IRS: Bitcoin will be taxed as property

Associated Press

WASHINGTON

Virtual currencies such as bitcoin will be taxed like property — not currency, the Internal Revenue Service said Tuesday.

The IRS says bitcoin is not legal tender. You can’t use it to pay your taxes.

However, if you receive wages in bitcoin, you have to pay taxes on it just as you would if you got paid in dollars. Or if you got paid in chickens.

The IRS issued a series of 16 questions and answers Tuesday to clarify the tax treatment of virtual currencies such as bitcoin. In general, the IRS says it will apply the same rules that govern other barter transactions.