US Tax Man Leaves Bitcoin For Now

Reported initially by NextGov, the federal auditing committee, Government Accountibility Office (GOA), has recommended to the IRS not to create regulations for the taxation of Bitcoin Bitcoin While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that Read this Term related profits. The GOA stated the IRS has “neither the money nor the time” to create rules related to bitcoin tax collection.

The GOA study is part of a report titled “Virtual Economies and Currencies”. The GOA explained that the research was due to the recent rise of virtual currencies being used as a medium for the Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term of real goods. As they stated:

“Recent years have seen the development of virtual economies, such as those within online role-playing games, through which individual participants can own and exchange virtual goods and services. Within some virtual economies, virtual currencies have been created as a medium of exchange for goods and services. Virtual property and currency can be exchanged for real goods, services, and currency, and virtual currencies have been developed outside of virtual economies as alternatives to government-issued currencies, such as dollars. These innovations raise questions about related tax requirements and potential challenges for IRS compliance efforts.”

The report covers various forms of virtual currencies, including ‘closed flow’, ‘hybrid’, and ‘open flow’ structures. Closed flow currencies are products that are only available for trading of goods within on environment. They have a virtual value and can’t be cashed out for fiat currencies. In hybrid formats, the virtual currency can be acquired with dollars, but there is no guarantee of an exchange of the virtual currency back into dollars. Open flow currencies are virtual products that are being freely exchanged and being used to exchange both real and virtual goods.

In its section of open flow currencies, bitcoin was featured prominently, with an explaination of what bitcoins are and how they are used as a payment item for real goods.

In its conclusion, the GOA recommended that the IRS find a “relatively low-cost” way to provide tax reporting information of virtual currencies for taxpayers to learn the rules.