The IRS Says Bitcoin Isn't A Currency. It's Property

And that means it is subject to federal taxes.

On Tuesday, the Internal Revenue Service announced that bitcoin and all other forms of digital currency were to be counted as property, not currency. Per the Wall Street Journal, this distinction will give the fledgling market "a potential boost to investors" while imposing "extensive record-keeping rules--and extensive taxes--on [bitcoin's] use."

The move means that the IRS will treat bitcoin like stock or other intangible property for federal tax-keeping purposes. According to the IRS, "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." The IRS's imposition was widely expected. Recently, U.S. Attorney Preet Bharara, aka the "most dangerous man in bitcoin," told Fast Company that the cryptocurrency's regulation was all but inevitable, "to make sure it doesn't become a Wild West for criminal activity."

[Image: Flickr user TravelingOtter]

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