The IRS Tax Notice 2014-21 clarifies the treatment of Virtual Currencies("VC") such as Bitcoin. The guidance states that digital currencies are to be treated as property. Thus Capitals Gains must be paid on every transaction. This treatment of VC is overly burdensome as it will create onerous record keeping issues and unnecessary costs that will stifle the development and advancement of this important technology. Bitcoin is regularly used to pay for items and services, as it is a safe way to transfer payment. Under this interpretation, when Bitcoin is spent, the owner will have the tenuous responsibility of calculating their capital gains or losses, as well as the Seller of the goods or services. We ask that the IRS creates a new classification for VC's that removes these challenges.
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