IRS: Bitcoin Is Property, Not Currency

Image: IRS: Bitcoin Is Property, Not Currency

Wednesday, 26 Mar 2014 12:02 PM

By Nick Sanchez

  Comment  |
   Contact  |
  Print   |
    A   A  
  Copy Shortlink
The IRS made its first pronouncement on bitcoin and other virtual currencies Tuesday, declaring them property instead of currency.

In a statement released on, the bureau acknowledged that, "In some environments, virtual currency operates like 'real' currency ... but it does not have legal tender status in any jurisdiction." Generally speaking, that means that "tax principles that apply to property transactions apply to transactions using virtual currency."

Urgent: Do You Approve Or Disapprove of President Obama's Job Performance? Vote Now in Urgent Poll

The news was welcomed by many as a legitimization of virtual currencies, however the announcement was bittersweet for those "mining" bitcoin and those investing in it, as they're now facing both income taxes and capital gains taxes.

In a blog post, bitcoin pricing index Coindesk wrote, "The increased clarity – provided three weeks before the end of the US tax year – will come as a relief to many who were scared to get involved in bitcoin, commercially."

Coinbase, a bitcoin bank with more than 1 million consumer accounts, also welcomed the clarification with a tweet.

Democratic Sen. Tom Carper said in a statement that the IRS guidance "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."

According to Reuters, bitcoin began circulating in 2009, and its present market value stands at $8 billion, with 80,000 transactions occurring daily.

Some worry that the number of transactions may dip with the new rules, primarily as a result of decreased liquidity.

Those mining bitcoin or receiving it as payment are subject to the same income reporting as anyone receiving dollars, however the day-to-day value fluctuation of each bitcoin could be subject to capital gains and losses reporting and taxation if held. That means that each time a bitcoin is spent, the spender may need to figure out how much they gained or lost in dollars while holding it, and report in on their taxes.

The announcement comes as the Securities and Exchange Commission continues its investigation into whether the bitcoin market should be regulated.

Editor's Note: Do You Support Obamacare? Vote in Urgent National Poll

Related Stories:

© 2014 Newsmax. All rights reserved.

  Comment  |
   Contact  |
  Print   |
  Copy Shortlink
Send me more news as it happens.
Get me on The Wire
Send me more news as it happens.
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
Zip Code:
Privacy: We never share your email.
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
You May Also Like

Cambodia HIV Outbreak: 100-Plus People Diagnosed; Investigation Sought

Friday, 19 Dec 2014 18:50 PM

More than 100 HIV infections in a single Cambodian village have spurred the country's prime minister to ask for an inves . . .

Slender Man Case: Two Girls Competent to Stand Trial in Stabbing

Friday, 19 Dec 2014 18:26 PM

Two girls who allegedly stabbed a 12-year-old friend over the online game Slender Man are competent to stand trial for a . . .

Kate Upton Sexiest Woman Alive; Model Apologizes to Teen Brother

Friday, 19 Dec 2014 17:52 PM

Model Kate Upton was selected as People magazine's first Sexiest Woman Alive, a month after Chris Hemsworth received the . . .

Top Stories

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

America's News Page
©  Newsmax Media, Inc.
All Rights Reserved