BITCOIN HAS RECEIVED a small boost after the US’s Internal Revenue Service (IRS) decided it will treat Bitcoin as property for tax purposes, but not as a currency.
The new rules means that US bitcoin owners will have to pay taxes on the income they gain as bitcoin increases in value.
Since all transactions will be treated as a taxable event, it means bitcoin owners will have to keep record of them, similar to making stock transactions and other deals.
In some environments, virtual currency operates like “real” currency…but it does not have legal tender status in any jurisdiction.” said a statement from the IRS.
“The notice provides that virtual currency is treated as property for U.S. federal tax purposes. General tax principles that apply to property transactions apply to transactions using virtual currency.”
The rules come into effect immediately and anyone who fails to comply with tax laws will be subject to penalties. However, the agency said it will be lenient if a failure to pay if it’s due to “reasonable cause.”
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