IRS: Bitcoin Is Taxable Property but not a Currency

IRS Says Bitcoin is Taxable (CNN)

The Internal Revenue Service has issued a formal notice saying it can tax Bitcoin transactions, calling it a property -- not a currency.

That's big news for Bitcoin, the independent, electronic money that is growing in popularity. It's not a blessing or a curse by the U.S. government -- but it is a sign that authorities are taking the digital money more seriously.

On Tuesday, the IRS notice said payments worth at least $600 and made with bitcoins will be taxed the same way the agency treats property transactions. That includes payments made with bitcoins, gains realized by investing in it, and income derived from producing them on your computer, a process known as "mining."