This Portfolio is available with a subscription to Bloomberg Tax, a comprehensive research solution including over 500 Tax Management Portfolios, practice tools, primary sources and timely news.
Tax Management Portfolio, Taxation of Cryptocurrencies, No. 190, considers the U.S. federal income taxation of the convertible virtual currency known and implemented as Bitcoin — specifically, the open source software currently referred to as Bitcoin Core1 or software fully compatible with that reference version — because it was the only convertible virtual currency identified by the IRS in Notice 2014-21.2Chapter I introduces and discusses certain aspects of Bitcoin. Chapter II addresses the U.S. federal income tax classification of bitcoin. Chapters III and IV consider the consequences of trading and investing in bitcoin, and the activities and selected transactions undertaken by investment entities, and foreign and tax-exempt investors. Chapter V identifies some of the issues which pose novel or challenging tax aspects of Bitcoin. Chapter VI outlines information reporting that may apply to bitcoin and similar cryptocurrencies.
This Portfolio endeavors to adhere to the community convention of identifying the reference version of the Bitcoin software as Bitcoin Core and other aspects of the protocol as Bitcoin (upper-case), and its native currency as bitcoin (lower-case). Bitcoin Core may be the master version or inspiration for other cryptocurrencies; however, seemingly unimportant differences between Bitcoin and other cryptocurrencies may result in significantly different federal income tax consequences.
The classification of bitcoin for U.S. federal income tax purposes is the basis for much of the detailed analysis in this Portfolio. A general classification of bitcoin for this purpose is merely a starting point that can be, and is, subject to exceptions. In addition, Bitcoin and its related technologies present new and novel U.S. federal income tax issues; therefore, the views expressed by the author are often based on interpretations that are intended to be (and, hopefully, are) neutral, as well as reasonably correct.
|1 The Bitcoin Core GitHub repository is at
https://github.com/bitcoin/bitcoin (last checked Dec. 4, 2018). Note that the lack of a central issuer is a fundamental aspect of cryptocurrency. Therefore, this portfolio contains several references to peer edited webpages. While these sources are not typical legal reference material, they provide practical insight and helpful background information on the complicated world of cryptocurrencies.
2 Notice 2014-21.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)