Crypto currencies are a new area of law. It’s still evolving.
In 2014, the IRS issued Notice 2014-21 IRS Virtual Currency Guidance. In short, the IRS treats crypto currency as property. Meaning, the IRS applies general tax principles to cryptos as they would to real estate, for example.
The IRS treats crypto currency payments you may have received for good and services, as income. You are liable to pay taxes on it as you would any other income you generate.
Any crypto payments over $600.00, you make to others or receive, must be reported to the IRS. Just as in any other payment such as, rent, salaries, wages, salaries, annuities and compensation.
Payments made using cryptos are subject to backup withholding. Which means you must have a taxpayer identification number (TIN) from the payee in order to report it properly.
The good thing out of this is that the IRS’s regulation of cryptos gives credibility to cryptos as a real and valid form of money.
I am not a CPA or an accountant. I am a tax and criminal defense lawyer. If you need help dealing with the IRS and your cryptos, contact me.