Bitcoin Declared As A Property By IRS, No More Currency

IRS - Internal Revenue Service has finally came up with the decision and declared 'BITCOIN' as a property, not as currency. Before IRS wasn't sure how to tax Bitcoin, but after certain research, the virtual currency is declared as a property in US. You all know, when you have a property you have to pay tax. Same applies for Bitcoin means, Bitcoin owners gaining their income as Bitcoin will have to pay taxes, and may be able to deduct a loss if Bitcoin loses value, just as if Bitcoin were a stock. IRS wrote, "In some environments, virtual currency operates like 'real' currency, but it does not have legal tender status in any jurisdiction. Therefore, virtual currency is treated as property for U.S. federal tax purposes and general tax principles that apply to property transactions apply to transactions using virtual currency.".

IRS Declared Bitcoin As A Property Instead Of Currency

Virtual currency owners who regard their holdings as an investment will be happy to know they can now take advantage of the capital gains tax, which allows investors to pay a much lower percentage on holdings sold after a year and also deduct up to $3,000 in losses. But those who use Bitcoin and other virtual currencies as an actual medium of exchange may be encumbered by the additional paperwork. Virtual currency sellers are not eligible for capital gains. Virtual currency miners will report their earnings as taxable income, and will be subject to payroll taxes if they mine as part of a business.

Via - TheVerge