I plan to pay my taxes on USD I have gained through Bitcoin (mining and trading)... I plan to just count the income into my bank account as what I made, and deduct the costs of buying BTC and mining them (electricity, equipment, etc.)... which my accountant feels should be reasonable and simple enough.  My accountant doesn't share the opinion that the IRS wants to "stick it" to people dealing in Bitcoin, they ostensibly just want a reasonable and accurate calculation of profits made and taxes paid consistent with the law.  And that where the law is unclear with respect to the new technology, that a reasonable best guess interpretation is made that doesn't blatantly skew toward not paying taxes.

This year, Bitcoin has been a windfall for me, and I can't really hide it (Bloomberg BusinessWeek sort of told the whole world)

As the tax year draws to a close, I have been deliberately incurring expenses which may or may not produce a profit in the end (such as producing physical bitcoins and offering software development bounties) to promote Bitcoin - which I believe I can legitimately deduct as business expenses because they are arguably expenses and efforts incurred to improve the value of BTC I have been holding.

per my accountant, I am advised to BEWARE if I bought BTC earlier in the year, made a profit on it by selling it, bought BTC afterwards, and took a loss.  In the US, according to him, if I don't sell those BTC by the end of the year to "Realize" the loss, AND keep my hands off them for 30 days, I run the risk of being on the hook for capital gains (which become taxable the moment it's sold for a gain) but not able to offset them with the losses (which only get realized if I sell AND DO NOT BUY THEM RIGHT BACK for 30 days).  Instead the capital losses would roll forward from year to year, and I could deduct them later, but only against future capital gains, and/or up to $3,000 per income per year (which could be a long time, or never, if the gains are substantial).  The 30 day rule is biased towards taxing gains: the government is apparently happy to take a piece of my "gains" unconditionally, but will only cut me a break on "losses" under relatively narrow conditions.  Don't get stuck with a scenario where you have both gains and losses but the rules force you to pay on the gains without the benefit of offsetting the losses.