IRS classifies Bitcoins as property not currency
The US Internal Revenue Service has moved to classify Bitcoin, and other virtual currencies, as property (not currency) for tax purposes.
A change in designation would see owners become liable to capital gains taxes applicable on ordinary income or assets – as well as gains and losses made on sales or exchanges.
In a statement the IRS said: “In some environments, virtual currency operates like ‘real’ currency – ie, the coin and paper money of the United States or any other country that is designated as legal tender, circulates and is customarily used and accepted as a medium of exchange – but it does not have legal tender status in any jurisdiction.
The IRS added that the virtual currency would henceforth be ‘treated as property for US federal tax purposes’, adding: “General tax principles that apply to property transactions apply to transactions using virtual currency."