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State Taxes And Bitcoin



What state tax rules and issues exist when a business accepts bitcoin from customers? What about for the customers? In March 2014, the IRS told us that convertible, virtual currency should be treated as property (rather than as currency under any special rule for currency, such as Code Section 988). That was in Notice 2014-21. States have mostly been silent on the topic. Where states conform to the federal system, that means, treat as property as well. But what about treatment for sales tax and some special state income tax issues, such as sourcing?

New York recently issued guidance on both income and sales tax.

I’m working on an article about state tax issues and virtual currency. What issues do you see for this topic? Is there state guidance you are seeking?

Did anyone give you bitcoin for Christmas or Hanukkah?

Original Post By:  Annette Nellen

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Annette Nellen, CPA, Esq., is a professor in and director of San Jose State University’s graduate tax program (MST), teaching courses in tax research, accounting methods, property transactions, state taxation, employment tax, ethics, tax policy, tax reform, and high technology tax issues.

Annette is the immediate past chair of the AICPA Individual Taxation Technical Resource Panel and a current member of the Executive Committee of the Tax Section of the California Bar. Annette is a regular contributor to the AICPA Tax Insider and Corporate Taxation Insider e-newsletters. She is the author of BNA Portfolio #533, Amortization of Intangibles.

Annette has testified before the House Ways & Means Committee, Senate Finance Committee, California Assembly Revenue & Taxation Committee, and tax reform commissions and committees on various aspects of federal and state tax reform.

Prior to joining SJSU, Annette was with Ernst & Young and the IRS.

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