How does the U.S. government view Bitcoin? Is it a currency, a commodity, or something else?
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irs.gov/uac/Newsroom/IRS-Virtual-Currency-Guidance– Nick ODellFeb 26, 2016 at 4:24
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1 Answer
The U.S. government views Bitcoin as a commodity, kind of like gold.
If you buy Bitcoin at one price in dollars, and sell it at a higher price in dollars, you will have a gain (in dollars), that you will have to pay tax on.
If you buy some Bitcoin (using dollars), and then use the Bitcoin to buy a car, you have made a "two stage" purchase of a car. (If you then re-sell the car for dollars, you may have a taxable gain if the dollars you receive are more than the dollars you used to buy the Bitcoin that you used to buy the car.
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@Jesse: Consult your tax accountant. You're not a car dealer so the answer may be "technically yes, but the state won't chase you." That was actually my experience with a "use" tax. I filed and paid $24 (6% of $400), and the state of Connecticut sent it back to me.– Tom AuFeb 26, 2016 at 14:07