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Travel.Write.Money
@travelwritemoney
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2 min read

Hive is a tax nightmare for me, particularly with the layer 2 tokens, which don't generally have a price history to use to determine cost basis. And, then, you don't have any control over what layer 2 tokens you receive. They just pop up in your wallet.

My thoughts are:

  • Pending rewards - not taxable. You don't have a cost basis. And, they're not in your wallet yet.
  • Claimed HP - taxable as ordinary income
  • Claimed HBD - taxable as ordinary income
  • Interest on HBD - taxable as interest
  • Interest on leased HIVE - taxable as ordinary income
  • Inflation from staked HIVE - can't be taxed until you've sold, which could be never. If you do cash it all out, it has a zero cost basis.
  • Payments received in HIVE/HBD - taxable as ordinary income

Going by the IRS case, only the HIVE from Inflation is not taxable until sold. The inflation rate is the reward for staking.

Proof of Brain (PoB) rewards, such as posting and voting, are for work that you do. Thus, it is income. If you stop posting and voting, you would not earn rewards. You would only earn inflation and HBD interest.

Having said that, if you haven't tracked your HIVE transactions, like me, then you'll have to use a zero cost basis. Most software will automatically do this. You end up paying a bit more in capital gains tax. But, it makes up for not reporting the income when you first got it.

What I am doing to make my life easier for future taxes is:

  • turned off automatic reward claims. They make too many transactions.
  • try to only claim once per month (not always successful) and record the value of HP/HBD.
  • convert liquid earned HIVE into HBD. I'll have to report the earned HIVE as income. But, if I convert to HBD immediately, the capital gains are negligible.
  • If I have to withdraw, I'll only withdraw HBD. It makes the job of calculating easier as it's going to be roughly $1 per HBD. Again, negligible capital gains.
  • Try to not unstake HP or sell HIVE. However, if I must, it's going into HBD before leaving my wallet.

I can't go back and fix my poor HIVE accounting. It's a nightmare with claiming rewards every few minutes. But, I can make things easier for future.

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