Bitcoin and other virtual currencies have been in the news recently as one Bitcoin exchange, Mt Gox, went bankrupt and reporters chased the purported creator of Bitcoin around Los Angeles. Given their growing popularity, the Internal Revenue Service (IRS) thought it necessary to issue guidance on virtual currency, such as Bitcoin, in Notice 2014-21. The Notice, which is in the format of answers to frequently asked questions, describes how existing tax principles apply to transactions involving virtual currency.
May 29, 2014