Printed from http://www.electronista.com

IRS declares Bitcoin, virtual currencies as property for tax purposes

updated 04:10 pm EDT, Tue March 25, 2014

Bitcoin miners required to declare earned virtual currency

The Internal Revenue Service has declared that Bitcoin should be classed as property for tax purposes, and not as a currency. The ruling, which clarifies the tax-related standings for its supporters, can be applied to virtual currencies, with the US government agency also stating that owners may need to pay more tax or deduct a loss depending on what happens to the value of the currency as it is owned.

The notice, received by TechCrunch, is relatively straightforward, and effectively treats virtual currencies as the equivalent of stock. Payments made by the currency from an employer to an employee needs to be reported and are subject to federal income tax withholding and payroll taxes, and the gain or loss from its sale or exchange will depend on "whether the virtual currency is a capital asset in the hands of the taxpayer."

People who "mine" for the currency will need to include the value of the newly-minted currency as gross income as of the date of receipt, and can be subject to taxation as if the owner is self-employed.

Bitcoin, and virtual currencies in general, have found it difficult to be accepted by governments around the world, with one Texas federal judge recognizing Bitcoin as a regulatable currency in August last year, and China's central bank warning financial institutions against using Bitcoin in December, citing a potential risk of money laundering. Earlier this month, the Mt. Gox Bitcoin exchange filed for Chapter 15 insolvency in the United States, with another exchange called Vircurex having similar financial problems.



By Electronista Staff
Post tools:

TAGS :

toggle

Comments

Login Here

Not a member of the MacNN forums? Register now for free.

toggle

Network Headlines

toggle

Most Popular

Sponsor

Recent Reviews

Dell AD211 Bluetooth speaker

For all of the high-priced, over-engineered Bluetooth speakers in the electronics market, there is still room for mass-market solution ...

VisionTek 128GB USB Pocket SSD

USB flash drives dealt the death blow to both the floppy and Zip drives. While still faster than either of the old removable media, sp ...

Kodak PixPro SL10 Smart Lens Camera

Smartphone imagery still widely varies. Large Megapixel counts don't make for a good image, and the optics in some devices are lacking ...

Sponsor

toggle

Most Commented

 
toggle

Popular News