I don't see how this is good news. I am not trying to troll here, I was just talking to people the other day and telling them my arguments for Bitcoin being around for a very very long time. I was really excited about Bitcoin.
But this is a deathblow. How will businesses keep track of what a coin was worth when they exchanged a good or service for said bitcoin? This Bloomberg article puts it perfectly
"Todays IRS guidance will provide certainty for Bitcoin investors, along with income-tax liability that wasnt specified before. 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.bloomberg.com/news/2014-03-25/bitcoin-is-property-not-currency-in-tax-system-irs-says.htmlI am no economics major, but can someone please explain to me how this is a positive bit of news? I was hoping Bitcoin would be handled as a currency, or at least a foreign currency...this pretty much means any business trying to adopt bitcoin will have to think long and hard about the implications.
I am no economics major either, but just common sense tells me how is it different if the customer is paying the coffee shop $2 cash or credit card payment for the same cup of coffee? The coffee shop point-of-sale system still record it as a $2 income if it is paid via Bitcoin.
It's completely different because cash and credit are valued as currency and not subject to capital gains. So this is no different than going into a store and paying with $2 worth of google stock. It holds serious and very confusing repercussions for both the merchant and the consumer. Also, it renders bitcoin as a currency useless. The only reason you buy stock is that so you can someday trade that stock in for fiat currency, preferably at a profit. You don't buy stock so that you can trade it for goods and services.
Also, as a consumer, if you have 2 bitcoins in your wallet one day (let's say for simplicity sake you bought the. For $1 each) and then you go buy a cup of coffee for $2, but at the time of your purchase, your bitcoins doubled in value and are now worth $4 so you only need to spend one of them. Now in the eyes the government you just PROFITED $1. For now at least, it is completely not feasible for any consumer to keep track of this. And you can say yes it's impossible to keep track of AND enforce....but the tax manwillnot give a fuck if they audit you. "You didn't keep diligent records on your bitcoin purchases and expenditures....fuck you, pay me."