Trading in Bitcoins brings IRS Scrutiny

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The IRS is aware that bitcoins are being used to evade taxes.
The IRS recently sent a summons requesting information to Coinbase, the largest US Bitcoin exchange.
It asked for the records of all customers who bought bitcoins from them.
Coinbase is expected to resist this “fishing expedition.”
The IRS will eventually get all the records it wants.

The tax rules applying to bitcoin transactions are not well understood.
For tax purposes, bitcoins are to be treated like property, not like money.
If you exchange a bitcoin for $500 worth of services, and that bitcoin cost $300, you have a $200 taxable gain to report on your tax return.

If you have an account with Coinbase, you should expect to be hearing from the IRS.
It might not be a bad idea to have someone that understands the tax law review how bitcoin transations were reported on your tax returns.

– Mark S Gleason CPA

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