IRS: Bitcoin is property rather than currency, can be taxed


The IRS says it will apply rules used to govern stock trades and barter transactions, rather than currency, towards Bitcoin (BITCN).

Bloomberg notes the ruling means a $2 cup of coffee purchased via Bitcoins originally bought for $1 would yield a $1 capital gain for the coffee buyer, and $2 of income for the seller.

As with stocks, Bitcoins held for more than a year would be subject to a lower tax rate, capital losses can be deducted from gains, and different tax rules will apply for dealers.

Coinbase is currently showing a Bitcoin bid-ask spread of $583.04-$586.04.

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Comments (8)
  • Robert Laura
    , contributor
    Comments (52) | Send Message
     
    The big question remaining is, can individual investors hold them in a self-directed IRA and will they be subject to "real estate" based rules or treated more like stock?
    25 Mar 2014, 02:57 PM Reply Like
  • labas112
    , contributor
    Comments (518) | Send Message
     
    This is laughable. Are you even able to designate your oldest bitcoins from your newest? I feel like this would be like using SBUX stock to buy a cup of coffee.
    25 Mar 2014, 03:02 PM Reply Like
  • ChappyDave
    , contributor
    Comments (23) | Send Message
     
    If my Bitcoin has depreciated in value, can I take a capital LOSS on that coffee purchase?
    25 Mar 2014, 03:16 PM Reply Like
  • Robert Laura
    , contributor
    Comments (52) | Send Message
     
    Yes but my bet is you'll probably get audited as a result
    25 Mar 2014, 03:19 PM Reply Like
  • Robert Laura
    , contributor
    Comments (52) | Send Message
     
    Second market's initial Bitcoin trust offering has grown quickly and now they're moving on to regular investors.

     

    http://tinyurl.com/kvs... - link to a WSJ article from a few days ago
    25 Mar 2014, 03:18 PM Reply Like
  • TWagen
    , contributor
    Comments (168) | Send Message
     
    But buying through a fund eliminates the invisible nature of Bitcoins ? Not sure if I were to buy them that would be my avenue. If I want to work it via market impacts then I could just invest in companies that work in that arena and will benefit by its expansion.
    25 Mar 2014, 04:03 PM Reply Like
  • TWagen
    , contributor
    Comments (168) | Send Message
     
    Bitcoins are great for Micro purchases. I wonder how the IRS will feel about .0003 cent transactions and such.

     

    The exchanges all have differing values and so good luck with tracebility to its value at some far past time(s).

     

    And who will be reporting all of these CRYPTO Currency purchases to them for verification ? This will include 1 or 2 sided blind transactions.

     

    What nonsense ! They clearly do not get the concept or expected uses of the product (Bitcoins).
    25 Mar 2014, 04:01 PM Reply Like
  • monsatan
    , contributor
    Comments (12) | Send Message
     
    they just want to hit you with the 40% STCG tax
    26 Mar 2014, 06:39 AM Reply Like
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