Kudos0

Tax Advice for Norton Crypto

Posted: 17-Feb-2022 | 8:15AM · 3 Replies ·

*** Please take this as questions from a US Citizen that is not a tax expert or accountant ***

What are some recommendations for handling taxes in relation to using Norton Crypto? Previously, I would file a Schedule C for any crypto mining revenue within a given tax year when I ran the mine directly a crypto wallet under my control (had control of the wallet file and could transfer funds at-will). Since Norton Crypto operates as a service where customers do not directly control the wallet and it requires purchasing Norton 360 to use, would the same rules apply or some special considerations be made?

When should an event be recorded?

Since Norton holds all ether assets until it is withdrawn to Coinbase (where it can be exchanged in the open market), should I count crypto revenue at the point it is withdrawn to Coinbase instead of each Norton payout?  -- My thought is that Norton takes a 15% service fee makes the payout not an accurate revenue indicator and the account is actually in possession of Norton and not me.

Can I expense the subscription costs of Norton360 since it is a requirement to purchase/activate the software in order to use Norton Crypto?

It is rather fair to say that it qualifies as an expense on a Schedule C since you have to have Norton 360 in order to mine on Norton Crypto. Since Norton360 provides additional services, could it be disqualified? As a sidenote: Would it make sense to Symantec to allow customers to pay/subsidize their subscriptions using Norton Crypto assets? (It would keep money from changing hands and reduce taxes to both company and customers)

Does Norton report to IRS?

Norton does not indicate that they are reporting transactions to the IRS. I'd imagine that Lifelock members could be reported on since SSNs are provided at sign-up but certainly not for other Norton customers. Anyway, USA customers are responsible to self-report crypto earnings.

Labels: Payment

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Kudos2 Stats

Re: Tax Advice for Norton Crypto

Posted: 25-Feb-2022 | 2:09PM · Edited: 25-Feb-2022 | 2:30PM · Permalink

As a CPA, my take on this would be that you do not have to report any funds until you receive an actual distribution. (aka. you withdraw the funds and get a negotiable item... check, cash etc., or use it to buy something of material value).  It would seem to be treated much like an investment in stock, either directly or via a 401K plan. The IRS guidance on the issue is here.

https://www.irs.gov/irb/2014-16_IRB#NOT-2014-21

Unless Norton forks over the dough, no. 

As far as claiming the subscription fee as an offset to gains, I would say not completely. Mining is but a small part of what the software does. You would have to part that out. If you are using Norton as part of your business at home or at work, you would get the expense deduction from the subscription in accordance to IRS rules as to what percentage of your personal stuff is being used to run your home business, just like everything else you are using.

From the 1040 instructions...

A transaction involving virtual currency does not include the holding of
virtual currency in a wallet or account,
or the transfer of virtual currency from
one wallet or account you own or control to another that you own or control.
If your only transactions involving virtual currency during 2021 were purchases
of virtual currency for real currency, including the use of real currency electronic platforms such as PayPal and
Venmo, you are not required to check
the “Yes” box next to the virtual currency question. You must not leave the
field blank even if you are not required
to answer “Yes”. If you disposed of any
virtual currency that was held as a capital asset through a sale, exchange, or
transfer, check “Yes” and use Form
8949 to figure your capital gain or loss
and report it on Schedule D (Form
1040).
If you received any virtual currency
as compensation for services or disposed
of any virtual currency that you held for
sale to customers in a trade or business,
you must report the income as you
would report other income of the same
type (for example, W-2 wages on Form
1040 or 1040-SR, line 1, or inventory or
services from Schedule C on Schedule
1).

Kudos0

Re: Tax Advice for Norton Crypto

Posted: 26-Feb-2022 | 6:45AM · Permalink

@kris44dad,

Thanks for this info it is very useful to many here. I guess this is a whole new tax arena for the CPAs and tax lawyers.

If you have shares in an ETF that invests in crypto exclusively or a mutual fund that invests in crypto exclusively or even futures contracts for bitcoin or Ethereum do you answer yes on the 1040? You do not really own the crypto of course but rather some shares in the product you have bought.

Kudos0

Re: Tax Advice for Norton Crypto

Posted: 26-Feb-2022 | 7:12PM · Edited: 26-Feb-2022 | 7:17PM · Permalink

From the instructions from the 1040 above, I would say no.

If you think about it, if every group investment fund eventually invests in some cryptocurrency, everyone in the nation would be answering 'yes' and the question on the form would be meaningless. You should only need to declare if you take a distribution. State laws vary, so you will have to check all this with a local CPA/H&R Block et al., regardless.

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