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posted by
LaminatorX
on Wednesday March 26 2014, @08:40AM
from the you-know-you've-arrived-when dept.
from the you-know-you've-arrived-when dept.
gishzida writes:
Reuters reports, "Wading into a murky tax question for the digital age, the Internal Revenue Service said on Tuesday that virtual currencies such as Bitcoin are to be treated as property for tax purposes. General tax principles that apply to property transactions apply to transactions using virtual currency," the IRS said in a statement."
Better put that BTC wallet in a mattress.
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IRS: Virtual Currencies are Taxable
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I'm not a robot like you. I don't like having disks crammed into me... unless they're Oreos, and then only in the mouth.
-- Fry
(Score: 5, Interesting) by Dale on Wednesday March 26 2014, @01:02PM
If I buy a rock for $5 and later sell it for $7 I owe the IRS tax on the $2 gain (long term or short term based on when I bought and sold).
If I do someone's taxes (CPA here) and they fix my car in lue of payment I still have to claim income on the fair market value of the services I received ($500 car repair for doing the taxes for example).
Bit coin is no different.
If I buy a bitcoin for $600 and later sell it for $800 I would owe tax on the $200 gain.
If for doing the mining I gain a coin worth $800 I have $800 in income that has to be claimed in the year I got the coin (not when converted to cash).
There are not new rules needed for this stuff, they are just applying the existing rules and concepts to it.
Documentation and tracking are a whole different headache. I can't imagine the fun of trying to document buying a coin for $700 and then spending it later in small pieces and trying to allocate any gain or loss to the individual transactions. It could be done, but it would be a royal pita.
The IRS would have an equally difficult time trying to prove its case against the user. If people get too crazy and try to play off no gains when there obviously are there will still be issues that will come up.
Like with most things, people should claim income when they have it and pay tax on gains when appropriate. Issues arise when people trying to lie/cheat/steal/whatever.