This is a good article about How Bitcoins are Taxed:
https://www.thebalance.com/how-bitcoins-are-taxed-3192871Here is a preview of the article:
What is Virtual Currency from a Tax Perspective? Here's What the IRS Has to Say
Definitions:
- "Virtual currency is a digital representation of value that functions as a medium of exchange, a unit of account, and/or a store of value."
- Virtual currency "does not have legal tender status in any jurisdiction."
- "Virtual currency that has an equivalent value in real currency, or that acts as a substitute for real currency, is referred to as 'convertible' virtual currency."
- "Bitcoin is one example of a convertible virtual currency."
- "Bitcoin can be digitally traded between users and can be purchased for, or exchanged into, U.S. dollars, Euros, and other real or virtual currencies."
Tax Treatment:
- "For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency."
- "A taxpayer who receives virtual currency as payment for goods or services must, in computing gross income, include the fair market value of the virtual currency, measured in U.S. dollars, as of the date that the virtual currency was received."
- "Transactions using virtual currency must be reported in U.S. dollars" on the tax return.
- "Taxpayers will be required to determine the fair market value of virtual currency in U.S. dollars as of the date of payment or receipt."
- "If a virtual currency is listed on an exchange and the exchange rate is established by market supply and demand, the fair market value of the virtual currency is determined by converting the virtual currency into U.S. dollars ... at the exchange rate, in a reasonable manner that is consistently applied."