The last line makes sense. I’ve seen people, even here at FR, define bitcoin mining as hard work, one saying it was the hardest work he did.
If you do work, and get paid for it, that is income, and of course it should be reported as income.
And unfortunately, bitcoin’s value moves wildly. It isn’t a ‘currency’ in that sense, it is like gold. So like gold, once you have bitcoin, you will need to remember what you paid for it, and when you sell it, or exchange it for money to use to buy something, you will have to see if you had a gain or a loss, and will pay capital gains or incur capital losses.
This did however get me wondering how the IRS handles currency trading. Those are real currencies, but I can’t imagine the IRS just leaves large currency gains on the table, so it seems they would be trying to collect taxes there somehow.
Except of course that is how lefties like George Soros make their money, so maybe the IRS isn’t that interested.
No need. The transaction where you bought it is in the chain with your public key in it. The time of the transaction is in the block. The value at that time can be looked up by an exchange that keeps track.
I see bitstamp.net has a daily price available, that’s probably good enough for the IRS.