By TARA SIEGEL BERNARDJAN. 18, 2018 Bitcoin may grab headlines when it skyrockets in value, as it did much of last year, or when it plunges precipitously, as it has this week.
But the virtual currency has a reputation for providing a sense of anonymity to those who own it. That anonymity doesn’t extend to the tax authorities, however.
Come April, people who have bought and sold Bitcoin — or any of the other digital currencies that have quickly sprouted across the web — will be expected to report any profits on their federal tax returns. Considering Bitcoin’s jump of more than 1,500 percent last year, there are probably many people who logged gains or losses for the first time, as people rushed in with the irrational exuberance of the early dot-com days.
But how much tax you owe will depend on how and when you acquired the digital currency — which, in fact, isn’t treated as a currency at all. Instead, for tax purposes, the Internal Revenue Service views Bitcoin and its cryptocoin cousins as property.
For the most part, that means Bitcoin and other digital currencies will be treated similarly to an investment like stocks — but not always. Given the speed at which these currencies have caught on — Bitcoin was released only in 2009 — regulators haven’t quite kept pace. Read more from nytimes.com…
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