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

|By:, SA News Editor

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.