I've seen some ask how to handle Twetch transactions for ta…

With that in mind, I believe all payments to you are to be considered income, and is taxable as such.

At this point, the "earned" value in your account would be what you would pay income tax on.

This will likely result in a great deal of gains and losses, and there are some questions I have about whether or not the wash sale rule applies here. I believe it wouldn't, because it is not buying or selling an asset.

To greatly simplify things, I would suggest using lot based accounting (must be done up front, not declared after the fact) to separate Money Button transactions from all others (could do this to separate Twetch txs, but that could get really complicated.)

First, all Twetches are taxable events. The question is, are sub dollar amounts (US focused, of course,) taxable? I'm not sure. I will treat it as though it is.

That is a very important point, because income is taxed, then when spent again, capital gains are assessed. If spent within a year, it is short term capital gains. If longer than a year, it is long term capital gains.

Then within your Money Button lot, do FIFO (First In, First Out) accounting for cost basis gain/loss calculation.

My real advice is to always consult with a tax professional in cases like this. But until you do that, I hope my statements here help you to understand that, at the very least, this is not entirely straightforward yet.

Just to clarify, this is all my best effort attempt to give my understanding for US tax law, but I am not a lawyer or accountant or anything like that.

Bear in mind... It is possible you will be taxed on a) your income, and b) all gains at the short term capital gains rate when you spend the coins.

This may be like being taxed on the full dollar value of what you spend, depending on a number of factors.

So, be mindful of what you're doing, and don't forget to account for your Twetching at the end of the year.

Nice take! It would be so much easier if the govt just took their tax cut in the moment the micro transaction happens and then we don’t have to think about it. One day it’ll be so, and we won’t have to deal with this convoluted tax stuff. :)

Ryan X has said he is working on a Tax / Accounting tool with MoneyButton :)

Gross Income - Expenses = Taxable Income

I would think the IRS would be treating this like sandwich money v an asset trade.
(But there I go thinking again. That always cost me.)

If you incorporate your Twetching as a business, I think you can deduct expenses. I don't believe you can otherwise. I'd have to do more research.

Dr frog, do you know if Ryan intends to launch that before year end? But that's awesome it's in the pipeline.

Thanks for the post Matt, this has been on my radar.

In which case not at all expenses on Twetch would be deductible. Definitely not likes. Maybe the cost to post a Twetch. Again... Would need to do more research.

I've always been self-employed. Persona expenses (advertising/marketing). Income (product engagement)