It’s time to start to start thinking about the tax and accounting ramifications of digital, virtual currencies.
By Hitendra Patil
Bitcoin is virtual currency much in the news these days. It’s peer-to-peer so there’s no central bank or government. But, because it necessarily represents income or asset, it needs to be accounted for and hence will have tax ramifications.
Accountants, the IRS and accounting software developers are starting to take it seriously. But in the absence of IRS rules specific to bitcoin taxability, accountants have to draw upon their knowledge of IRS rules that govern income, assets, capital gains or losses, and stock and bond transactions, and apply that corollary to bitcoin ownership and transactions.