It sucks because if I mine just 1 BTC, then, to stay compliant with the law (which would be a nice bonus regardless), I have to report that "income" at its present USD exchange rate, even though:

- I haven't converted it into USD
- I may *have* to convert it just to pay the taxes on it
- it could be worth less when I do convert it, meaning I have to keep records just because of this tiny transaction.

And remember, even if I get bitcoins, that doesn't mean I made a profit!  I have to deduct the cost of the mining rig I put together to get that, which (in the case of receiving just 1 BTC) is a lot more than revenue.  Now, if the IRS actually allows those deductions, it's not so bad.  But really, how much crap do you think you'll have to go through when they see you trying to deduct high-end computing/graphics equipment, and audit you, and you have to convince them the machine just sat in the corner and computed hashes?

Most likely outcome is that they'll declare some arbitrary fraction of its cost to be "personal use" and non-deductible, and then fine you for not guessing that number.

F*** that.  From now on, I'll shut up about how many bitcoins I have, and I'll leave it to them to prove I know the trapdoor information about this or that elliptic curve (i.e. the private keys to certain addresses, in case you missed the reference).

EDIT: OTOH, if the IRS decides to be cool and accept payment directly in BTC, that's one more argument the haters can't use  "Bitcoin's stupid because, unlike the dollar, you can't pay your taxes in it."  "Actually, you can.  See this IRS ruling." "Oh.  Nevermind!  Wait, I've got another one..."