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In 2014, the IRS released guidance on virtual currencies (i.e. cryptocurrencies). Some highlights include:
Cryptocurrencies are treated as personal property (not currency) and are therefore taxed as capital assets
Capital gains from selling cryptocurrency for fiat currency (e.g. USD) or using cryptocurrency to purchase goods or services are subject to capital gains tax
Cryptocurrencies that are obtained from mining are taxable as income at their fair market value at the time they are received
Mining equipment can be deducted as a legitimate business expense