2018 Taxes on Trades - Boooo

[Steve Sokolowski]

Here is something which may be helpful to customers who are working on taxes. We may make a sticky notice of this in the future.

-------------------

Our view is that mining pools rent computer systems from customers and pay customers for the usage time of those systems.


......This is the total value that we paid customers in exchange for the computer systems they are renting to us.

So for my apartment....I RENT from my landlord. That makes me the rentER...and him the rentEE.
The landlord is the one providing the service, and as the renter I am the one taking him up on that service as a customer.

So from your definition of mining pools renting systems....does that make you our customers and US the ones providing the service? I thought the service provider was the one that offered the service and the customer was the one who decided if they wanted to partake in that service.
The way that is phrased I am read that as the POOL is renting OUR machines. That means WE are providing the service. I dont have any licenses to operate any such service in my state. Do I need to charge you taxes for using my service?

I think it should be...the mining pools provide a service that allows customers to exchange hashing power for coin payouts for a fee.
I've never been contacted by any of the pools about renting my hashing power. I used to go to nicehash all on my own.

Is the pool setting itself up as a service or as customer? Im a bit confused from those statements.
Could you rephrase or explain that a bit better please.

I'm sure you can understand that it's not my place to comment on what Nicehash's business model is; I suggest that you ask them for clarification about how they will be handling their paperwork.

As to our own model, I think it's pretty clear that when customers connect to our pool, they are allowing us to use their systems to find blocks until they disconnect. When something (like an apartment) is used for a short period of time, and ownership is not permanently transferred, it is a rental.

While we can't provide advice as to what licenses you need to obtain where you live, I personally am not aware of any jurisdiction that requires licenses to rent mining equipment. You might want to investigate that issue further before concluding definitively that a license is required.

[rcoutopt]

I try to find information for people from other countries...

But I didn't find many... Me as a Portuguese living in Portugal, have to fill the forms? In which conditions?

Thanks

[Chris Sokolowski]

I try to find information for people from other countries...

But I didn't find many... Me as a Portuguese living in Portugal, have to fill the forms? In which conditions?

Thanks

We have it in our help section, but if you do not live in the United States and do not perform any mining within the United States then you can choose the option that you do not live here and the paperwork will not be required.

[overlordx]

Comparing real estate rentals to mining pools seems to be a "round peg in a square hole" analogy. As I understand the business model of Prohashing, we (i.e. the Miners) are independent contractors who provide services to the mining pool. We select the particular currency for payment and payment is made at the time the coin is sent to our account.

Is this a correct understanding?

[rcoutopt]

I try to find information for people from other countries...

But I didn't find many... Me as a Portuguese living in Portugal, have to fill the forms? In which conditions?

Thanks

We have it in our help section, but if you do not live in the United States and do not perform any mining within the United States then you can choose the option that you do not live here and the paperwork will not be required.

Perfect... I have everything in Portugal... Thanks

[Chris Sokolowski]

Comparing real estate rentals to mining pools seems to be a "round peg in a square hole" analogy. As I understand the business model of Prohashing, we (i.e. the Miners) are independent contractors who provide services to the mining pool. We select the particular currency for payment and payment is made at the time the coin is sent to our account.

Is this a correct understanding?

Steve can clarify if necessary, but my understanding is that you are correct.

[AppleMiner]

I guess my issue was with the word RENT and how it was used in your sentence.
To me RENTING is an active action. I RENT a car, I RENT a house, I RENT a hooker for the evening.

Our view is that mining pools rent computer systems from customers and pay customers for the usage time of those systems.

I am reading that as you are going out and renting systems. Taking the action part of renting. Making you the RENTER, and us the RENTEEs, the ones being rented from. I was asking if you were in fact providing a service that allowed us to do work and then get paid for that work. I understand my real estate analogy, the point I was making was in the terms of RENT...RENTER and RENTEE.

I just wanted clarification if the pool is providing a service or buying a service. When I RENT a car I RENT it from the car company.
The company is providing a service and I am its customer. So when you say that you see it as mining pools rent systems and then pay for them....are you now the RENTER of my service? Am I now the car company? DO I need to have a license to be a service provider? You say rent and pay, to me that means you are buying from ME. Are we not buying coins from you in exchange for hashrate traded? Now from a tax point of view do I need to give you a 1099 for you renting my service and being one of my customers? I guess who is paying who? Which is the customer and which is the service provider. I know how it SHOULD be, but after reading your statement several times I think it could be argued either way from a legal standpoint so I would like it clarified.

Am I splitting hairs? Absolutely I am. You don't think the IRS won't?
This could have a huge impact on taxes if I am a customer or a provider on what I can claim or how I might be allowed to file.
I file one way and the pool defines and files another way, an audit could be nasty, would like to avoid at all costs.

[Aura89]

I guess my issue was with the word RENT and how it was used in your sentence.
To me RENTING is an active action. I RENT a car, I RENT a house, I RENT a hooker for the evening.

Our view is that mining pools rent computer systems from customers and pay customers for the usage time of those systems.

I am reading that as you are going out and renting systems. Taking the action part of renting. Making you the RENTER, and us the RENTEEs, the ones being rented from. I was asking if you were in fact providing a service that allowed us to do work and then get paid for that work. I understand my real estate analogy, the point I was making was in the terms of RENT...RENTER and RENTEE.

I just wanted clarification if the pool is providing a service or buying a service. When I RENT a car I RENT it from the car company.
The company is providing a service and I am its customer. So when you say that you see it as mining pools rent systems and then pay for them....are you now the RENTER of my service? Am I now the car company? DO I need to have a license to be a service provider? You say rent and pay, to me that means you are buying from ME. Are we not buying coins from you in exchange for hashrate traded? Now from a tax point of view do I need to give you a 1099 for you renting my service and being one of my customers? I guess who is paying who? Which is the customer and which is the service provider. I know how it SHOULD be, but after reading your statement several times I think it could be argued either way from a legal standpoint so I would like it clarified.

Am I splitting hairs? Absolutely I am. You don't think the IRS won't?
This could have a huge impact on taxes if I am a customer or a provider on what I can claim or how I might be allowed to file.
I file one way and the pool defines and files another way, an audit could be nasty, would like to avoid at all costs.

Your analogies would work better if they were correct analogies.

None of your analogies are specifically one party letting another party "rent" their product to gain money in a specific way for payment where you both gain money.

Renting a house only gets the owners money.

Renting a car only gets the owners money.

etc. etc. etc. etc. etc. etc. etc.

In this sense, both Prohashing and ourselves would be customers and business to eachother. It's a collaboration between the two entities that are gaining money. We provide the number crunching machines whereas prohashing provides the software to do it.

As to you freaking out about what the IRS is going to do, the IRS has already laid down how they tax cryptocurrency, so i'm not sure why you're freaking out. The only issue would be if the IRS were to decide to change something making what you're freaking out about, relevant.

[Steve Sokolowski]

I guess my issue was with the word RENT and how it was used in your sentence.
To me RENTING is an active action. I RENT a car, I RENT a house, I RENT a hooker for the evening.

Our view is that mining pools rent computer systems from customers and pay customers for the usage time of those systems.

I am reading that as you are going out and renting systems. Taking the action part of renting. Making you the RENTER, and us the RENTEEs, the ones being rented from. I was asking if you were in fact providing a service that allowed us to do work and then get paid for that work. I understand my real estate analogy, the point I was making was in the terms of RENT...RENTER and RENTEE.

I just wanted clarification if the pool is providing a service or buying a service. When I RENT a car I RENT it from the car company.
The company is providing a service and I am its customer. So when you say that you see it as mining pools rent systems and then pay for them....are you now the RENTER of my service? Am I now the car company? DO I need to have a license to be a service provider? You say rent and pay, to me that means you are buying from ME. Are we not buying coins from you in exchange for hashrate traded? Now from a tax point of view do I need to give you a 1099 for you renting my service and being one of my customers? I guess who is paying who? Which is the customer and which is the service provider. I know how it SHOULD be, but after reading your statement several times I think it could be argued either way from a legal standpoint so I would like it clarified.

Am I splitting hairs? Absolutely I am. You don't think the IRS won't?
This could have a huge impact on taxes if I am a customer or a provider on what I can claim or how I might be allowed to file.
I file one way and the pool defines and files another way, an audit could be nasty, would like to avoid at all costs.

At this point, I just have to say that since I'm not a lawyer, I can't answer your question about customers. I can only tell you how we see ourselves. You probably noticed I used very specific word choices in that post, and I'm sure you can understand that it's not our place to explain the law to you.

That said, you're free to discuss with other posters what you think this means and how you want to respond in your own filings. We make sure to be as transparent as possible in all other aspects of this system, but this is the one area where we can't have a standard conversation like we would anywhere else.

[muerioch]

Slightly offtopic, but I can't seem to submit that form when I indicate that I live outside the US (which I do). It just doesn't save, next time I load the page it's back to "please complete.."