Businesses, mining and records that survive an audit

After this lesson you can: keep records that would survive an audit.

Businesses holding bitcoin

Since 2025, US accounting rules (ASU 2023-08) require companies to carry bitcoin at fair value, with changes through earnings each period, replacing the old impairment-only rule that could only mark down. Taxes still follow the property rules: a business realises gains on disposal. Accepting bitcoin for sales is revenue at the value received, which becomes basis. Paying employees or contractors in bitcoin is wages or payments at value, with the usual withholding and reporting.

Mining

Mined coins are ordinary income at their value when received, and that value is their basis. Equipment and electricity are business expenses if mining is a business (depreciation applies to hardware), hobby income if not. Selling mined coins later is a capital gain or loss from that basis. Businesses may owe self-employment tax.

Records

Mining income flow: coins are income at receipt, that value becomes basis, a later sale is a capital gain or loss. — Mined coins, twice: income when received, capital gain or loss when sold.

An audit asks two questions: what did you dispose of, and what was its basis. Keep:

Acquisitions: date, amount, price, fees, platform.
Disposals: date, amount, proceeds, and which lot, if using specific identification.
Transfers: both sides and the transaction ID, so a broker's "sale" that was really a withdrawal can be explained.
Income: value at receipt for every mining payout, reward or payment.
Proof of holdings: addresses or xpubs (kept privately) that tie the records to the chain.

If you cannot prove basis, the IRS may treat it as zero and tax the whole amount as gain. Software helps; exports kept in your own files help more, because platforms close.

The rule under everything

Table of the five records an audit asks for. — What to keep. If you cannot prove basis, the IRS may treat it as zero.

Nothing in this course replaces a professional who knows your situation and this year's law. The purpose was to make you a better client and a better record-keeper, which is most of the battle.

Course checklist: what you can now do

Tick each one you have actually done. The course is finished when they are all ticked, not when the quiz is.

01Your cost-basis sheet has every lot and every transfer labelled
02You know your lot method and have written it down
03You can name the forms your next return needs

MINI CHALLENGEProve the basis

You cannot find the record for one lot. What cost basis may the IRS assume for it, in dollars?

dollars

CHECK YOURSELF

1/3 How is a mined bitcoin taxed when received?Not until it is sold, because mining rewards are treated as unrealised gainsAs a long-term capital gain, because the hardware was owned for more than a yearAs ordinary income at its value on receipt, which becomes its basis

2/3 If you cannot document cost basis, what may the IRS assume?Zero, taxing the entire proceeds as gainThe current market priceAn average of your other purchases

3/3 What changed in US accounting for companies holding bitcoin in 2025?Companies must carry bitcoin at fair value with changes through earnings, replacing impairment-only accountingBitcoin must be recorded as cash, so it never changes value in the accountsCompanies may no longer hold bitcoin on their balance sheets at all

pick an answer for each question