If Alice gives BTC to Bob, how would Bob report it as income?

[don giovanni]

Lets say Alice wanted to help Bob out, so shes gives him 100BTC but over the course of a year. Bob is a good citizen and wants to report it as income but he also believes his btc will appreciate so he doesnt want to cash it out just yet, would Bob have to make note of the value of btc every time he receives some? Which metric would he use? Bob understands the IRS doesnt have any position on this yet, but Bob also understands the IRS might attack him nonetheless.   

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[Mike Christ]

Bob must first bow to his masters and say these words exactly: "Oh mighty IRS, my lords and masters, how may I make tribute to your humble holinesses, for thou dost not accept Bitcoin, and I must prove to thee, mine graces, my good citizenship."

Thus, the voice of God will ring, and truth will become clear to Bob, and Alice will think twice about helping Bob.

[Stephen Gornick]

would Bob have to make note of the value of btc every time he receives some?

If Alice is "helping out" Bob, is this a loan, or gift, or income to Bob?

If income or loan, he would want to record each payment, qty and date.  The market value can be determined from the exchange rate under a few different ways.

So then let's say it was income, and Bob holds onto the coins the entire year.  He has income from receiving the coins at the value when they were received.   Hey may have unrealized capital gains at the end of the year but until he cashes them out (or spends them) those need not be reported.  

If instead this was a loan, and bob started repaying, all interest payments would be converted to USDs and he could expense that as interest expense.  But other than that it doesn't matter if the value goes up or down on the value of something that was borrowed.

Related:
 - http://en.bitcoin.it/wiki/Tax_compliance

[thefiniteidea]

I'm so confused.

Why is a Canadian reporting anything to the IRS?

[don giovanni]

would Bob have to make note of the value of btc every time he receives some?

If Alice is "helping out" Bob, is this a loan, or gift, or income to Bob?

If income or loan, he would want to record each payment, qty and date.  The market value can be determined from the exchange rate under a few different ways.

So then let's say it was income, and Bob holds onto the coins the entire year.  He has income from receiving the coins at the value when they were received.   Hey may have unrealized capital gains at the end of the year but until he cashes them out (or spends them) those need not be reported.  

If instead this was a loan, and bob started repaying, all interest payments would be converted to USDs and he could expense that as interest expense.  But other than that it doesn't matter if the value goes up or down on the value of something that was borrowed.

Related:
 - http://en.bitcoin.it/wiki/Tax_compliance

Alright so bitcoins are considered a commodity and not a currency.

[odolvlobo]

In your example, the BTC is a gift and not taxable income.

If you are asking about receiving BTC as income, then this might help (if you are in the U.S.): http://www.irs.gov/taxtopics/tc420.html I don't think the IRS cares what bitcoin is classified as. If it isn't money, then it is bartering.

I am not a lawyer, account, financial advisor, broker, or any other type of regulated person, so feel free to ignore me.

[7 Fingers]

I'm so confused.

Why is a Canadian reporting anything to the IRS?

Does any arm of the Canadian government or any regulatory authority have
any pronouncements about Bitcoins?