax. I.e. if I performed some service for you and you paid me 100 HIVE, I am bound to pay income tax for this amount (the value of HIVE from the day of the transaction should be used for calculations).
I agree with you that it should not be taxable until you convert it into fiat. Until then, I don't really think it is really something for the governments to get concerned with. However I guess it becomes a little more of a gray zone when you start paying and receiving crypto as payments. So I don't know the correct answer.
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Nobody really has a correct answer. That's why it will be interesting to see the outcome of this lawsuit in the courts without any settlements.
Yeah, I can agree with all that said. Also, you're right in this:
An example from here:
In Slovenia, there is a new proposal for a law to tax crypto income, which is (because apparently, the tax administration can't control everything) to tax a 10% flat rate on every amount that turns into fiat from €15K onwards. And there is still a debate whether 10% is too much or too little...
Problem is they/govts all want the taxes, just have no clue what they are taxing.
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Recently India imposed a 30% tax on your crypto gains. I still don't know how will I evaluate my income from Hive. 😂
There are millions of places I am invested in. Some, I don't even remember. 😂😂😂 It's all over the place. Filling taxes for the first time under new rules could be a nightmare for me and my accountant.
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For you nightmare, but I am sure your accountant will appreciate the work.
No way that it is ever possible to figure out all the crypto transactions I did in the last years incl. the HE tokens.
Unless I sell, there is nothing to be taxed. Besides, in Austria the exchanges between different cryptos are not taxable, according to a new law, only the exchange to Fiat. For such an exchange I would go to Switzerland, outside of EU regulations. At least that´s my plan for now.
Sounds like Austria has reasonable laws and ahead of the game.
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If I were an attorney, I think I could make a strong case that nothing in crypto is taxable. I would also contend that barter is not taxable, although according to IRS it is. Given the income tax exists (a curse on all who passed that 1913 amendment to the Constitution--because our founders were not stupid or evil enough to allow an income tax in the original document) I would argue that unless we are using the government's currency, they have no basis for taxing anything. The existence of the IRS negates/threatens all the freedoms the Constitution is supposed to protect. IRS exists to completely control us and to destroy anything the party in power does not like.
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It will be interesting to see such a strong argument. You don't need to be an attorney to make an attorney. You hire attorneys to represent your argument. I think income tax existed even before 1913, but was very low.
Interesting view on this whole thing. I must admit I've been completely ignoring the tax bit because I think my government is nowhere close to understanding or caring about Hive but at the same time I'm worried that things could blow up in my hands all of a sudden.
Last time I checked, they said if you are below a certain threshold of profit in crypto transactions you don't need to pay taxes so I guess I'm safe for now but the whole tax thing is something that bothers me a lot
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this makes sense, but unfortunately in some European countries they would argue that every single Hive/HBD earned is a taxable event which is stupid... hopefully the ruling in the US gets wider adoption
Sorry man, I feel your pain, but in another way, in we're I live crypto is ban and that's a good thing because I don't have to pay task and I am not paying task for anything right now, but those who pay task are not seeing their result for doing so everything ends up in pockets of others. If they will just task everything and be using it then their will be a massive upgrade in my country, but that's not going to happen lol.
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Wow, lady, I don't know if you read about the law but you sure put a good point up there, but that's not all, although HP might not be tasked. let's not forget that there is also HBD which they can say is kind of a stable coin which they will try to task, am not in the U.S but know to an extent how some fishy, but will love this problem with just some click of a button I.e changing all earning to HP that could solve it to an extent and this is just my own opinion not financial advice
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Everything between the fixed border are and in a jurisdicting state falls under the criteria of taxation and tax paying. But,in the virutal presence and online monetizatiom system,there is the need that arises to say, -we need to chamge the definition-..
I think,since we have gotten automation in the virutal sector,so as for blockchains and what you said is very true..that every block is a neat product of tax, nice bit analysis with good bit of example.Learnt a lot..
👍
Actually virtual/online transactions has been part of physical jurisdictions for tax and regulation purposes for a while now. Just like sales taxes, when e-commerce was new they didn't know how to tax it, but eventually they figured it out and now almost all online purchases require sales taxes based on the jurisdiction the product is being purchased at and will be delivered to, regardless where the product is coming from.
Yeah,so true.I myself have also witnessed part of the system that happened for e commerce.
Nice to know more from your blog, 💗👍
Interesting and intriguing points.
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THIS makes more sense!!! xD #meme #memes
I live in the US as well. As of yet, I haven't earned enough to worry about being taxed and I am just holding whatever I do have and/or rolling it back in to reinvest it. I will most probably need to learn more about taxes on these activities sooner than not. Don't want any nasty surprises next year.
I really love this post . I learnt a lot from this topic .
excellent post. I really liked your examples.. artiest creating art, baker making bread.. I also think taxes should be paid IF and when actual physical fiat gets exchanged.
Potentially, exchanging for another crypto could be sufficient.
Yes, good point.
I think this discussion ignores the central purpose of cryptocurrency, which is, financial sovereignty. Sovereignty includes from all external forces. You are your own bank, YOU decide how much liquidity you CHOOSE to voluntarily contribute to a protocol. No bank is involved in any aspect of a normal existence on HIVE, and rule #1, you're not converting to fiat. No taxable event is incurred without the USD. IF you do not operate with the USD, as billions of people around the world don't, then the IRS really doesn't have any ground to stand on. Not like they did before
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Unfortunately, that's not how IRS thinks and that's not how laws are applied. For example, there is property tax for house you may have. Regardless how you paid for it, you have to pay property taxes, just because the law says so. Moreover, financial freedom/sovereignty doesn't mean no tax obligations. It just means removing the banks/middleman out of the equation.
If you're not engaging with any middleman, where is the knowledge of the event? If there's no KYC applied, there is no way to compel private parties to disclose their activity. Just my two cents
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Here is an interesting take on it. Do we think the asset is hive power or vests? Because a vest goes up in value versus hive power I think about 3% p.a.
So if the underlying assets is vests, then you'll only have to pay tax on the capital gains in most jurisdictions (on the 3% not the curation rewards) whereas if you think the asset is hive power then you need to pay income tax on the 3% p.a increase in value of the vests.
On rewards no matter how I look at it, this is income in the current year.
Not tax advice..just my thoughts.
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Good point, HP is actually vests. But I think for tax purposes it would come down to their value in fiat, which would be same.
Here is an interesting take on it. Do we think the asset is hive power or vests? Because a vest goes up in value versus hive power I think about 3% p.a.
So if the underlying assets is vests, then you'll only have to pay tax on the capital gains in most jurisdictions (on the 3% not the curation rewards) whereas if you think the asset is hive power then you need to pay income tax on the 3% p.a increase in value of the vests.
On rewards no matter how I look at it, this is income in the current year.
Not tax advice..just my thoughts.
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Here is an interesting take on it. Do we think the asset is hive power or vests? Because a vest goes up in value versus hive power I think about 3% p.a.
So if the underlying assets is vests, then you'll only have to pay tax on the capital gains in most jurisdictions (on the 3% not the curation rewards) whereas if you think the asset is hive power then you need to pay income tax on the 3% p.a increase in value of the vests.
On rewards no matter how I look at it, this is income in the current year.
Not tax advice..just my thoughts.
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It's only taxable if you don't turn your cashed out rewards into privacy coins like $ARRR and then watch them vanish into the ether aka your private wallet.
How is ARRR doing these days?
Adding more functionality and development daily and it's on sale price wise
Brilliant! I was so impressed and so excited with this your post because I'm really learnt alot from this topic emphasized on. Thanks for the topic
This nightmare with taxes makes me glad for living in s country that have some easier tax for crypto
Good luck while the law doesn't get clear and easier to understand
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I seriously don't think tax professionals know either to be honest. Instead most will side will just pay it and don't risk it. To me that's stupid AF and it's something we all in crypto need to stand up for and support this fight to make sure the peg lands on the right side.
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I think taxes should be paid only when switching to Fiat, the question is whether it should be as a content creator or as a trader. It seems more reasonable to me that it was a flat percentage, easy to declare and that would give security, that way more people would be interested in being up to date with their taxes
I know that in Portugal, for now, any crypto earnings dont have tax. but unfortanelly I think this wiil be a matter of time before you get taxed.
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I gotta be honest with ya, this is the one piece of being part of this community that has given me the most anxiety recently. There is a distinct lack of good information about how to report capital gains or other income from crypto assets online, and for newbies like me, the fact that even the governing authorities that are in charge of this stuff don't really know how best to collect their [undeserved] slice of the pie is very unsettling. It would be nice to get some tax experts onboarded to, in partnership with some of the developers on chain, develop a dapp or tool that assists the average Joe or Jill user in reporting their capital gains and such.... but that's just me speaking as the average Joe user. haha