Question by someone who is new to Bitcoin. Bitcoin mining is considered taxable income in the US. However, if it's given as a gift, then should it be taxable under US law?
This is probably better for Money.SE as it doesn't really have anything to do with Bitcoin; it would be the same for any sort of income.
However, my understanding of tax law with respect to gifts is roughly this:
Money, goods or services that you earn from working, business or investing are taxable income to you.
If you decide to give some of that money to someone else, that's your business; but you still earned it, and it's still your taxable income. Giving it away doesn't change your taxes at all. The IRS doesn't really care whether you gave it to your friend or used it to buy 300 pounds of jellybeans.
Within certain limits, the gift is not taxable income to your friend (who didn't earn it). However, above those limits, it can be subject to gift tax. I think beyond $13,000 per year, you have to start keeping track of such gifts; gift tax does not actually kick in until a larger number, but it counts gifts spread across several years.
The one major exception is if you give the money to a registered charitable organization. Then you can deduct the gift from your income, again up to certain limits (usually 50% of your income).
Disclaimer: If you want tax advice, talk to a professional who's qualified to give it. I'm not.
as of dec. 07 2017, not taxable if you are the receiver, taxable if you are the giver .
however, since technology is outpacing traditional governance , here are the best ways for both the sender and receiver not to get taxed (also, how to get rid of tax by sending a gift to your own self) :
1.) buy a truly anonymous coin in bulk (ex. monero, zcash, electroneum, vertcoin, etc) , declare a capital loss,create a lost/stolen report (monero and electroneum is not app dependent, buy private key dependent , just tell them you lost the paper copy and have not created a virtual copy and can't memorize over 30 wallet characters) send that to another anonymous coin wallet that you own (it is untraceable at this point), send it to your friend as a gift, no tax on both of you.
2.) to get rid of tax yet earn bitcoin in secret : buy anonymous coin, declare a capital loss, create a lost/stolen report, send it to another anonymous coin wallet that you own, convert it to an unknown bitcoin wallet (make sure that it is not a wallet provided by an exchange, or ever been used in an exchange) , wait for those bitcoins to grow, then send it as a gift to another bitcoin wallet of yours that is connected to an exchange. discard or don't use the unknown wallet, create a new one if you plan on repeating this method.
3.) improved version of method #2 : instead of declaring it as a gift, wait for the atomic swap . it will convert your monero to bitcoin without going thru the blockchain. it's like buying monero, declare loss, lost/stolen report, atomic swap (yes, after the lost/stolen report, they can still check the blockchain for any movements and if the US government starts to be too strict about it calling you a liar, then atomic swap will keep the moneros moving, but without any trace at all) to bitcoin, send as if it was wrongly sent by someone to you as a gift (you know, like leaving a short message like "happy bday pedro! i give you these bitcoins as gifts!" even though you don;t know any pedro) , then it's non-taxable anymore