Tuesday, March 25, 2014

Did the IRS Just Shoot Bitcoin in the Head? Bitcoin is a Security for Tax Purposes, not a Currency

The U.S. government will treat Bitcoin as property for tax purposes, applying rules it uses to govern stocks and barter transactions, the Internal Revenue Service said in its first substantive ruling on the issue.

Today’s IRS guidance will provide certainty for Bitcoin investors, along with potential income-tax liability that wasn’t specified before. Purchasing a $2 cup of coffee with Bitcoins bought for $1 would trigger $1 in capital gains for the coffee drinker and $2 of income for the coffee shop.

“The Internal Revenue Service’s guidance today provides clarity for taxpayers who want to ensure that they’re doing the right thing and playing by the rules when utilizing Bitcoin and other digital currencies,” Senator Thomas Carper, a Delaware Democrat, said today in a statement.

Did the IRS just shoot bitcoin in the head?

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