The Internal Revenue Service (IRS) in the US has declared Bitcoin as ‘Property’, as opposed to currency, and will be taxed as such. To those involved in the Crypto community, this represents a significant change in the way that Bitcoin vendors trade.
“The notice provides that virtual currency is treated as property for US federal tax purposes. General tax principles that apply to property transactions apply to transactions using virtual currency,” – The IRS
For vendors and traders accepting payments in Bitcoin in the US, profits will be treated as ‘Capital gains’ as opposed to income. This means that they will be subject to a lower taxation rate, with a maximum long-term tax rate of 20%, as opposed to the maximum income tax rate of 39.6%.
For miners of Bitcoin, the taxation rates are a little more tricky; Miners that produce their own bitcoins are charged two lots of tax. Firstly, they must declare the ‘fair market value’ of the virtual currency (on the day that it is mined) as a part of their gross income. This will then be subject to capital gains tax at the point of sale. The taxpayer must take this fair market value on the date of acquisition as the basis price for the coins. Capital gains will be due on the difference between that basis price and the sale price. If however, an individual mines bitcoin as a business, the net earnings from that business will be treated as self-employment income, and will be subject to self-employment tax...
Read more at:
http://www.coinchilli.com/bitcoin-will-be-taxed-in-the-us-as-property-not-currency/J.C Axe
