Bitcoin– More News, I.R.S States Bitcoin Is Property
When we recently wrote a blog, regarding Bitcoin, we pointed out the questions which were being posited as to whether Bitcoin is/was a “currency” or “property.” For United States tax payers at least, the I.R.S. has ruled that Bitcoin is to be treated, by the I.R.S., as “property.” This ruling came out March 25, 2014.
A declaration that Bitcoin is property will not alter the fact that if one gets paid “wages” in Bitcoin, those wages are still taxable as income when received. Employers paying wages in Bitcoin will still have to report the payment of “wages.” When Bitcoin is spent, there may be a “gain” on the value and there will be a tax (presently 20% on long term gain) but the tax may be less on the increase in value than if that increase were taxed at regular income tax rates. Of course, the Bitcoin could be worth less at the time it is spent. How will one establish and report the “value” of the Bitcoin at the time it is spent?
The I.R.S. ruling, at least for U.S. Taxpayers using Bitcoin, will make the use of Bitcoin for transactions a matter of “trading” property for property or property for services.
For domestic relations attorneys, the value of any Bitcoin owned by the parties will continue to have to be established for the purpose of dividing property in any divorce, dissolution, or legal separation proceeding. Long term and short term gains taxes, will also have to be considered to ascertain the after tax effect of any division of property which includes Bitcoin. Ohio attorneys will have to be aware of Bitcoin discovery issues and how to treat Bitcoin in property settlements.
It can only be assumed that the Ohio courts will also treat Bitcoin as “property” rather than “cash” and that restraining orders restraining
the transfer of property will apply to Bitcoin also.
This blog was written by Attorney William L. Geary. Attorney William L. Geary and the Law Offices of William L. Geary, L.P.A. attempt to stay up on all issues regarding and affecting Ohio family law matters. If you have a question, about a family law matter, please call The Law Offfices of William L. Geary at 614.228.1968 or contact us at through our website.