To me, bitcoin is very different. When you buy monero, your not selling bitcoin for USD, and then buying your monero with those USD's. Your trading your bitcoin for moneros. Your basis is whatever you paid for your bitcoin. and your profit/loss is whatever you made on the sale (either bitcoin or monero) back to USD.
To me too, but that is entirely irrelevant. What matters is what the IRS thinks. I have spent a _lot_ of time researching this, and my conclusions have led me to declare and pay taxes on all my Bitcoin profits when converting to Monero. The upside is there is less tax to pay when selling the Monero because the basis will be higher.
The IRS will rule on this and if it goes the way I think it will go, those who have claimed like kind and declared their transactions as such will face penalties and interest. For those who haven't declared those transactions at all, it could be a lot worse.
It's onerous to declare all your transactions, but there is software that simplifies it. You just download your Coinbase or Poloniex logs and it creates the IRS report.
Playing Devils advocate here. Where do you get the value of bitcoin at time your trade is made? Since bitcoin can vary by a hundred or more dollars depending on where you look, is your choice, IRS approved?
I don't really have to worry about this at the moment, but it will be interesting to see what the official stance is in the future. I'll have to mention it to my CPA and see what he thinks. Of course I have a feeling he'll say whatever will make him the most money...
