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In 2014, the IRS released guidance on virtual currencies (i.e. cryptocurrencies). Some highlights include:
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Cryptocurrencies are treated as personal property (not currency) and are therefore taxed as capital assets
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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
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Cryptocurrencies that are obtained from mining are taxable as income at their fair market value at the time they are received
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Mining equipment can be deducted as a legitimate business expense