lol not trying to troll you im just saying, unless california has implemented some new law and has the technology and the man power to pull it off to actually tax your btc income then NO its not taxable...
Im not sure what the state tax forms look like but im looking at the federal 1040 right now and NOWHERE do i see "BITCOIN" anywhere on it....
.... of course you don't, because your taxes are due in USD? If your argument is that because the IRS don't ask about it, that you don't owe it - that's fucking stupid. You're supposed to pay tax on barter as well, you're supposed to figure out the USD value of whatever you bartered and claim it accordingly. Personally as far as income tax goes, I would just claim the amounts of the conversions to USD that you have to make, and for fuck's sake don't keep any books in BTC in case you get audited. However, there's something to be said about taking tax advice off the internet - it's worth about what you paid for it. If OP makes more than a few hundred bucks off this venture he really should go speak to a tax accountant/attorney instead.
As I said, the California State Board of Equalization are animals - they make the IRS look like a bunch of free-love hippies. They have zero qualms about putting a ramen-profitable small business
out of business if the state doesn't think it's getting it's "fair" share.
But by all means, dodge all the taxes you like, just don't go telling people it's a good idea - particularly not when they live in California.