If @sean-king's assertion that value of rewards should be accounted ''on the day they are awarded'', and my supposition that Steem Power should be treated as capital asset (such as stock) are both true, then would it mean (according to the article below) that it should be first taxed in full as normal income, then again declared as capital gains or losses when powered down, and thus making a profit or a lost compared to when it was first rewarded (or redeemed?)?
Meaning that if I was to make $100 of Steem Power author rewards at $0.10/Steem, I would be right away taxed for $100 of income, but when come the time to Power Down this same SP now worth $1000 (price having evolved to $1/Steem), I would again be taxed on a capital gain of $900? I don't know.
http://time.com/money/3571313/irs-taxes-stock-you-didnt-buy/
I also like your comparisons with online gaming values, because after all Steemit is a lottery. You never know what you're gonna get as a reward. And, first and foremost, it's a game of attention.
I'm an accountant myself, but I live in Canada, and still I'm having a hard time wrapping my head around how the entire Steemit economic system could be viewed by fiscal authorities. It's a brand new concept and can't be considered the same as Bitcoin. This ain't no big faucet, we put in efforts but there is no guarantee of retribution, hence can't be considered as counterpart for services rendered.
You are very prescient to note the lottery factor, as they actually discus how Steemit is a lottery in the white paper. There is no guarantee for work done and no pay agreed upon.
The sad truth is that the first half of your post may be what the IRS expects. I hope to show that that is not an acceptable taxation strategy through this series, but the reality is some people may end up audited and effectively double-taxed, just as you point out.
There is no ethical or moral justification for this and stopping it begins at creating an internally consistent logic for taxation that is far less repressive, given that taxes are a reality we are probably all stuck with for now.
Thanks for your thoughts!
I'm 100% with you about finding a fair tax interpretation for Steemians. Specifically considering that most of us are in for the long run and will keep on sitting on our time investments without really getting significant short-term financial benefits.
One other thing we should also consider: it doesn't make sense for the IRS to pay an employee hundreds or thousands dollars of man hours in order to get their hands on about the same or even less amount that it would cost them. Can you imagine the time an agent could spend going through all of one account's transactions on the blockchain for the duration of an entire year? This leave us with the advantage of developping a justified tax strategy that they could be forced to accept. I'm looking forward to see the one you'll be proposing.