Note: The exact details of how specific items must be reported is likely correct only for US taxes. The details on how to obtain the necessary data for reporting purposes and the 10,000-foot view is likely correct for all countries.
TL; DR – Despite all the libertarian anti-tax arguments and protestations of lack of clarity,
if US citizens don’t make, at least, a “good faith effort” to pay taxes on Steem and SBD, they will be legally liable for tax evasion. Simply choosing not to report income or capital gains to the IRS immediately opens you to the possibilities of 20% penalties and an increased chance of an audit.
Despite the unanswered questions (How is SP income treated?) and numerous arguments (undue record-keeping burden), it is very clear how to make a safe “reasonable effort” to comply (without paying for a tax accountant who potentially does not understand Steem well enough to give you good advice). Given the transparent status of the Steem blockchain and a seven-year window for the IRS to recoup a lot of money,
do you really want to risk an audit and a 20% penalty? Or, do you want advice on how to stay out of trouble?
DISCLAIMER: I am neither a lawyer nor a tax accountant. I have no fiduciary duty towards those who read and follow this advice.
THE GOOD NEWS:
1. Curation rewards and the Steem Power portion of author rewards are NOT immediately taxable as income.
It can clearly be reasonably argued that Steem Power is equivalent to a non-statutory stock option with a “Not Readily Determined Fair Market Value”. The claim that “the IRS may view STEEM Power as the same as the STEEM token, just that the STEEM is in a restricted account called ‘Steem Power’” simply does not understand the nature of vests. Vests are redeemable for monotonically increasing amounts of Steem and are, thus, clearly complex contracts (i.e. options). The fact that they can be bought for a determinable price does NOT offset the fact that they cannot be SOLD on an open market. The fact that Steem Power can be leased is irrelevant to the argument as well (although lease payments ARE income and immediately taxable unless they are paid in Steem Power).
2. A large portion of your non-power-up Steemit-related Steem and SBD expenditures are deductible.
Buying re-steems and votes, giving prizes and similar audience-building expenditures can all be classified as advertising. You *DO* need to report it as income – but you end up not being taxed on it.
3. Unless you held Steem or SBD on an exchange for longer than a day, you can get all necessary tax information from the blockchain. This can be counted as bad news as well since the IRS can do exactly the same thing.
4. I will post how you can get the necessary information to calculate your taxes from the blockchain (in easy-to-use spreadsheets) tomorrow morning – complete with an option where my bot will do it for you for a few SBD (feel free to argue what the price should be in the comments below).
THE BAD NEWS:
1. Receiving SBD or Steem for any reason (including Author Rewards) except purchase is a taxable event.
2. Powering down is a taxable event.
3. Selling SBD or Steem is a taxable event (even if you buy one with the other).
4. Powering up is a taxable event.
5. Receiving interest is a taxable event.
6. All of the above information is easily accessible to the IRS (and, particularly if you posted an Introduce Yourself post, you are likely easily identifiable by the IRS).