[MrB]

That’s the deal with barter - they don’t like it because if I trade tomatoes for rabbits,

we both say they had the same value, and there’s no profit to tax.

I would say that would apply to bitcoin as well.
I trade $1000 worth of bitcoin for $1000 worth of goods or services, and no profit has occurred.

[Safrguns]

>>> we both say they had the same value, and there’s no profit to tax.
I trade $1000 worth of bitcoin for $1000 worth of goods or services, and no profit has occurred.

When trading occurs, you are accumulating one commodity for another. Each of those commodities whether it be bitcoins or pork bellies has value which rises and falls over time.
So it is not necessarily the transaction that is taxed, but rather the change in value of what you own. This form of income is reported as capital gains and is taxed differently than others.

If however, you are receiving a commodity for services, that is recognized as income which you are supposed to report AS wages/salary. The only difference is WHERE you report it on your tax return.

Now... here is where I think your real question resides:

At what point is a bitcoin considered a commodity OR a CURRENCY?

Technically, it cannot be considered a currency because it has no backing and is not recognized as currency by any government. It is therefore a commodity, and is subject to the same income tax regulations for speculative income as everything else.

NOW... what happens IF and WHEN bitcoin’s success positions itself as an effective ALTERNATE form of currency?
If that were to become the case, it would threaten or compete with the value of valid forms of currency, and the federal government would be forced to justifiably ban it.

Now... considering the fact that bitcoin was DESIGNED to be an alternate form of currency, there is ONLY ONE way for it to end.