The IRS considers cryptocurrency to be property, and capital gains and losses need to be reported.
"If you make a purchase in bitcoin, you will recognize a gain or a loss," said Lisa Greene-Lewis, CPA and TurboTax Tax Expert ( (INTU) - Get Intuit Inc. (INTU) Report). "And that will be based on the fair market value of whatever you're receiving."
Frequently Asked Cryptocurrency Tax Questions:
- Is cryptocurrency (bitcoin) taxed like real estate? Yes. Think of it as property.
- If I make a purchase in crypto will I be taxed? Yes. You will recognize a gain or loss based on the bear market value of whatever you purchased.
- If I hold cryptocurrency for less than a year, am I taxed? Yes. If you have owned any cryptocurrency for less than 365 days, any profits are short-term capital gains. If you own it for more than 365 days, it is long-term capital gains.