The Basics of Bequeathing Bitcoin
By: Julie K. Kelly, J.D.
On March 25, 2014, the Internal Revenue Service issued a notice classifying Bitcoin as property for U.S. tax purposes. Thus, individuals who invest in Bitcoin must report capital gains and losses when they sell the asset. Moreover, receipt of bitcoins as payment for goods or services must be included in the taxpayer’s gross income. Some argue the government’s acknowledgment of Bitcoin will encourage more mainstream investment in the digital currency. Before advising clients who own bitcoins, it is important to understand the complexity of the asset and how to properly incorporate it into an estate plan.
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