By Stephen Ohlemacher
WASHINGTON: The Internal Revenue Service says virtual currencies like bitcoin will be taxed like property — not currency.
The IRS says bitcoin is not legal tender. You can’t use it to pay your taxes.
However, if you receive wages in bitcoin, you have to pay taxes on it just like you would if you got paid in dollars. Or if you got paid in chickens.
The IRS issued a series of 16 questions and answers Tuesday to clarify the tax treatment of virtual currencies like bitcoin. In general, the IRS says it will be treated like other property that is traded.
For investors, if you buy bitcoins and they increase in value, the IRS says you have to pay capital gains taxes after you sell them.