Steem Secret #3: Power Up Posts When Steem Dollars Trade Below $1!
Choosing the 50/50 post payout is best if SBD are trading for $1+ but Power Up 100% pays more if not! See the SBD value any time at http://www.steemdollar.com/sd_index.php which is created and maintained by @mauricemikkers.
Powering up also is easier to process because it eliminates the need to use the Steem and Steem Dollars market at https://steemit.com/market. Powering up simplifies our process in receiving rewards because all powered up post rewards go directly into our Steem Power balance. Note that comments always pay 50/50. If we have a tax payment system which treats Steem power as an option to receive Steem rather than having it as a currency, we also can simplify taxes by only paying when we actually power down the Steem Power into Steem. For simplicity, I am now doing 100% power up until the Steem Dollar price is over $1.10 consistently because then I would earn about 5% more per post payout.
Steem Dollars were trading as high as $2 earlier in 2017 which inspired my post explaining how to earn more by selecting the 50/50 payout at https://steemit.com/steemit/@jerrybanfield/steemit-authors-earn-37-more-steem-with-50-50-payout. If we believe the price will go high again, taking the 50/50 payout could be better if we want to hold SBD for a day when they trade high or as a hedge against Steem dropping in value in the future at which point Steem Dollars would have more value than today. I am betting on a huge price spike and consistent rise in the Steem price which motivates me to put everything I am getting back into Steem Power!
In summary, being aware of the author payout choices we have can help us maximize our rewards from posts and select a strategy going forward optimized for either reinvesting automatically with Steem Power or cashing out 50% with SBD!
Love,
Jerry Banfield
Bonus: Steem Power and Taxes
After an in person talk with @lexiconical, I am adjusting my tax payment system by only paying tax when I actually power down and then cash out to my bank account or another cryptocurrency at which point it becomes income because potentially overpaying a whole lot on something that is not clearly defined as a currency seems foolish. If an auditor disagrees on my good faith assumption in the future or the tax code does make it more clear how to tax Steem Power and rewards from Steemit, I will be happy to review the difference. More on this in an upcoming post!
Thanks for the tip!
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Thanks for sharing
Great post never really realized that it is much better to switch between 100% Power Up if SBD is Below a Dollar. and 50/50 Post Payout when SBD is 1$+
Thank You for the Tip!
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@adsactly thank you for the invitation I just sent you a message!
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GREAT award winning post! Follow me @lurehound
Great math that clarifies more options.Thanks
Let's hope we all owe ridiculously large amount to the tax man next year!
Yea!
Thanks you for the tips! Are very helpful for peopel like me. I'm new here and I have a really positive feeling about this new world steemit!! Thanks again!!
Interesting approach Jerry. But aside from the approach, your comment caught my eye.
Specifically, "I am adjusting my tax payment system by only paying tax when I actually power down and then cash out to my bank account or another cryptocurrency at which point it becomes income because potentially overpaying a whole lot on something that is not clearly defined as a currency seems foolish."
As I understand it, the IRS hasn't come out and defined cryptocurrency as money. It's my understanding that it's treated as property for tax purposes.
So if that's the case, going from one crypto to another (and in some cases that is the only way to buy some cryptos) would seem to me to be more like a 1031 exchange.
"IRC Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange. Gain deferred in a like-kind exchange under IRC Section 1031 is tax-deferred, but it is not tax-free."
That being said, just hours ago, I read this: https://www.forbes.com/sites/greatspeculations/2017/08/15/cryptocurrency-traders-risk-irs-trouble-with-like-kind-exchanges/#77e85ae226a8
"Section 1031 specifically excludes stocks, bonds, notes, and indebtedness. It does not mention “cryptocurrency” or “virtual currency” since Section 1031 predated the advent of cryptocurrencies."
That being said, cryptocurrency 'coins' are not stocks, bonds, notes or indebtedness and the IRS does not define it as currency, but property, hence the treatment as capital gains.
When you sell a home you own, you trigger capital gains. When you do a 1031 exchange, you're going from one home to another which can be bigger, smaller, in totally different locale, but you don't trigger capital gains.
The IRS hasn't publicly ruled on the treatment of using 1031 like exchange between cryptos. So as I understand it, crypto only becomes income when you cash out to fiat.
I learned awsome fact!
same here
At current low value at Steem and SBD, 100% power-up is the way to go.
That's exactly what I'm doing. I did some research before i joined and everyone suggested 100% power-up to start. I always learn something from Jerry, and this is yet another item to add to my Steemit Tips sheet. I just wish they had a "One Click" button to buy Steem using a card, instead of opening an account through an exchange. That will come in time...
Great advice in regards to the rewards. I was holding SBDs but share your feeling that the Steem price will move upward when the exchange issue gets resolved. The Steem price has been artificially suppressed b/c of the exchange issues we've encountered and now is the time to load up on as much cheap Steem as possible.
Also appreciate the tax advice. I have been keeping a daily log on Steem and SBDs earned daily, but your explanation makes perfect sense. Upon consulting with my accountant he had advised holding any coin for greater than 1 year before selling so as to pay long term cap gains and reduce my tax rate. There's some gray area concerning what could be considered dividend income or actual income from rewards, so I think it's a really good idea to keep records of daily rewards just in case. The great thing is the block chain keeps track of all that for you, but keeping a spreadsheet like you outlined in one of your videos is definitely the way to go.