Wednesday, March 26, 2014
The IRS recently issued its first guidance regarding the topic of bitcoins.
In Notice 2014-21, the IRS stated it will treat virtual currencies, such as bitcoins, as property for federal tax purposes. So when computing gross income, a taxpayer who has received bitcoins as payment for goods or services must include the fair market value of the bitcoins (measured in U.S. dollars) as of the date the bitcoins were received.
See Alistair M. Nevius, J.D., New Guidance Clarifies Tax Treatment of Bitcoin and Other Virtual Currencies, Journal of Accountancy, March 25, 2014.
Special thanks to Eugenia Charles-Newton and Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.