I find it interesting that Bitcoin could even be considered property and not a currency. It has all the qualities of a currency.
If the IRS considered it currency, your gains would be considered regular income, as is the case with a foreign currency. By treating it as property, you get a preferential tax treatment for long term gains.
This is true.
Imagine you mine 1 XBT when the value is $500. The IRS expects you to report that as income on either your W-2 or 1099 depending on how you normally file your taxes.
Then you hold the coin for over a year and decide to sell the coin. The value of that XBT is double what it was when you mined it. You now have $1,000 value of which you paid taxes on $500. The IRS wants you to pay $500 in capital gains on the difference.
The long term capital gains tax rate is currently 20%. Regular income tax brackets are 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. In this scenario you are likely going to pay less in taxes than you would if you paid regular income taxes on your sale amount. If you make more than $36,000 per year your regular income tax rate is greater than the long term rate on capital gains.
So what if you transfer your coins into your personal wallet on a day where the market has flash crashed? Will you be able to claim the daily value of that day for the purpose of determining your regular income tax liability?