SOURCE
Kevin O'Leary and the IRS both seem to think that Bitcoin is not a currency but more of a property.
And that kinda makes sense.
As it states in IRS NOTICE 2014-21:
No. Under currently applicable law, virtual currency is not treated as currency that could generate foreign currency gain or loss for U.S. federal tax purposes.
Thus, this would mean more taxes on taxes if you pay your taxes with Bitcoin or any other type of crypto.
SOURCE
"The transfer of crypto to the tax authority is itself a sale, and that could mean more taxes are payable for the year of the payment."
This is because there can be gains on the crypto depending on when you bought it.
For example, if you bought 1 BTC in 2012 for $13 and now it is worth $10,000. And you used that to pay your taxes, then great! But you also gained $9987 which in itself is taxable.
Hopefully, it is a long-term capital gain, which would make the taxes lower but you still have to pay taxes on tax.
In fact, many transfers of crypto can trigger tax issues:
such as wages paid to employees using crypto are subject to federal income tax withholding and payroll taxes.
payments to independent contractors are also taxable.
As Kevin O'Leary says explains:
It is hard to guarantee the value of Bitcoin against the price of the U.S. dollar.
this means that because Bitcoin is so very volatile and unstable, it has wild swings, and these wild swings can change the amount of dollars earned when the currency is converted.
thus, Bitcoin, or crypto as a whole is yet to be considered a currency but more of an asset
SOURCE: https://cointelegraph.com/news/paying-tax-in-crypto-ironically-triggers-more-taxes-expert-take
SOURCE: https://www.cnbc.com/2017/12/07/kevin-oleary-bitcoin-is-an-asset-not-a-currency.html
Asset
exactly :)
Since the world market and currency changes, the bitcoin will not be stable
It's not taxed as long as you don't sell! #HODL (;