bitlicense, bitcoin regulation, bitcoin lawsky, bitcoin new york As a wise man once said, there is no escaping taxes and death once you are born. When bitcoin was introduced there was a glimmer of hope, most of us thought that we might just be able to escape taxes. However, it was short lived, until IRS decided to impose taxes on virtual currency holdings. Now that bitcoin is considered as money, asset, commodity, currency and what not by various government agencies in the United States, one can do nothing but pay relevant taxes.
Now, how do we know what is taxable and what is not? Well, for that we have few experts who can make us understand. It will be helpful if you are involved with cryptocurrency and reside in the United States. Laura Shin is one such Good Samaritan who has explained how to deal with digital currency and the IRS when it comes to taxes. Her article in Forbes clearly explains about various different sources of bitcoin/digital currency and how to account for it. To begin with, all digital currency holdings are to be treated the same way one treats his/her capital assets like stocks and bonds. Internal Revenue Services in its guidance notice 14-21 refers to cryptocurrency as assets.
There are only so many ways one can come into possession of digital currency or spend it. Starting with mining. Considering you to be one lucky individual miner with enough hashing power to mine blocks after blocks, any block reward you might get has to be accounted for along with the number of bitcoins gained, its market value at that time and record the date and time. It is important to have proper records as bitcoin value is bound to fluctuate and you will never know what the value will […]
