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Tuesday, October 24, 2017

Crypto News: Using Bitcoin to buy a sandwich could trigger a tax bill

Using Bitcoin to buy a sandwich could trigger a tax bill

Crypto currencies may have been around for less than a decade, but they are proliferating so quickly that our established tax and regulatory systems can't keep up. And that could create serious tax problems for those who would join the digital currency revolution.

The total market value of the crypto currency market rose to over $177 billion in the third quarter of 2017. Crypto currencies are no longer just an adventurous and futuristic investment opportunity; they are making over-night millionaires and rapidly becoming an alternative payment method for everyday goods and services. For example, major companies like Microsoft, DISH Network, Overstock.com, and at least one Subway sandwich shop accept Bitcoin for payment.

But crypto currencies are not like real dollars. The IRS considers crypto currencies to be a form of property, which means that every crypto currency transaction, no matter how small, triggers a separate tax gain or loss. So, the seemingly casual nature in which one might exchange Bitcoins or other virtual currencies for everyday items could leave users and businesses with untold tax liabilities and a record-keeping nightmare, depending on the frequency with which they are used.

Here's how it works. For tax purposes, a bitcoin is treated as a piece of property, like a diamond. Of course, anyone who receives a bitcoin in exchange for a good or service has taxable income. What is less obvious is that anyone who uses bitcoin to pay for a good or service also can have taxable gain or loss.


Full story at http://cnb.cx/2xUWtbi


Source: CNBC


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