U.S. IRS rules virtual currencies are property for tax purposes

WASHINGTON, March 25 Tue Mar 25, 2014 2:31pm EDT

WASHINGTON, March 25 (Reuters) - The U.S. Internal Revenue Service said on Tuesday that virtual currencies such as Bitcoin are to be treated as property for tax purposes.

Weighing in with official guidance in a murky tax area, the IRS said wages paid to employees using virtual currency are taxable to the employee, while other payments made using virtual currency are also taxable.

"The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer," the agency said in a statement. (Reporting by Patrick Temple-West; Editing by Kevin Drawbaugh and David Gregorio)