Taxes For Brave Affiliates

Hi,

I am here to ask about taxes for Brave affiliates as I cannot find posts about this topic. I know that for U.S. residents, if you earn $600 or more as a self-employed person from a business, the payer of that income is supposed to issue you a Form 1099-MISC.

However, this was never issued to me last year and now I’m a bit confused. Note that I’m a U.S. citizen.

  1. Since Brave Rewards pays in cryptocurrency, does this rule not apply?

  2. Regarding paying taxes on the income, I contacted Uphold and was under the impression that income earned from Brave Rewards only becomes a taxable event after the BAT tokens are sold. Is this true?

  3. If the above is true, this is my understanding for paying taxes on income earned from Brave Rewards. The value in USD of the BAT received in Uphold on the day it is transferred are earnings. Then if the value of the BAT tokens increase and are sold, the increase in value are taxed as capital gains?

Example: Brave Rewards pays 1,000 BAT tokens to an affiliate on 6/8 and the value is let’s say, $0.20 per BAT token on that day. The affiliate decides to sell these 1,000 BAT tokens a month later where a BAT token is now valued at $0.40. The affiliate would file these earnings as $200 income and $200 as short-term capital gains.

Would appreciate some clarification.

Thank you

1 Like

Hello,
To be clear, I’m not certified to give you any advice in this matter.
But what I know is that IRS identifies crypto as property, not currency. As a result, tax rules that apply to property (not real estate) transactions, like selling collectible coins or vintage cars that can appreciate in value, also apply to cryptocurrencies. And you can find information regarding this matter from the IRS website.
Here is a link to the FAQ sheet from IRS where you can find answers to all your queries.

3 Likes

Thanks for the information, you’re correct. I’m concerned about specific things about the Brave affiliate program including question #1 and which of the following examples would be correct.

Example 1) Brave Rewards pays 1,000 BAT tokens to an affiliate on 6/8 and the value is let’s say, $0.20 per BAT token on that day. The affiliate decides to sell these 1,000 BAT tokens a month later where a BAT token is now valued at $0.40. The affiliate files these earnings as $200 income and $200 as short-term capital gains.

Example 2) Brave Rewards pays 1,000 BAT tokens to an affiliate on 6/8 and the value is let’s say, $0.20 per BAT token on that day. The affiliate decides to sell these 1,000 BAT tokens a month later where a BAT token is now valued at $0.40. The affiliate files these earnings as $400 short-term capital gains.

Hoping that someone from the Brave team can answer it. I know that I am responsible for my own taxes, but I think these are fair questions targeted specifically towards the affiliate program that can be answered without the need of a tax professional.

1 Like

Q19 from the link that I sent you answers that:

Your gain or loss is the difference between the fair market value of the virtual currency when received (in general, when the transaction is recorded on the distributed ledger) and your adjusted basis in the property exchanged.

So, you have to calculate the dollar value when you receive cryptocurrency, and you should assume you owe taxes based on the dollar value of the cryptocurrency at the time you receive it. Later, you would calculate dollar values again when you trade out of cryptocurrency (by trading, selling, or using it) and account for profits/losses at that time.
So, the correct answer to your question is Option 1. $200 as short-term capital gains.

2 Likes

Oh I didn’t see that part, thanks so much!

bhimXsardar, thanks for information.

Glad to help you guys. @RadioNation @ernest3VR