So every time I spend bitcoin, I need to:
1) Keep track of how much fiat I used to buy the bitcoins originally
2) How much the item costs in fiat
3) Figure out when I bought what bitcoins and when
4) Calculate the capital gain based on the difference between the item and the purchase price of the coins
5) Repeat steps 1-4 every time I spend Bitcoin
6) Calculate my total gained / lost from every transaction at the end of the year.
7) Report this amount on my tax form, including proof of every transaction in the event of an audit
Sounds like a computer program to me, and something a computer could do for you automatically. Do you have one?
Dear IRS, I have a computer that can transact funds using this new-fangled cryptocurrency technology, but I am unable to make it keep track of those transactions for tax purposes. There's no public record of those transactions anywhere in cyberspace.