You need to pay capitol gains if you hold the coins for a year or more.
More than a year. A year or less is short-term gains (in the US).
If you spend them right after buying them it can be said you are using bitcoin as a payment network and not an investment. If spending/selling after a year try this formula.
It makes no difference, it is still a tax event. Any gains made on the coins are taxable.
So if I hold Bitcoin in my wallet for more than a year I have to pay taxes on that? are you sure?
You don't owe taxes for just owning Bitcoins. You will owe taxes on any gains when they are realized (sold, spent or traded)
I mine altcoins and spend them in WAY less than a year by trading them into Bitcoins and using them on Gyft. So do I even need to report?
Mining could be immediate income or it could be manufacturing and therefore treated as stock. There is no IRS guidance yet, so it is up to you and your accountant to decide how to report it.
Gains made from coins are taxable, so trading one coin for another, or for a product or service, is a tax event and you would need to work out the gains made in USD and report it. Say you mined 5 LTC over the year, then converted to BTC to buy a $100 card. Your 5 LTC were realized for $20 each, so you would subtract the cost basis less any transaction fees to find their gains. Problem is because there is no IRS guidance you could also say you manufactured those 5 LTC and then spent them. In which case, you had income (not gains) of $100.
Stating the obvious, but this only applies to any sales (or purchases) you made in 2013 (for the US).
