how is buying a contract not an event? They treat this as business. It would be like owning a delivery business and you buy that Ford or GM truck you mentioned to operate. Thus making it a reportable event. 

The contract is the overhead cost in order to receive income. Without the contracts, there are no commission income. I did say you cannot sell the contracts, actually one can try, but since I was told the account is one time and the password unique to such contract is given one time and cannot be replaced. So if i sold you a contract, i would still know the password and I can regain control if/when i want to using the unique password. The contract can appreciate in value if ETH appreciate, if one bought a level 1 at 30,  and 2 years from now worth 300, but unlikely anyone would buy for the explanation i mentioned before. The smart contracts are definitely a cost of running this business.

This seems getting complicated. My head hurts, lol. 

I guess one thing must need to be established, is this a business or not? In my view, the people who owns the contracts, works a lot of hours networking and recruiting. Many are successful and have recovered the costs of contracts like 10-20 x over if not more. The platform is "to earn" Ethereum income.  Ponzi, scheme, what have you, there is intention to profit here, that by definition is business, would you say? What about the over head of internet expense, phone, laptops, etc they use to operate the business? these are business expense I would say. 

"It seems unlikely anyone will get more than their initial investment, other than relying on ETH to increase in value."

I know people (online) who has earned up to over 500k in matter of less than 6 months using this platform. Wouldn't you report that on Schedule C as commission income? That is definitely reportable. This is huge. How would you report it then if not on Schedule C. That really begs the question of it being a Business.

While many have cashed some out, between the time it was earned and the time it was sold when it appreciated in value, this even obviously triggers Sch D capital gains, some have use the commissions earned to level up. Again it is cost of running the business in order to have more opportunity for commissions. 

Thanks for discussion.