Bitcoin is 'Property' Not 'Currency' Says IRS — LIkely Every Transaction With Bitcoin Must Be Reported In Some Way

Bitcoin is 'digital currency' designed to free users from paper and metal currency, big credit card and money
transaction fees, and the prying eyes of governments. (Illustration by Jason Benjamin)

By Rob Wile
The IRS has ruled Bitcoin should be treated as property, not as currency, for tax purposes.

According to Bitcoin tax expert Tyson Cross, this will create a significant burden on Bitcoin users, as every transaction they ever make using the digital currency will have to be reported in some way.

That would not be the case if it had been ruled a digital currency.

"Users will have to track their transactions and determine the amount of their taxable gain each time," he told BI in an email. "It's quite a burden. The rules on taxing foreign currency provide an exception for 'personal transactions' for that very reason. It would be great to have that exception (or something similar) apply to bitcoins as well."

But Cross adds the IRS' guidance may not stand forever. The Treasury Department should now begin developing formal regulations tailored to digital currencies.

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