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History of Provide Rates

#1

Ok so when I first started using provide I did not even think about having to pay taxes on my rewards. Kind of naively figured there would be some sort of reporting in the app to make it easier. Now I’m sitting down to actually do taxes, and of course it’s not there.

So I’ve been working backwards from my current balance and the 28% APY compounded every hour. However, I know the rate has changed in the time I was staked during 2020. I was able to find a post indicating the rate changed to 28% APY compounded every hour from 37% compounded every 15 minutes on or around Sept. 16. I could find no information on changes earlier to this.

Can one of the developers give some insight into the APY change history in Provide to include the date the change was made, the APY, and the compounding interval. I started using provide in April so would not need earlier than that. This would greater help me in estimate my tax burden.

Edit: I found the date Provide started, July 9, 2020, but this is not necessarily when 37% at 15 minutes started. I know it was called Pool/Staking prior to being called Provide, still need the previous rates back to May.

Thanks!

1 Like
#3

I can’t tell if you are joking or are serious.

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#4

I think total earning since you used staking pool can help you calculate your taxes. What do you think?

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#5

Nope. In the US you have to report earnings from staking cryptocurrency as ordinary income. You have to report your earning as they are mined/awarded and at the price at the time. In the case of Provide, it’s compounded every hour, so technically I need to know my earnings and the price of PRV at the time every hour. Because there is not a reliable source of hourly historical prices of PRV, I’m combining my earnings per day and using that. Note that this is only for the staking earnings. If I were to sell PRV I would have a capital gain and I’d have to pay taxes on that too based on first in first out accounting.

#6

You can get hourly price from here… but still… taxes are going to suck this year trying to get accurate information on this.

#7

I think he’s trying to point out that you may have missed the point of a privacy coin and the way Incognito works.

4 Likes
#8

I fully understand the point of a privacy coin. I’m not willing to break the law to do it. While it’s easy to hide what you are doing with Incognito, once I want to get USD back into my bank account I’m going to be subject scrutiny.

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#9

Ahh I see that now. I’m going to stick with daily, especially because before 28% APY it was 37% compounded per 15 minutes and before that I think it was every second, and before that continuously. Even if I did break it down hourly that would involve me having to input 8760 values into a spreadsheet every year and 365 is too many already but do-able.

#10

I’m not a legal expert

With that being said, you do realize the complicated and insane way you’re attempting to calculate the payment on profits of holding PRV is not how the government intends you to do your taxes. Taxes are only paid when you realize profit. In other words when you sell and cash out your crypto to USD.

Works the same way with stocks and dividends. You don’t pay taxes on dividends as long as they are reinvested. If you withdraw to cash you’re taking a profit.

Again, I’m not a tax expert and my advice / comments are just my point of view. I strongly encourage you to meet up with a tax expert. I assure you they will tell you you’re wasting your time.

5 Likes
#11

also not an expert

I agree that this level of reporting is utterly insane, but I believe Up2UrHeadlights is right that it is what the IRS expects currently. There have been lots of innovations that don’t fit well into their outdated template. But crypto custodians do report interest paid in crypto this way: each accrual credited counts as normal income equal to the dollar value at the time it was received.

To add to the insanity you’re right about the IRS wanting another bite if ever the asset is traded and capital gain realized. Just how much that will come to depends on the cost basis of the asset, which is another reason you need price history if you want to do it by the book. The IRS doesn’t really have any concept of fungibility here; in their eyes when you sell you are disposing of specific tokens acquired at specific prices - each of which will have appreciated or depreciated differently.

Believe me I hate it, and I’ll just say I’m glad they can’t check my balances here to hammer down on any mistakes I might make. But if you’re in the US and you plan on ever moving a significant amount of money out of incognito, I would strongly recommend dotting i’s and crossing t’s. If you are audited you are guilty until proven innocent. If you can’t document where the money came from then you will be on the hook for whatever they decide.

#12

Let’s get everyone to use Incognito, then you never have to move crypto out.

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#13

Agreed. Mass adoption needs to be the focus for sure!

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#14

Also also not a legal expert, but I have hired a CPA.

Thank you ruction, you are most assuredly correct and Jared is not.

The best way to think about it is Ordinary Dividends on a Stock that you purchase. The dividends are treated as ordinary income and taxed as such, and then you have to pay a capital gain (or loss) when you cash out the stock itself. In the same way the staking rewards are treated as ordinary income and then you have to pay a capital gain when you sell the PRV.

And even if the staking rewards were not taxed as ordinary income, I would still need an accounting of how much the PRV was worth when it was rewarded as a basis to calculate the capital gain. I suppose you could just assume a basis of $0, but then you are way overpaying your capital gains tax.

Bottom line, you are playing with fire if you are making money mining/staking cryptocurrency and not keeping an accounting of your earnings in USD as you are receiving it and you live in the US. If it’s a small amount you might fly under the radar but I’m not going to risk it as I own a small business and if I get audited I don’t want to drag it down with me.

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#15

I’m sure if Incognito were to ever gain mass adoption to the point that people could use it to evade paying taxes then governments would just make it illegal. That wouldn’t stop someone from using it against the law, especially if it truly becomes decentralized, but remember here, I’m not a criminal. I want to pay taxes on the income I earn.

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#16

I have hired a CPA, and they have confirmed what I’ve already said. Dividends are counted as ordinary income. There are some dividends, called Qualified Dividends, that are not taxed as ordinary income, but they have to meet certain conditions. In any case, I highly recommend you look up the actual IRS guidance. https://www.irs.gov/businesses/small-businesses-self-employed/virtual-currencies

What’s even crazier is that the IRS wants you to calculate a basis when you use crypto to pay for something. So let’s say you buy 1 PRV for $1. Then the price of PRV doubles to $2 and you use 1 PRV to pay for a cup of coffee. In the governments eyes you’ve had a $1 dollar capital gain and you owe taxes. It’s for this reason I don’t use crypto to pay for anything anymore, the whole tax situation is becoming untenable.

#17

I was not talking about evading taxes at all.
Incognito is a project that offers an environment in which you can perform your transactions anonymously. That doesn’t mean no taxes or laws apply, it is just that I don’t think it is Incognito’s task to facilitate the taxes and rules of every country.

The information you need for your taxes is alien to me. We have a way simpler system. Other countries may have tax rules that are different from yours and mine. I think it is a waste of time to focus on that. There are more important things to focus on.

1 Like
#18

I see you have been here for 2 whole days! Welcome to the community !

#19

Thanks for your clarification. While it would be helpful for Incognito app to have some sort of reporting function, I’m not suggesting the devs implement the feature. The entire purpose of this thread was to get some historical context so that I could complete the calculations for my specific country by myself. My initial question still hasn’t been answered yet.

With that said, I calculated back to 5/28/2020 using the 37% at 15 minute compounding which appears to be the day I started staking based on my opening balance (and further evidence is that I purchased the seed PRV 5/25/2020). So basically, I don’t think the earlier rates that I don’t know apply to me. If any devs do know what the rates were and when they changed it may be helpful for others who were staking prior to 5/28/2020, but I no longer need the information.

#20

Hey, just want to confirm your findings - the rate was changed to 37% APY on May 20, 2020. It was then changed to 28% APY on Nov 10, 2020 Sept 16, 2020 (thanks for the correction @Up2UrHeadlights) .

For anyone else looking for this information, prior to May 20, it was 57% for PRV, which started April 20.

2 Likes
#21

Are you sure it was changed to 28% APY on that date? One of the devs posted a notice on Sept. 16, 2020 announcing the change from 37% to 28%. I believe the update on Nov. 10 is changes to the other cryptocurrency rates, PRV was already 28% since Sept 16.

See:

and