Taxes for Investing in Bitcoin Mining

I am investing in someone who does btc mining. For tax purposes, would profits I receive be taxable income or would they fall into capital gains status. Thanks.

Hi @jimbo,

Does our guide on cryptocurrency mining help answer your question?

Hi Chandon-Thanks for the article. However, it does address someone like me who is investing in a bitcoin miner and receives a profit. I am not mining as a hobby or business; I am investing in someone who does the mining. Am I subject to ordinary tax rates for profit, Where will cointrackershow these profits ( eg, as mining).

Thanks.

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Hi @jimbo, if you have invested in an mining operation as an investor, at the end of the year, you should receive a K-1 indicating your share of mining income from the operation. Since you are not actively participating in the day to day operations, that income will be passive income to you. This will be subject to ordinary income tax rate.

CoinTracker will not show you these amounts because CT doesn’t have that data (unless you connect the mining wallet). The amount you need to report on your taxes will be on the K-1.

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Yes, very helpful…,thanks

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