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IRS rules bitcoin is property, not currency - and it's taxable, too

IRS rules bitcoin is property, not currency - and it's taxable, too

Bitcoin users have touted its independence from world monetary systems as one of its best features. Now that feature may cost it some value.

IRS has ruled that the digital money is not currency but property and, therefore, taxable.

From USA Today:

Although Bitcoin may operate like coin and paper currency and can be used to pay for goods and services, no country accepts it as "legal tender," the Internal Revenue Service said in its notice.

"Virtual currency is treated as property for U.S. federal tax purposes," the notice said. "General tax principles that apply to property transactions apply to transactions using virtual currency."

That means, for example, that anybody who pays employees in bitcoins is going to have to withhold income and payroll taxes and hand out W-2 forms.

Read the whole story here. Still confused by bitcoins? Here's a quick tutorial on the digital currency.

 

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