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Did you know that Bitcoins ARE taxable? Here’s how.
More and more individuals are using bitcoin as an acceptable
form of payment for goods or services, particularly for the sale of goods and services
online. The IRS tax code says that these bitcoins are taxable to the fair
market value (in USD) of the day that the bitcoins were received in exchange
for the goods or services.
On top of that, the taxpayer can have a gain or loss upon an
exchange of the currency for other property. The way this works is similar to
the stock market. For instance, people who own stocks consider them a capital
asset. When bitcoins are recognized as capital assets they can recognize a capital
gain or loss upon the exchange of bitcoins for property in relation to its
adjusted basis.
Taxation-wise bitcoins are treated as property so you may
want to have your CPA or local tax preparer familiar with these regulations
prepare your return. That being said, if you haven’t already decided to let a
tax professional handle your tax return, you may want to do so now.
Source: Keith A. Aqui. Notice 2014-21. Internal Revenue
Service. <http://www.irs.gov/pub/irs-drop/N-14-21.pdf>