Quote from: darkangel11 on January 12, 2017, 11:40:21 PM

Quote from: DebitMe on January 12, 2017, 08:31:15 PM

I would say you can use any of the major exchanges, as long as you continue to use the same one. You would want to use the one with the highest price, as that would give you the most basis, but just be consistent. Would look really fishy to be jumping around all the time using different exchange prices without a valid reason.
So, to answer your second part, think about it like this. You are walking down the street and find an ounce of gold on the ground and say 1 ounce of gold is currently worth $1000. You now have income of $1000 that is due in the current year. So everything is hunky dory, you pay the tax on your fortunate find, but decide to sell the gold next year when the price is $1500 an ounce. You will now owe a $500 capital gain.
It is the same for bitcoin. When you mine, you "find bitcoins" that you would owe ordinary income on, and you would need to record a basis for. When you sell those bitcoins, you will owe capital gains tax based on the appreciated value of the coins you mined.

His response isn't different than mine, he just isn't referencing mining but is talking about buying and holding bitcoin for a period of time. You won't owe capital gains on the appreciation until you sell it.

Does that clear it up a bit?

All clear

My question comes to the fact that I'm used to treating my held coins as not taxable. Sure, you can report how your investment is doing each year, or month, but this means you are monitoring the price and frequently reporting gains and losses, like a trader, instead of just doing it when you finally decide to sell it.

I sell coins over localbitcoins. So I treat them as inventory instead of as an investment. So once a month I revalue my inventory and put the difference to a gain or loss account so my balance sheet stays up to date with actual values.