Get ready to calculate your capital gains, Bitcoin's about to be taxed!
In general, the US government doesn't appreciate having any currencies domestically competing with the dollar. Now that Bitcoin has been exploding in value and popularity the last few years, a lot of people have been anxiously wondering what the government might say about it. Now, the IRS has broken the silence: Bitcoin isn't an actual currency, it's just property.
Apparently, that thing you can use to purchase stuff on Overstock.com and other places isn't actually money, just funfair tokens. As such, the taxman will treat it like stocks, bonds, or any other thing of worth that's not physical. That means that any transactions made using Bitcoin are subject to the same rules and regulations that you'd have to jump through to buy or sell stocks. If you want to purchase a cup of coffee using Bitcoin, you'll now have to work out the capital gains of the transaction and report it on your 1040 at the end of the year.
It seems obvious that Bitcoin might fit the dictionary definition of currency, but legal realms are allowed to play by their own rules. While the decree might come across as demeaning to Bitcoin enthusiasts, it might be the lesser of two evils. If it's a legal property, it's taxable, but if it's a legal currency, mining it might be illegal. Personally, I'm holding out until the feds make an official statement on the existence of Dogecoin.