David Hariton and Jeff Hochberg Comment on IRS Issuing Notice on Bitcoin as Property, Not Currency in Tax Notes Today ArticleMarch 26, 2014
In the March 26 article, “Bitcoin Is Property, Not Currency, IRS Says,” published by Tax Notes Today, Mr. Hochberg commended the IRS for announcing in a notice that Bitcoin is property, not currency, and for outlining questions and answers on aspects of virtual currency transactions. Mr. Hochberg said that issuing the notice, “…demonstrates that the IRS is able and willing to respond to innovations in the financial marketplace and is determined to prevent the use of such innovations to avoid U.S. tax.” The IRS clarified that virtual currency should be treated as non-currency assets, and general tax principles regarding property transaction apply to virtual currency. Mr. Hariton noted one of the most significant aspects of the notice, which is that virtual currency will not be treated as currency for rules on foreign currency transactions. The article continues to discuss the implications of the notice, including making it impractical for taxpayers to use virtual currency as a form of payment for personal transactions.