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IRS Lays Out Rules for Bitcoin

Virtual currencies will be treated as property similar to stocks or bonds for federal tax purposes and not currency.

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THE TAXMAN COMETH FOR BITCOIN: The Internal Revenue Service laid out new rules for the treatment of virtual currencies, such as Bitcoin, which might give shoppers pause. Bitcoin will be treated as property similar to stocks or bonds for federal tax purposes and not currency.

That means shoppers who held Bitcoins as their value increased and then used the computerized currency to buy goods would have to pay taxes on those gains to the federal government.

“In general, the sale or exchange of convertible virtual currency, or the use of convertible virtual currency to pay for goods or services in a real-world economy transaction, has tax consequences that may result in a tax liability,” the IRS said Tuesday.

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