April 2018 JD Supra

For U.S. Federal Income Tax purposes, Virtual Currency (VC) is treated as property.  As a result, a VC investor ought to keep a very close watch on potential net short term capital gains (realized gain if VC is held one year or less) or long -term capital gains (realized gain if VC is held for more than a year). Net short-term capital gains are treated like ordinary income for tax purposes and taxed at the Taxpayer’s highest marginal federal income tax bracket. If a VC investor experiences a loss, net capital loses are capped at $3,000 a year.