What do you get when you combine Bitcoin, the United States Internal Revenue Service, frothing-at-the-mouth freeman on the land types, tax evaders, clueless, wild-eyed speculators, and a bunch of teenagers? You get yesterday, when the IRS announced that it considers Bitcoin to be property, not legal tender, and will tax it as such.
What does this mean for Bitcoin? It means that in the coming months, or even just the next few weeks, things are guaranteed to continue being hilarious. Immediately after the announcement, bitcoiners scrambled to be the first to misinterpret it and shout “this is good for Bitcoin!” Of course, these were few and far between, since most of the Bitcoin community flew into a rage and decided that it just didn’t have to obey the law.
Various sources have already begun analyzing and interpreting the ruling, and it’s packed full of hilarity. Mined coins are taxed at the exchange price at the time of the mining, Bitcoins are subject to capital gains taxes, requiring users to keep detailed records about buying and selling to properly calculate their taxes.
Furthermore, we may finally see some transparency with regard to the inner workings of payment processors such as Coinbase or Bitpay, who seemingly remain solvent thanks to venture capital, but are speculated to have other less-savory dealings to continue operating. Many of us are curious about their sources of income, exchange, and other operating procedures and the IRS may well have forced them into showing the world just what they’re made of.
This was all done three weeks before the annual personal tax deadline and applies to current, future, and, best of all, past Bitcoin purchases, profits, and losses.
Meanwhile, reddit is frantically trying to figure out if Bitcoin ATMs are vending machines now, if they can sue the US federal government, and what it costs to buy an island to start their own nation.
What can we conclude from all this? Bitcoin just got trolled hard by the IRS.