When you spend it is capital gain/loss. Weird enough...
For tax purposes (in USA), I am not certain this is income at all.
Even if it is barter it still is taxable the moment you spend it. I just don't know how we would even explain it.
My guess is if you spend BitUSD you'll either be paying barter or income taxes of some sort somehow. I doubt it would be completely tax free. But even if it were tax free how exactly would we explain our income sources to people who don't know this industry so we don't appear as criminals?
As a delegate how would you explain to people how you make money?
But if it's not an investment then it cannot be a "capital gain". Or can it?
A capital gain is a profit that results from a disposition of a capital asset, such as stock, bond or real estate, where the amount realized on the disposition exceeds the purchase price. The gain is the difference between a higher selling price and a lower purchase price. Conversely, a capital loss arises if the proceeds from the sale of a capital asset are less than the purchase price.
Dividends, yield, and delegate fees are not capital gains. That would be income. Capital gains would apply to people who purchased Bitcoin as an investment of some sort and then the price of Bitcoin went up. In our case it doesn't work like that at all because trading in Bitshares can change the amount of BTSX you have so that capital gains don't really track anything.
Income is the only thing you can track. You know if you have more BTSX or less. You know if you have more BitUSD or less. You can track income in BitUSD received from the algorithmic function. You can track automatic income from algorithmic sources.
1% yield per year would just become 1% income per year right? The question also is about how do you tell people what you do for a living? No one is going to believe you if you tell people you work for a computer algorithm without having a word to explain what that even is.
So that is why I came up with a couple phrases. Automatic passive income and algorithmic passive income. This way people don't have to understand Bitshares to understand it is at least conceptually possible to get passive income from an algorithm or automatic process.