What does this mean? – bottom line, if I understood it correctly, all “VC” Virtual Currencies will be treat as a property and will have tax implication. Yes, I know this is not new. To be fair, everyone whom make money off of anything would be required to report on their tax return, whether it’s a wash (no profit), or profit, or loss, keep your receipts and activities, the tax could be as high as 46% for some people if their earning is high with no expenses such as investing on a bitcoin mining machine and fees and stuff.
The IRS Tax Notice 2014-21 clarifies the treatment of Virtual Currencies(“VC”) such as Bitcoin. The guidance states that digital currencies are to be treated as property. Thus Capitals Gains must be paid on every transaction. This treatment of VC is overly burdensome as it will create onerous record keeping issues and unnecessary costs that will stifle the development and advancement of this important technology. Bitcoin is regularly used to pay for items and services, as it is a safe way to transfer payment. Under this interpretation, when Bitcoin is spent, the owner will have the tenuous responsibility of calculating their capital gains or losses, as well as the Seller of the goods or services. We ask that the IRS creates a new classification for VC’s that removes these challenges.