Bitcoin & Other Virtual Currencies on your U.S. Tax Return
Welcome to the gold rush of 2017, where the new gold is no longer a physical product, but virtual currency (cryptocurrency). All the rage in silicon valley, the subject of many confused google searches and medium blog posts of why you should be investing, bitcoin and other virtual currencies are taking the financial world by storm. We won’t attempt to educate you on the specifics of virtual currency, and we certainly will not be providing financial investment advice. What we will do, however, is explain to you the U.S tax reporting requirements from transactions in Bitcoin and other virtual currencies.
What is a virtual currency
“The new money” – Bitcoin and other virtual currencies are a method to exchange money or assets between parties. A “Digital representation of value” – although there is no legal tender status in any jurisdiction (they are not backed by a principal authority or governing body), they operate just like paper money (on the internet) and growing number of vendors are beginning to accept it as payment (although still nascent). Bitcoins are ‘mined’ by powerful computers.
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