2014-3-25 Zero Hedge IRS Rules Bitcoin Is Property (Not Currency)

[qwerty555]

http://www.zerohedge.com/news/2014-03-25/irs-rules-bitcoin-property-not-currency

OK..SO

This appears to mean that any wealthy person with a large tax bill can write off  losses they incurred in the Mt Gox issue against their tax obligation.

this could be small if they bought long ago but could be very big if they bought within the last 6 months.

which, as WSJ notes, means an investor who buys bitcoin would typically have a capital gain or loss when it’s sold.  ( or LOST)

[BitOnyx]

Somehow this one "Bitcoin and other virtual currencies are treated as property, not as a currency. Therefore, an investor who buys bitcoin would typically have a capital gain or loss when it’s sold but wouldn’t have foreign-currency gains and losses." is kinda opposite to this one "If a taxpayer receives a payment in virtual currency, is it considered income?

Yes, the fair-market value of the currency (in U.S. dollars) on the date the payment was received is considered to be income. For more information on exchange rates, see the notice."

[qwerty555]

Also

If he accepts a bitcoin for goods on April 1st 2014 and the market value is $700 a coin (Income)

But he does not convert to Fiat until May 1st when the price was for example $400  then I suppose he can book a loss of $300 against his taxable income.

The timing of buying/receiving for goods or services ....and selling would

a) be key to if a loss is bookable

b) Open to many types of manipulation by acquiring paperwork that suggests (demonstrates to the satisfaction of the IRS..which has no rules for that YET) that they sold at a lower price than they actually did.

[siennamar]

time to pay my taxes.

[howardb]

So if Bitcoin is not currency but property, then technically buying or selling anything with Bitcoin is really barter!

[Rygon]

So if Bitcoin is not currency but property, then technically buying or selling anything with Bitcoin is really barter!

This ruling is hardly a surprise. It just confirms what everyone had thought based on current tax law.