As a former bank examiner, that's my understanding. While the US Treasury recognizes BTC as a currency, it is "virtual" until it's negotiated. That can be via buying online and paying via Bitpay, or exchanging to a bank. I report when I sell BTC to Bitpay to go on the debit card. While I don't wish to argue with someone's CPA, I think it's a bit ludicrous to try to figure a tax liability on something as volatile as BTC at ANY given point in time, and call it "tax debt." I know three people who actually work at IRS who have told me up front that the agency really doesn't have BTC...or any other coin...under even basic understanding. Their focus is collecting tax, and they want to get it at the earliest possible moment. We'll have to see, I guess.
Re knowing the various exchange rates...here's a good place.
https://bitpay.com/bitcoin-exchange-ratesThanks so much FireTreeActual. Nice to have another respected opinion (mine is not by the way - I'm still learning). It makes sense that BTC is not real because it all could be gone tomorrow with the wrong circumstances. My accountant did tell me that tax/accounting issues are in their infancy and subject to a lot of change. And as I mentioned, it is pretty hard for tracking to happen. I have seen the exchanges starting to require more info, so I suspect moves are being made by the IRS to "collect" as much tax as they can.
My feeling is that having a consistent approach and making an effort to report some income will go a long way to keeping "the man" from taking a heavy handed tax / penalty approach later on. Could it be that mining is supposed to be reported as income as it occurs since the power would be written off? If anyone is like me, my BTC holdings will most certainly go longer than the year it was mined.