Property

The Tax Treatment Of Bitcoin And Other Cryptocurrencies

The Tax Treatment Of Bitcoin And Other Cryptocurrencies

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.