I live in the US and have been considering buying some more Dash to have enough for a Masternode.
I bought 500 Dash a couple years ago at $15. I'd buy another 550 Dash now at current price. With the resulting amount, I can set up my Masternode collateral transaction, and have some Dash left to pay the servicing fees.
My questions are about the tax treatment of the several steps of selling the payouts of a Masternode.
I don't know the exact amount of the payout, but let me assume that the monthly payout is 5.8 Dash. I know I have to treat that as immediate and regular income for tax purposes. This means that the pre-tax cost basis of those 5.8 Dash is $0, and I immediately recognize it as regular income (and pay my quarterly filing) and those new Dash will now have a cost basis based on the price they were when payed out. (e.g. \~$210 per coin, which is the price now).
My question is how to handle the sale of the new 5.8 Dash.
Since I have already used FIFO treatment for my bitcoin, does this also apply to my new Dash? In other words, when I actually sell my new 5.8 Dash, does the FIFO rule require me to sell them with the $15 cost basis (FIFO)? Or can I sell those 5.8 with the most recent cost basis of $210?
Let me use an analogy to make my question clear. Let's say I have two different brokerage accounts, one with eTrade and one with Fidelity. I bought 200 Amazon shares two years ago at $700 in my eTrade account, and then I bought another 100 shares of Amazon stock at $1000 in my Fidelity account one year ago. If I now want to sell some Amazon stock from my Fidelity account (to buy some Dash :)), does FIFO cause me to have to use the cost basis from the earlier stocks in the eTrade acocunt (since I bought them earlier)? Or do I use FIFO only within each account?
It would seem sensible to treat the eTrade and Fidelity accounts as separate, and any sales from them would only consider their internal FIFO rules. I hope I can apply that to masternode payouts.
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