01 Jun 2021
Is This Money Spendable? Taxation of Digital Currencies
The key element in understanding the tax consequences of virtual currency transactions is that the IRS has determined that a virtual currency is generally property for all federal tax purposes. A virtual currency is not a foreign currency or even a true currency. This status of virtual currency as property holds true even though a virtual currency might function much like a real currency, including its use to pay for goods and services, to pay wages, or to hold as an investment.
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Discover how Bitcoin is the most well-known form of digital currency. It is not legal tender, but in most countries it can be used and accepted in commerce voluntarily by willing participants. The use of Bitcoin per se is not illegal, but activities performed using Bitcoin may be illegal (e.g., buying illegal drugs or running a Ponzi scheme) or subject to regulation (e.g., operating a Bitcoin exchange). - Virtual Currency State Law Survey
Review this survey for an overview of the treatment of virtual currency in all 50 states and the District of Columbia.
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