IRS: Bitcoin Is Not Currency

With taxes due in less than a month, the Internal Revenue Service made its first major ruling on Bitcoins, saying they will be treated as property under the guidelines used for stocks and barter transactions. Effective immediately, the U.S. government will not recognize Bitcoin as a form of currency, at least when it comes to tax purposes. “The danger is the creation of an electronic black market, similar to the cash economy,” said Joshua Blank, a tax law professor at New York University. Bitcoin miners will have to report their earnings as taxable income with a value equal to the price on the day it was mined, and if they mine for business, they will be subject to payroll taxes as well.