Bitcoin speculators are in the midst of another wild ride in the crypto-currency’s price, which shot up as high as $13,387.26/bitcoin on June 26 after having settled for months in the $3,500-range. Prices have now fallen back below $9,500 in the span of a month, taking back some, but certainly not all, of what speculators made in the last rally.
Something many Americans are confused about is, whether bitcoin is a currency, or an asset. For tax purposes, the IRS is treating bitcoin like an asset. Laura Saunders reports for the WSJ:
According to an IRS spokesman, there is no explicit requirement that many cryptocurrency sales be reported to the agency by third parties. Sales of stock shares must generally be reported on Form 1099-B to the IRS by the brokerage firm.
Among the possible taxes: If an investor sells a cryptocurrency after holding it longer than a year, the profits are typically long-term capital gains.
The tax rate is 0%, 15%, or 20%, plus a 3.8% surtax in some cases, depending on the owner’s total income.
Bitcoin prices have proven to be extremely volatile, and bitcoin should probably be avoided by any investor seeking to minimize risk in a portfolio. I don’t see much value in the crypto-currency, but I have written regularly that there is merit to the underlying blockchain technology that runs bitcoin.
There are a number of companies including banks and IBM that are using blockchain technologies to revolutionize their businesses.
Read more about what I think about bitcoin, the blockchain, and where the technology will ultimately take the internet.
E.J. Smith - Your Survival Guy
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