We have a Free Printable E-Sheet available on how Bitcoin is Taxed! Please visit our Social Media outlets to sign up for that! In the meantime, below is an excerpt from a Notice the IRS released regarding the taxation of cryptocurrency.⠀
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The IRS says in Notice 2014-21, “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 and services must, in computing gross income, include the Fair Market Value of the the virtual currency, measured in U.S. Dollars, as of the date that the currency was received.”⠀
The IRS says in Notice 2014-21, “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 and services must, in computing gross income, include the Fair Market Value of the the virtual currency, measured in U.S. Dollars, as of the date that the currency was received.”⠀
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Continued, “Transactions using virtual currency must be reported in U.S. Dollars. 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.”
Continued, “Transactions using virtual currency must be reported in U.S. Dollars. 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.”