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I believe this is the point which the IRS should (if at any point) tax. They can't tax bitcoin yet as they haven't even officially declared it as legal tender.
by Sealy 13y ago
I believe this is the point which the IRS should (if at any point) tax. They can't tax bitcoin yet as they haven't even officially declared it as legal tender. They have to agree what it is first and declare it as a currency before they can tax it. This will take them a long time!
Edit: I stand corrected by the comments below.
- saalweachter 13y agoChickens aren't a recognized currency either, but if you conduct your business in them, you will be required to fill out the tax forms pertaining to barter.
- jlgreco 13y agoDo you use the USD<->Chicken exchange rate at the time of barter, or do you use the USD<->Chicken exchange rate at the time that you actually perform that conversion? I think the rules for commodities and currencies are likely different. Regardless, bitcoin is clearly one of those two and you don't get to avoid the IRS by only dealing in commodities.
- gamblor956 13y agoSince there is no authority one way or the other, you generally get to pick. As long as you are consistent (i.e., you always treat it as a commodity/asset or always treat it as a currency), the IRS will generally accept your choice until they or the legislature issues affirmative guidance compelling a particular choice. (Note: this is known as a "method of accounting" in tax parlance.)
- kevinnk 13y agoSomething doesn't have to be legal tender to be taxed. If I'm a home builder I don't avoid paying taxes by being payed in, say, a house rather than USD. I still have to report it as income.