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RE: It's official, cryptocurrency has at least 3 million users! But tax complications threaten to rub out all legitimate use cases
It will be interesting to see what they come up with. The obvious answer is whatever the most restrictive option they have is, but there's a good chance they will have little ability to enforce it, making it game-theory correct to regulate in a more reasonable fashion. I have a hard time believing they are competent enough to realize this fact yet, though, since after all they can just put a tax on the series of tubes which constitutes the internet(s).
It's not really possible to enforce it but that isn't the issue. The fact is if compliance is made impossible or just very very hard, it will discourage use of Steem, use of cryptocurrency, etc. In a sense if they were to enforce the rules, then almost every user of Steem could have under paid or calculated something wrong.
And Steem developers haven't made it any easier. Is there any automated process to determine how much you owe in taxes per account? The developers who paid their taxes should come up with an app so we can pay ours.
Since there is currently no clear rule on how one would pay taxes on something like Steem, it's extremely difficult to prove intent in tax evasion cases. Anyone who follows a consistent strategy will have a solid defense. IANAA, but personally, I don't think you can simply count it as income upon receipt in your account at the market rate, plus you have the added complexity of the SBD/Steem power split. The market rate is not some sort of immutable price and moves on every purchase and sale. If you suddenly make 1 million Steem, and Steem is $1, you could never sell it all immediately and get anywhere close to $1 million for it. You'd tank the order book, so how can it be valued at $1 million upon receipt? Then you've got the power-down situation which further complicates how accurate the "liquid value" is upon receipt.
There need to be exemptions or some clear capital gains rules applied which are likely to look much different from the logical way to tax an entity like Genesis Mining.
That is the exact dilemma I was mentioning but couldn't word as well as you.
Aww, shucks.
Mark and a few others say the rules are very clear. If the rules have been so clear all along what excuse do the Steemit developers have for not automating and streamlining the process?
Those tubes themselves are about to be decentralized. The longer they wait on this, the greater the difficulty in creating 'effective' power & turf-preserving regulation.