Feeds

Revealed: What the US taxman really thinks of crypto-cash Bitcoin

Essential reading if you want to pay your staff in BTC, for instance

Next gen security for virtualised datacentres

The US Internal Revenue Service (IRS) has laid out a formal set of policies for how it will handle Bitcoin and other virtual currencies for tax purposes.

In a guide (PDF) released Tuesday, the IRS said that it would be considering cryptocurrencies to be property, and as such would be subject to US laws regarding the transfer and holding of property in calculating taxes.

"The Internal Revenue Service is aware that 'virtual currency' may be used to pay for goods or services, or held for investment," the IRS said in prefacing its sixteen point guide on virtual currencies.

"In some environments, it operates like 'real' currency -- i.e., the coin and paper money of the United States or of any other country that is designated as legal tender, circulates, and is customarily used and accepted as a medium of exchange in the country of issuance -- but it does not have legal tender status in any jurisdiction."

According to the IRS, the ruling allows employers to report wages paid to both employees and contractors as property transactions. This will allow employers and business owners to log and report wages paid out in virtual currency through either a form W-2 (as salary) or a form 1099 (for contract work).

The rulings would apply to transactions in which currency valued at $600 or more was exchanged, the same threshold applied to property transactions under IRS rules.

The ruling will also prevent users from reporting virtual coins in a currency gain or loss as they could foreign currencies. Users will, for tax purposes, value the currency for tax reporting purposes based on the market value at the time the transaction took place (so a virtual currency transaction taking place last summer would be based on currency value at the time rather than a currency's current trading price.)

Additionally, the IRS said that it will classify companies who facilitate Bitcoin (and other virtual currency transactions) as third-party settlement (TPSO) organizations for tax purposes, placing a classification on the brokers who help conduct virtual currency transactions between merchants and end-users.

The classification comes as many Americans are preparing to file their federal and state income taxes ahead of the 15 April filing deadline.

Government classifications of cryptocurrencies have been a matter of debate and speculation in recent months. Bitcoin in particular has seen prices rise and fall with the release of government decrees and classifications regarding the virtual currency.

Bitcoin markets reacted to the IRS release with little outrage or surprise. The Coindesk Bitcoin Price Index remained (relatively) stable over the course of the day before and after the announcement. The Bitcoin Foundation has yet to offer its two cents (or .00003BTC) on the matter. ®

Next gen security for virtualised datacentres

More from The Register

next story
Britain's housing crisis: What are we going to do about it?
Rent control: Better than bombs at destroying housing
'Stop dissing Google or quit': OK, I quit, says Code Club co-founder
And now a message from our sponsors: 'STFU or else'
Top beak: UK privacy law may be reconsidered because of social media
Rise of Twitter etc creates 'enormous challenges'
Ex US cybersecurity czar guilty in child sex abuse website case
Health and Human Services IT security chief headed online to share vile images
Uber, Lyft and cutting corners: The true face of the Sharing Economy
Casual labour and tired ideas = not really web-tastic
We need less U.S. in our WWW – Euro digital chief Steelie Neelie
EC moves to shift status quo at Internet Governance Forum
Oz biz regulator discovers shared servers in EPIC FACEPALM
'Not aware' that one IP can hold more than one Website
prev story

Whitepapers

5 things you didn’t know about cloud backup
IT departments are embracing cloud backup, but there’s a lot you need to know before choosing a service provider. Learn all the critical things you need to know.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Backing up Big Data
Solving backup challenges and “protect everything from everywhere,” as we move into the era of big data management and the adoption of BYOD.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?