We’ll also assume you are subject to the maximum ordinary income tax rate and long-term capital gains rate. For simplicity, we will not discuss employment tax or state tax consequences. In each of the below examples, assume you receive 100,000 shares subject to vesting, worth $.01 per share at the time of grant, $1.00 per share at the time of vesting, and $5.00 per share when sold more than one year later.
WASHINGTON, June 30 (Reuters) - The U.S. commodities regulator announced on Thursday it had filed civil charges against a South African man and crypto his company for operating a fradulent commodity pool worth over $1.7 billion in bitcoin.
The CFTC said in its complaint that the company claimed to have proprietary software that would realize significant trading gains for investors who pooled their bitcoin
with it, but in reality no such "bot" existed.
For most of Bitcoin's history, the average block time has been about 9.7 minutes. This is because Bitcoin
's price has remained steady for most of 2019. However, for most of 2019 the block time has been around 10 minutes. Because the price is always rising, mining power does come onto the network at a fast speed which creates faster blocks.
Mining uses SHA256 cryptography which breaks the data up into 64 byte chunks and operates on each chunk so there are 2 chunks and 2 steps to the SHA256 algorithm in this case. A block starts out with a header and a single transaction to pay the miner reward. The first sha256 step is performed on the first chunk of the header and that does not change. This transaction has a special name (called the "coinbase"). This is called the "midstate" because it is partway through the SHA256 process which is 2 steps in this case. Transactions are added to the block. This includes the nonce field. The nonce is returned if it meets the difficulty. A block "header" of fixed length is formed by doing cryptographic hashes of the transactions (called the Merkle root). The entire solution is run through a second round of SHA256 and the solution compared to the difficulty (that is part of the block header). The "midstate" is sent to the ASIC processor, The second step of SHA256 is done on the second chunk of the header. The nonce is incremented and the last 2 steps (6 and 7) are done again 2**32 times to exhaust all possible nonce values. If no solution is found another nonce contained within the coinbase transaction is incremented. This is done on the ASIC chip. This is done on the ASIC chip. This changes the hash of the coinbase transaction and the merkle root The process goes back to step 5 and continues until a solution is found. This is done on the Application Specific Integrated Circuit (ASIC) chip.
In reality, only a small portion of the pooled bitcoin
was ever invested, at a loss, and the rest was "misappropriated," according to the CFTC. The company ultimately filed for bankruptcy in 2021, shortly after which South African authorities launched a fraud investigation.
The are are problems with using "multiplying 6" as scheme. The biggest problem is that it is pretty easy to figure out the original number by just diving by 6! Also, the number will get larger and larger.
commodities regulator announced on Thursday it had filed civil charges against a South African man and his company for operating a fradulent commodity pool worth over $1.7 billion in bitcoin.
Your economic gain after tax? On the sale (which occurs more than one year after the date of grant) you recognize a taxable gain of $4.99 per share (not $5.00, because you get credit for the $.01 per share you already took into income), and pay additional tax of $99,800 (i.e., $499,000 x 20%). In this example you timely file a Section 83(b) election within 30 days of the restricted stock grant, when your shares are worth $1,000. You pay ordinary income tax of $370 (i.e., $1,000 x 37%). $399,830 (i.e., $500,000 minus $370 minus $99,800). Because you filed a Section 83(b) election, you do not have to pay tax when the stock vests, btc only on the sale.
The CFTC said in its complaint that the company claimed to have proprietary software that would realize significant trading gains for investors who pooled their bitcoin with it, but in reality no such "bot" existed.
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