I have an idea and want to be reviewed by the community. I’m new to mining but not passive income. For tax reasons, I record how much I take out in USD at the time. Either once every two weeks, once a month, or however often. I have some self-employment software that I use, so that it will be dual purpose. I’m looking for thoughts, comments, or criticism.
Mining is not considered passive income. It is treated as business income. It should be recognized at the time it is mined in most cases. The control test is when you can control the crypto and what happens to it is when the income is recognized. After the mining income is recognized then you need to track the crypto movement with the capital gains and loss rules.
For example, if the mining pool will not transfer your mined coin until you reach a certain threshold you do not control it until you reach that threshold. So if the threshold is .01 BTC and you have .0099 BTC you can not control what happens and you do not have to recognize it as income. But if you have .01 BTC you can decide what you do with it and this is considered control. You have to report this as income.