The IRS classifies all cryptocurrencies as property. Buying Bitcoin is not a taxable event. But using Bitcoin to buy something else is considered a sale of Bitcoin and selling property for more than you purchased it for is a taxable event. If you "sell" some Bitcoin at a profit that you purchased within the last year, you will have to report short term capital gains on your tax return and pay ordinary income tax rates.
The few buyers Reuters could locate were those who had posted about their experiences on online cryptocurrency forums. None would identify themselves. One complained of being “scammed.” Another told Reuters he had received his tokens without problem; he blamed U.S. sanctions against Venezuela and “awful press” for hurting the petro’s debut.
Most investors know that a diversified portfolio spreads out your risk and keeps your returns afloat if one of your investments takes a nosedive. The question then becomes: Where are the best places to invest your money?
While the stock market offers plenty of options for diversification, it's wise to look beyond Wall Street and find other investment vehicles with solid yield potential. We asked members of Forbes Finance Council to share their thoughts on the best holdings to add to your portfolio. From cryptocurrency to health savings accounts, here's what they had to say.
1. Life Insurance
2. Self-Directed IRAs
3. Online Businesses
5. Real Estate Investment Trusts
6. 401(k) Account
7. Health Savings Account
First, it was Arizona, and now Georgia is moving to accept payments in Bitcoin and other cryptocurrencies. Both proposed laws are not yet final, but Arizona’s Senate Bill 1091 has passed the State Senate. It seems likely that some other states will follow, and perhaps the IRS eventually will too. In Arizona, the tax man would convert it to dollars at the prevailing rate. You would get credited with the converted dollar amount, so timing could be important. IRS position said cryptocurrency is property in Notice 2014-21. That classification as property has some big tax consequences, accentuated by wild price swings.
f you owe $5,000 in taxes, you could pay the $5,000 in dollars. Or soon, you could pay with $5,000 worth of say Bitcoin, Ripple, or Ethereum. As long as the crypto is worth $5,000 when you pay, you’re home free, right? Not really. After all, you need to consider the sale you just made. The transfer of the crypto to the tax man is a sale, and that could mean more taxes for the year of the payment. If you bought the crypto for $5,000 the day you pay your taxes, there’s no gain.