“The Internal Revenue Service’s decision to treat Bitcoin as property will make tax consequences part of every transaction involving the virtual currency.  So much so that Bitcoin users and analysts say the IRS guidance announced yesterday complicates people’s ability to use it as a currency.  The IRS, faced with a choice of treating Bitcoins like foreign currency or property, chose property. Exchanging Bitcoins for goods, services or dollars will generate taxable income or losses, depending on what the Bitcoin investor paid.  Purchasing a $2 cup of coffee with Bitcoins bought for $1 would trigger $1 in capital gains for the coffee drinker and $2 of gross income for the coffee shop.”

http://www.businessweek.com/news/2014-03-26/bitcoin-currency-use-impeded-by-irs-property-treatment-taxes

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